Pro Perspectives 6/10/20

June 10, 2020

The Fed met today. 
People were looking for something new from the Fed.  What more do they want? 

The Fed has already told us they will do anything and everything to promote stability and recovery.  And they've done it.  If something else bubbles up, they will do more.  Powell has made it very clear that he will continue to protect the balance sheet of businesses and consumers.  And he has made it clear that they will keep the pedal to the metal until the economy is well into recovery. 

That means, they will let the economy run hot.  That means, they will tolerate inflation, and they will do nothing in response to inflation that would risk making the nearly $10 trillion of fiscal and monetary stimulus that has already been fired, impotent.  

As we've said, inflation is coming.  And, if anything, the Fed will be behind the curve, by their own design.  At some point, they will be chasing inflation, which will mean some abrupt brakes will be put on the economy.  But that won't be anytime soon.  They want to give the economy plenty of room to run, so that there is a clear exit from this recession, and enought time for the economic damage to be repaired.   

This is, and has been, a greenlight to be long asset prices: stocks, real estate, commodities, art, collectibles … even bitcoin.  The cheapest is, without question, commodities.  We've looked at this chart before from Leigh Goehring, one of the great research-driven commodities investors of our time (you can see more of he and his partner Adam's work at 

Never before, have commodities been this cheap, relative to stocks.