With President Biden signaling that he will nominate Jerome Powell for a second term as chair of the Federal Reserve, all eyes this week have turned to how Powell will act in his second term.

Would he continue with dovish stimulus policies, or would he become more hawkish and taper bond-buying to begin to curb inflation?

We got the answer when Powell signaled that the inflation affecting the markets (and our pockets) is not “transitory”, as the Fed had once signaled. He indicated that the Fed would speed up the tapering process, which could lead to a rise in interest rates far sooner than expected. It was a decidedly hawkish action.

Powell cited supply chain issues and the new COVID-19 Omicron variant as the rationale for his remarks, but many believe those are only part of the new scenario facing the markets, with runaway government stimulus being the main mover behind inflation.

It has meant a rough few weeks for the markets, with even more uncertainty over the future of the economy.

At Coign, we remain confident in the future of the market. We have always focused on fundamental investing in our strategies. And we still believe that the stocks of companies with strong balance sheets, earnings growth potential, and attractive valuations relative to their industries will do well long term - and possibly even short term, as companies pass the costs of inflation onto their customers. We don’t see any weakening in consumer demand.

We also believe strongly in investing dynamically around inflation. Reach out if you have questions. We’re happy to talk about asset strategies to protect and grow during uncertain times, or in times of inflation.