Pierotti For Fed Chair
By Tim Pierotti
Chief Investment Strategist WealthVest
Today, after much prayer and deliberation, I am launching my campaign to be the next Chairman of the Federal Reserve. Unlike the other candidates running for this office, I am running as a “Run it Cool” candidate. I know it’s a long shot given the President seems dead set on a candidate from the “Run it Hot” Party, but I think the President should hear me out, because the run-it-hotters might be good for markets near-term, but they sure aren’t going to help in the midterms. Given the lines between monetary policy and electoral politics have now been blurred, our campaign believes that the ideal monetary policy is one that is focused on actually getting inflation to 2% and keeping the incumbent President’s party in the House majority, perpetuating the President’s agenda.
Hassett, Warsh and Waller all, to varying degrees, are going to give the President what he wants. They have all expressed the view that despite over four years of inflation running above the Fed’s 2% target, rates remain restrictive and that the bigger risk to the economy is rising unemployment versus inflation becoming unmoored. In fairness to them, they could certainly be right. Nobody knows the future and it could be that forthcoming economic data will justify further cuts. However the data evolves, the market will question their credibility. Given Hassett’s performative sycophancy, his nomination would be the most dangerous in terms of Fed credibility. But even for Warsh and Waller, both broadly respected people, their independence will invariably be questioned given the repeated demands of the President and their presumed acquiescence. Not a problem if the President shifts his attention over to my candidacy. I’ve been a consistent hawk for years and no one could accuse me of politically motivated fawning praise.
I only own one house, so the primary-residence mortgage fraud issue shouldn’t be a big problem. Unlike many Fed Governors of past and present, I actually have lots of experience as a market participant. More importantly, for the last three years I have written dozens of essays about the end of what economists refer to as The Great Moderation of inflation. The Great Moderation refers to three decades of falling inflation and inflation volatility, which ended abruptly amid the years following the Covid shutdowns. I have been emphatic that inexorably rising global long-term bond yields are telling us something. The message is that the good old days of globally cooperative trade, abundant labor and prudent fiscal policy are behind us, not just in the US, but across much of the developed world.
The problem for the President going into the midterms is that inflation is an incumbent killer. It clearly was for the previous administration, and it may well be for the current. Now the hard part is that all politicians promise to bring prices down even though we know that if aggregate prices are outright in deflation, that’s going to be really bad for profit margins and employment. In fairness to this President, consumers don’t really differentiate between inflation that has accumulated versus the current rate of change. The best the President can do is to show American voters that he is doing everything he can to prioritize bringing down prices and that starts with seating an inflation hawk in the Fed Chair. The benefit of a Fed with real inflation credibility is likely to be expressed in the form of lower long-term yields and lower mortgage rates. Given that housing affordability is such a clear concern among voters, that is the interest rate that matters most.
Not only do people see prices going up, but they also see wealthier people benefiting from it. They see and feel the bifurcation as clear as day. They see the rich getting richer as asset prices inflate, while they feel comparatively poorer. The Fed and policy makers have cavalierly pumped real estate and risk assets since COVID and there is a bottom half of this country feeling ever more left behind. If the President is going to be successful in the midterms, that Main Street over Wall Street rhetoric is going to have some meat on the bone.
Quixotic maybe. Underfunded definitely. But our platform wins when it comes to helping the most Americans and the most voters. So, if you happen to read this and you happen to have the ear of the President, let him know, the run-it-cool crowd may be the winning ticket and there’s a guy in Jersey with grassroots appeal.
About WealthVest:
WealthVest was founded in 2009 and is one of the leading distributors of fixed, indexed, and registered index-linked annuities to banks and broker-dealers. Financial institutions value WealthVest's insightful thought leadership, product design expertise, marketing strategies, technology, and specialization in field and hybrid-based sales and advisor marketing training.
Tim Pierotti is WealthVest’s Chief Investment Strategist.
Tim has over 25 years of experience in various aspects of the equities business. Prior to joining WealthVest, Mr. Pierotti spent seven years in Equity Research management roles at Deutsche Bank and most recently at BMO where he was a Managing Director and Head of US Product Management. Tim has 11 years of investment experience most notably as Head of Consumer Research and Portfolio Manager at The Galleon Group, a former NY based $8Bln Long/Short hedge fund. Tim is a graduate of Boston College and lives in Summit NJ.
WealthVest makes no representation or warranty, expressed or implied, with respect to the accuracy, reasonableness, or completeness of any of the statements made in this material, including, but not limited to, statements obtained from third parties. Opinions, estimates and projections constitute the current judgment of Tim as of the date indicated. They do not necessarily reflect the views and opinions of WealthVest and are subject to change at any time without notice. WealthVest does not have any responsibility to update this material to account for such changes. There can be no assurance that any trends discussed during this material will continue.
Statements made in this material are not intended to provide, and should not be relied upon for, accounting, legal or tax advice and do not constitute an investment recommendation or investment advice. Investors should make an independent investigation of the information discussed in this material, including consulting their tax, legal, accounting or other advisors about such information. WealthVest does not act for you and is not responsible for providing you with the protections afforded to its clients. This material does not constitute an offer to sell, or the solicitation of an offer to buy, any security, product or service, including interest in any investment product or fund or account managed or advised by WealthVest.
Certain statements made in this material may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such statements. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology.
The S&P 500® is a trademark of Standard & Poor’s Financial Services, LLC and its affiliates and for certain fixed index annuity contracts is licensed for use by the insurance company producer, and the related products are not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC or their affiliates, none of which make any representation regarding the advisability of purchasing such a product. WealthVest is not affiliated with, nor does it have a direct business relationship with Standard & Poors Financial Services, LLC.
