Kevin Warsh chairs his first Fed meeting. Crude retreats to $80 as Hormuz reopens. CalPERS rewires its governance. Three things for long-horizon allocators.
Voiceover transcript
This is the Universal Asset Owners daily video brief for Monday, June fifteenth. Three things for the people who allocate long-horizon capital.
Kevin Warsh chairs his first Fed meeting this week. Markets price a ninety-seven percent chance rates hold. But inflation is back at four point two percent, and the real story is whether the new chair retires the Fed's easing bias. For a universal owner, that means the policy backstop under long-duration assets may be going away.
Oil is the wildcard. Crude fell about five percent Monday, back near eighty dollars, as the US and Iran move to reopen the Strait of Hormuz. It traded above one hundred thirteen in March. The energy shock behind the inflation number is unwinding faster than the Fed can react.
CalPERS meets today with private markets at thirty-two percent of the fund, above its own thirty percent ceiling. On July first it drops fixed asset-class targets for a total-portfolio approach. The largest US pension is rewiring its governance for a higher-for-longer world.
Here's the squeeze Warsh inherits. Inflation has climbed back to four point two percent while the Fed funds rate has sat still. The gap between them is the shrinking real policy rate going into his first meeting.
Our take: the hardest thing about this meeting is that the inflation Warsh must answer for is already half-unwound by the oil price. Plan for a Fed that holds the line on the bias even as the data softens. Position for the policy put to be gone, not for the cuts to come back.
The full brief, the chart, and The Universal Owner podcast are at universalassetowners.com. Back tomorrow.
Read the full daily brief
universalassetowners.com →