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August 26, 2022 | Monday Morning Minutes

MMM Episode 80: Was Powell’s Brief Speech Really a Surprise?

DoubleLine’s Samuel Lau and Jeff Mayberry run down the numbers for the red market week of Aug. 22-26, with stocks in particular falling in the wake of Federal Reserve Chair Jerome H. Powell’s short speech Friday from the Fed’s Jackson Hole symposium (14:40). The S&P 500 Index was down 4% on the week, with most of that decline coming Friday (2:07). Energy was the best performer while tech was the biggest laggard. In fixed income, the two- and 10-year bond yields finished the week higher, and the long bond rallied a bit after the Powell speech. The Bloomberg US Aggregate Bond Index was down 40 basis points on the week with no green to be seen. Commodities delivered a mixed bag (7:07). Bitcoin was down for the week (9:13) to around $20,000, with Sam and Jeff questioning if its historical round-number bias might presage a 50% climb ($30,000) or fall ($10,000).

Over in Macro Land (11:03), data prints included the S&P Global U.S. manufacturing and services PMI numbers at their lowest since 2020, and core PCE has a long way to go before hitting the Fed’s inflation target. The negative second estimate of Q2 GDP number marked improvement but seems unlikely to hit zero or go positive in future updates. Powell’s speech was the macro event of the week (14:33), and Sam and Jeff dig into the details, including how Powell’s pronouncements were consistent with previous statements by other Fed officials but some equity investors reacted as if it were a hawkish surprise.

The Topic of the Week will be returning the first episode after Labor Day, and if you have any suggestions, please send them in via minutes@doubleline.com or @dlineminutes.

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About the Hosts

About the Hosts

  • Jeffrey Mayberry

    Macro-Asset Allocation

    Jeffrey Mayberry

    Macro-Asset Allocation

    Mr. Mayberry joined DoubleLine in 2009. He is a Portfolio Manager on DoubleLine’s strategic commodity strategy while working in portfolio management and trading for derivatives‐based and multi‐asset strategies. Mr. Mayberry is a Strategist on the Fixed Income Asset Allocation (FIAA) committee and a contributing member on our Global Asset Allocation and Macro committees. He also co-hosts DoubleLine’s weekly Monday Morning Minutes (Twitter @DLineMinutes, Minutes@Doubleline.com) podcast. Prior to DoubleLine, Mr. Mayberry was a Senior Vice President at TCW for nine years within the Mortgage Group, where he specialized in portfolio and fund monitoring and analytics. He holds a B.S. in Engineering from Harvey Mudd College and an M.S. in Financial Engineering from the Peter F. Drucker Graduate School of Management at Claremont Graduate University.

  • Samuel Lau

    Macro-Asset Allocation

    Samuel Lau

    Macro-Asset Allocation

    Mr. Lau joined DoubleLine in 2009. He is a Strategist on the Fixed Income Asset Allocation (FIAA) Committee and a contributing member on the Global Asset Allocation and Macro committees. Mr. Lau is a Portfolio Manager on DoubleLine’s strategic commodity strategy while working in portfolio management and trading for derivatives-based and multi-asset strategies, including DoubleLine's Shiller Enhanced CAPE®, Shiller Enhanced International CAPE®, Real Estate and Income, and Multi-Asset Trend strategies. He also co-hosts the Sherman Show (Twitter @ShermanShowPod, ShermanShow@Doubleline.com) and Monday Morning Minutes (Twitter @DLineMinutes, Minutes@Doubleline.com) podcasts. Prior to DoubleLine, Mr. Lau was a Vice President at TCW where he worked under Jeffrey Gundlach as a Research Analyst in the Mortgage Group. He holds a B.S. from the University of Wisconsin, Madison and an MBA from the Marshall School of Business at the University of Southern California.