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The Week Ahead – Five Hundred Twenty Five Thousand Six Hundred Minutes

Welcome to “The Week Ahead” where we take a moment to provide our thoughts on what we can expect in markets and the economy during the upcoming week.

Five hundred twenty five thousand six hundred minutes. The opening lines of “Seasons of Love”, the iconic song from the musical RENT. It may sound a bit familiar to those who have been stuck hearing “Let it go” from Disney’s Frozen the last few years (sorry!), as both are sung by Broadway star Idina Menzel. Five hundred twenty five thousand six hundred minutes are the amount of minutes in a year. This past week, we saw the national debt surpass $22 trillion for the first time and jump $1 trillion in the last 11 months. To put things in perspective, to pay back one million dollars, at a rate of one dollar per second, would take you 11.5 days. Not too bad. One billion dollars, 32 years. One trillion, 31,688 years. Yikes. Now high government debt isn’t necessarily a harbinger of doom, but it could have some potential ramifications down the road, namely on fixed income investors requiring higher yields given the level of debt. While the Federal Reserve controls monetary policy, fiscal policy may soon be driving how interest rates move if the deficit continues to balloon. On a side note, foreign investors sold a record amount of U.S. Treasury bonds and notes in December, to the tune of $77.35 billion. China remains the largest foreign owner of U.S. Treasuries with $1.123 trillion. 

The week ahead will be light, with the release of FOMC minutes as the highlight for investors. The FOMC minutes should provide some more transparency on the dovish shift in the Fed’s monetary policy. Markets are currently pricing in zero chance of a rate hike at the March Fed meeting, and actually a 1% chance they cut rates. Given the quick pivot by the Fed (recall how they spooked markets back in December and then the mea culpa a mere six weeks later), investors will be looking for language around what specifically changed in terms of expectations and how the Fed plans to continue their balance sheet normalization process.

Data deck for February 16-February 22:

Date

Indicator

Period

February 19

NAHB Housing Market Index

February

February 20

FOMC Minutes

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February 21

Initial Jobless Claims

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February 21

Durable Goods Orders (Preliminary)

December

February 21

Philadelphia Fed Manufacturing

February

February 21

Leading Indicators

January

February 21

Existing Home Sales

January

 
    

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Andrew Chan, CAIA, Portfolio Strategist
About the Author
Andrew Chan, CAIA, Portfolio Strategist
Mr. Chan serves on the investment team and is responsible for conducting investment manager research and portfolio construction. As a member of the investment committee, he provides market commentary and investment insights. Mr. Chan’s responsibilities include overseeing client portfolios, calculating risk metrics, conducting the rebalancing of client portfolios, and evaluating the selection of new investment managers. With over 10 years of wealth management experience, Mr. Chan has played key roles across various aspects of investment and wealth management. Prior to joining First Foundation Advisors, Mr. Chan was most recently a portfolio manager at U.S. Trust where, in addition to his daily responsibilities, he served on numerous internal committees including the investment manager committee, the portfolio model committee, and the strategic technology committee. He also served on the in-house strategic consultant committee reporting directly to the President of U.S. Trust. Mr. Chan is a graduate of the Wharton School Executive Program on Investment Management and holds a Bachelor of Arts degree in Business Administration from the University of California, Riverside. He is a Chartered Alternative Investment Analyst (CAIA). Mr. Chan serves on the executive board for CAIA Los Angeles and is the Interim President for the association. Read more
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