OmniDivitia Wealth Management, Inc. - ODWM Blog #treasuryOmniDivitia Wealth Management, Inc. - ODWM Blog #treasuryhttps://www.omnidivitia.com/blogs/tag/treasuryFri, 10 Apr 2026 23:27:24 -0700http://zoho.com/sites/<![CDATA["When Someone Tells You Who they Are, Believe Them the First Time" - Maya Angelou]]>https://www.omnidivitia.com/blogs/post/believe-them-the-first-timeThe Fed, the Treasury bond market, and the VIX are all trying to tell us something...]]>

Maya Angelou Could Have Been Talking about Jerome Powell

Maya Angelou's famous quote is quite apropos with reference to the Federal Reserve.  If you ever had a question on what Jerome Powell is trying to do right now, all you need to do is read his comments from Jackson Hole this past August.


"Restoring price stability will take some time and requires using our tools forcefully to bring supply and demand into better balance.  Reducing inflation is likely to require a sustained period of below-trend growth.  Moreover, there will likely be some softening of labor market conditions.  While higher interest rates, slower growth, and softening labor market conditions will bring down inflation, they will also bring some pain to households and businesses.  These are the unfortunate costs of reducing inflation.  But a failure to restore price stability would mean far greater pain."

The Fed can't be any clearer.  Demand must slow down to meet current supply levels.  Economic growth will likely need to slow for some time in order to bring inflation down from above 8% down to its longer-term target of 2%.  This means making borrowing more difficult & taking money out of circulation, Once demand slows, corporations will likely reduce costs by cutting production and reducing headcount.  Consumers would likely reduce discretionary spending, and focus more on the necessities.  The earnings performance and guidance for 3Q22 & 4Q22 could be an indication of how optimistic or cautions consumers may be, especially given the holiday season that is so important for retail companies.  

The spread between the 10-year Treasury and the 2-year Treasury has also been negative in recent months.  This occurrence is often seen before a recession, which is usually not officially declared until several months after the fact.  


Volatility is also Increasing

Another possible harbinger of a market pullback is the Volatility Index ("VIX"), also known as the "Fear Gauge".  Over the last 20 years, the VIX has been around 30 and associated with the following events:

  • January 2020 = The early stages of the COVID-19 pandemic
  • September 2011 = Double-dip recession fears; European debt crisis; US credit rating downgrade by S&P (from AAA to AA+; the US had a AAA rating since 1941).
  • September 2008 = Global financial crisis

Bull markets are more enjoyable than bear markets such as this, but we know times like this happen occasionally.  If you're uncertain about what all of this means for your family's financial plan or portfolio, click the button below to schedule a call.
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]]>Tue, 18 Oct 2022 14:55:21 -0500<![CDATA[The Impact of a Strong Dollar in Today's Economy]]>https://www.omnidivitia.com/blogs/post/The-Impact-of-a-Strong-Dollar-in-Todays-Economy

America has become a refuge for those seeking safety & opportunity. This is also applicable for foreign investors' capital. In today's economy, a strong dollar can present both benefits and challenges for U.S. investors.


A strong dollar occurs when the U.S. dollar (USD) can purchase more of a foreign currency than normal, generally measured by a historical range. Typically, during these times the United States is seen as a safe haven for capital, given the stability of its monetary system and economic growth potential.   When the USD can purchase more of that currency, imports become more affordable.  The downside is that exports also become more expensive.


There are also other risks, especially with conditions such as:

  • unemployment & underemployment still above historical norms, leading to muted consumer spending;
  • fewer exports, which certainly would affect large, multi-national corporations such as those found in the Dow Jones Industrial Average or the S&P 500;
  • tight lending markets, as  banks are still adjusting capital reserves because of the financial crisis & subsequent regulations;
  • foreign economies that are currently somewhat fragile, as central banks are pumping money into circulation (remember "quantitative easing?").

Another concern that Jack Lew, U.S. Secretary of the Treasury, will have is that as the USD becomes stronger, it will reduce US exports even further, which could hurt the bottom line and pace of hiring, resulting in slowing an already sluggish economy.  We'll need to watch how this catch-22 plays out, as weakening the dollar could help exports (corporations)  and the expense of imports (consumers), while strengthening the dollar would have the reverse effect.In the meantime, it may be worth reviewing your portfolio to determine how sensitive your investments are to these risks.  For a complimentary review, you can contact Locker Wealth Management at 708-960-0520, or by visiting the " Contact " section of our website .


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