Banks, the Fed, and inflation continue to be the big stories in the market right now, with advisors trying to navigate them all. They were also the topic of conversation on Fox Business’s “Mornings With Maria” show Tuesday morning, where host Maria Bartiromo was joined by VettaFi’s vice chair Tom Lydon.
Addressing Tuesday’s upcoming Senate Banking Committee hearing regarding this month’s bank issues as well as the House Financial Services Committee hearing scheduled for Wednesday, Lydon underscored the recent performance of the SPDR S&P Regional Banking ETF (KRE ).
“I think, Maria, it’s a few outliers that have really stirred up the hornet’s nest for sure,” Lydon said. “If you look at financial advisors and investors, they’re a little bit more confident in the last couple of weeks; we’ve seen the KRE, the S&P ETF on regional banks actually up 10%.”
“With everything going on with the Fed, and interest rates and inflation, we’re actually seeing financial advisors more confident in bonds with the idea that the Fed may be less hawkish going forward. So there are a lot of advisors that are top ticking rates right now, going a little bit longer duration, also a little less quality with the idea that they can infuse more income into portfolios,” he added, noting the $90 billion coming into ETFs over this quarter.
See more: Tom Lydon Talks Banks, Equities Bargains on The Watchlist
Turning towards the topic of a possible recession later this year and the GDP number expected to be released later this week, Lydon reminded audiences that while markets will hope for a smooth landing this year, markets do have experience dealing with long-term inflation. With gold reaching around $2,000 per ounce, a “favorable” number for the commodity, he added, it could be another option to diversify in the second half of the year.
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