Overcoming U.S. Investment Risks

To close out the last weekend of January, this latest edition of WealthTrack deals with a topic that never goes out of style ... 

Overcoming U.S. Investment Risks

January 26, 2023

Dear WEALTHTRACK Subscriber,

The debate raging on Wall Street is how much longer the Federal Reserve will continue its aggressive fight against inflation. The Fed’s goal is ambitious: to get the inflation rate down to a long-term average of around 2%. 

The bears are taking Federal Reserve officials at their word which has been a chorus of "we will stay the course,” and as Chairman Jay Powell famously said in a speech last year the Fed will “keep at it until the job is done.” He has repeatedly warned that there would likely be some economic pain in the process.

The bulls are tracking the slowdown in a number of inflation indicators. For instance, December’s Consumer Price Index slowed for the sixth month in a row to a 6.5% annual rate versus a year ago. Wage growth is slowing and gasoline prices have fallen from their highs. 

Despite protestations by Fed officials a growing number of professional investors are betting that the Fed will actually cut rates in the second half of the year which would be very positive for stocks and bonds.    

This week’s guest is a leading global value manager who has a successful track record of investing in the U.S. and overseas. He is Matthew McLennan, Co-Head of the Global Value team at First Eagle Investments where he oversees more than $80 billion in assets, including several mutual funds. His flagship First Eagle Global Fund is rated 5-star by Morningstar with a bronze analyst rating for its “unique approach…which has helped give the strategy a long-term edge.” Since McLennan took over the fund from legendary value investor Jean-Marie Eveillard in 2008 it has outperformed its Morningstar World Allocation category with considerably less volatility than the stock market. 

In this weekend’s episode McLennan will examine what he believes is a risky mix of monetary and fiscal tightening amidst high debt levels in the U.S. He also discusses the kinds of companies that can succeed despite it and other challenges. In our EXTRA feature, he recommends a book that puts today’s divisive political atmosphere in historical perspective.  

If you miss the show on public television, you can watch it on our website over the weekend, along with our past programs and our guests’ One Investment recommendations.  You can also find the WEALTHTRACK podcast on Stitcher and SoundCloud as well as iTunes and Spotify.

Have a lovely weekend and make the week ahead a healthy, profitable and productive one.

Best regards,

Consuelo