Radu Nasoi
Romania
2m
Edited
Although delivered in diplomatic language, Powell’s message was clear: risks are rising on both fronts --> inflation and unemployment. The Fed is increasingly cornered, where almost any policy decision could create new challenges for the economy. Even though the latest inflation reading came in at 2.7%, below expectations, the broader picture remains fragile. Economic momentum appears to be slowing, job creation is expected to weaken, and commodity prices continue to trend higher. As mentioned previously, before the Fed can move into an aggressive rate-cutting cycle or restart quantitative easing, the economy may first need to go through a more difficult phase. Markets are already beginning to price in higher risks of recession during the first part of the year. Despite recent market gains, price action feels increasingly tired and stretched. For this reason, I’ve decided to reduce or fully exit the most risky positions in my portfolio, with the intention of buying them back in a few months, once valuations and macro conditions become more favorable.
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