2022
Podcast: Why Panic from The Feds Leads to Self-Inflicted Recessions
June 2022 will not be remembered as a stellar month for the markets or your portfolio.
What it might be remembered for is the moment the feds “lost the plot.”
With the current calendar year already being a challenging one for the markets, the US Federal Reserve added to the chaos in June by hiking interest rates to 75 basis points, which was above previous expectations.
Interest rates are up. Inflation is up. Returns in both the stock and bond markets are down.
So, what the heck is going on?
To help decipher the current investment landscape, I'm joined by returning guest Drummond Brodeur (Senior VP & Global Strategist, CI GAM) to touch on what happened so far this year and especially in June.
We also ask Drummond what he and his teams see moving forward in the weeks and months ahead.
These episodes with Drummond are always jam-packed with useful market insights, which does lead to longer episodes. If you want to skip ahead to a certain section, here are some noteworthy timestamps from the episode.
- Market Outlook: Despite some surprises, this downturn wasn’t unexpected (1:00)
- Inflation Summary (8:00)
- The Fed panics and “loses the plot” (12:30)
- Housing & mortgage discussion (18:00)
- Why this is a manmade recession (25:00)
- Canadian Dollar/currency outlook (34:00)
You can listen to the podcast on these popular mediums.
Or, you can watch the video podcast in full here.
Here are some key highlights from the episode.
There’s nowhere to hide
Usually, fixed income investments (the less volatile piece of your portfolio) provide some cushion during dips in the market.
However, in volatile markets, there isn’t always somewhere to hide.
Drummond talks about volatility in the markets this year and puts declines in both equity and fixed income markets into perspective.
The Feds screwed up…
Do they ever get it right?
The U.S. Federal Reserve previously hinted at one rate hike in 2022. There have already been three interest rate increases in the first half of the year, and more will soon follow.
Drummond talks about why this strategy from The Feds is misguided.
This is a man-made recession
If we do enter a recession, it has certainly has been helped along by The Feds.
Although their intent might have been misguided, it’s important to remember that recessions are still normal in a healthy economic cycle.
With that in mind, Drummond offers up some facts about typical man-made recessions.
What do smart people do?
Well, they follow the Wealth Wisdom Podcast, that’s step one 😉
Step two? That refers to the specific actions of investors during down markets. More on that in this clip below.
Fear, Greed, FOMO & golf
Trust me, there’s a worthwhile message here…I just had to use my golf game to get it across 😊
Next guest
We’ll switch away from market and finance discussions on our next episode.
The stigma around mental health has been removed over the past few years.
Finally, people are beginning to understand that it’s okay to not be okay.
Our next episode will feature clinical counsellor Cecilia Mannella (Clinical Director & Owner, Eterna Counselling) who will talk about the top “myths of life” and how counselling and mental health awareness fits into that equation.
If you have any questions for Cecilia, or about this latest episode, please don’t hesitate to reach out.
Until next time,
Assante Sana
John Lawson (CFP®, CIM®, FEA)
Senior Wealth Advisor & Co-Founder of Sana Family Office, Assante Capital Management Ltd.
