036: Unpacking the FOMC Minutes with Megan Horneman 08-16-23

In this episode with Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors, discusses the diverse viewpoints of the FOMC committee on future economic and inflation trends. We unpack the July meeting minutes and dissect the reasons behind the split views in the committee regarding rate hikes and the persistent fretting over inflation. 

Tune in as we highlight the three potential market storm-brewers - wage inflation, services inflation, and housing inflation. These topics are concerning and are still too sticky to ignore. We believe the Fed's job isn't done and potential rate hikes remain a possibility.  As always, we invite you to share your thoughts and questions.

Hello, welcome to Markets with Megan. This is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors, and we're coming to you today to discuss the FOMC meeting minutes that came out from their meeting in July. Remember, after the meeting, we tend to get a brief statement or press conference, but the meeting minutes is more detailed and gives us a lot more information about the discussion as well as the view from some of the other bankers that may not be in the voting authority on the FOMC. What we saw is the committee is really split on what they see going forward from an inflation and an economic standpoint. The majority of people did agree with the rate hike, but there were some that wanted to pause, and then there are some Fed officials that are still very concerned about inflation. This has spooked the market.

Obviously, we've seen the equity market today. It's down deeply. Bond yields are high. The 10-year bond Treasury yield is getting ready to break through this previous peak, which was in 2022, so this is bad news for technology stocks, for growth stocks, for high PE stocks. It's something that we've been warning that the investors got a little too complacent on the Fed's path. We still think the Fed and Fed rate hikes are still on the table in the future. There is way too much work that they have done, that they don't want to unravel and there's still too many things. The three that we focus on wage inflation, services inflation and housing inflation All three of those are still too sticky at this point. So the Fed's not completely done. We think that this is going to continue to create volatility in the markets and we'll come back if any other information that we have on the Fed. That's all we have for today. If you have any questions or comments, please feel free to reach out to podcast at Verdence dot com. Thank you,