The Fed Moves (& Markets Throw a Tantrum)

It has been an eventful 72 hours in the markets. Here at Farr, Miller & Washington we remain diligent in our research, looking for value in a volatile market.

In the 1960s, Fed Chairman William McChesney Martin famously said the Fed’s job is to pull the punch bowl away just as the party is getting started. In the past decade we have seen unprecedented monetary intervention to prop up the markets and the broader economy in the aftermath of the Financial Crisis. The punch bowl never had as much high-octane fuel in history. The party took a while to get started, but we are now in the 10th year of a bull market, and Jerome Powell watering down the punch isn’t going over well with the markets.

I wanted to share with you two recent media appearances I made. Yesterday, I was on CNBC’s Powerlunch before Chairman Powell’s press conference. Below is a clip of my discussion with Greg Ip of The Wall Street Journal.

On Tuesday, on my weekly podcast, The FarrCast, I had a great discussion with Jim Iuorio on the current volatility, and with Jack Bouroudjian on the prospects for 2019. (Also in the second segment, great insight from Dan Mahaffee on President Xi of China.) The economy is sound: not perfect, but the American economy is in good shape.

We remain committed to the proposition that in the long term the markets are a reflection of the underlying economy. The Federal Reserve are custodians of monetary policy that promotes the long-term interest and stability of the American economy. While the markets may throw a tantrum in the short term, an economy not propped up by artificially loose monetary policy will, we believe, reap rewards for investors and for America in the long run.