The Market Slips Due to Fed Signals, Yet Again

The Federal Reserve’s upcoming actions have had an outsize effect on the stock market for some time. Monday was no different, with hawkish-sounding remarks from two Fed governors helping send the S&P 500 into the red by 0.66%.

Part of the market’s skittishness was House Speaker Nancy Pelosi’s trip to Taiwan, which the Chinese government condemned and threatened to respond to with some sort of military action.

Last week and last month were good for the market, which has for now at least turned around from the plunge in the year’s first half. The market took heart following last Wednesday’s news conference appearance of Fed Chair Jerome Powell. After the Fed upped its benchmark interest rate by 0.75 point to counter the current high inflation, Powell said that up ahead, following one more big hike, the body might slow its pace of rate boosts.

The market hopes that the Fed will ease off sooner rather than later, perhaps actually lower rates and not push the economy into a recession.

Then came a pair of more hawkish-sounding notes on Monday. San Francisco Fed President Mary Daly said the Fed was not close to finishing its rate increases. “Nowhere near almost done,” she told CNBC. And Chicago Fed President Charles Evans, in a speech, said the organization would have to keep increasing until high inflation is defeated.

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The market didn’t like that tone, to say the least. As Edward Moya, senior market analyst for the Americas at OANDA Global, put the matter in a note:

“This round of Fed speak suggests markets might be a little too optimistic into pricing in a Fed pivot and that rate cut calls for next year are too optimistic.”

The $22 billion Kentucky Public Pensions Authority has named Deputy CIO Steve Willer as its seventh CIO in 15 years, replacing CIO Steven Herbert, who left the pension fund May 31.

The KPPA also named Anthony Chiu as its new deputy CIO to succeed Willer. A KPPA spokesperson did not have any information on what Herbert, who was at the helm for a little more than a year and half, will be doing next, and said it is the pension fund’s policy not to comment on personnel matters.

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“KPPA is fortunate to have two such highly qualified investors on staff that can step into these extremely important positions,” KPPA Executive Director David Eager said in a statement.

Willer joined KPPA in April 2020 as fixed-income division director, and has since served as deputy CIO and interim CIO. Before joining KPPA, Willer was a senior portfolio manager and strategist at the Commonwealth Bank of Australia, where he oversaw development and implementation of portfolio strategies, asset allocations and hedging strategies.

He also previously worked as a portfolio manager and sector specialist at Deutsche Investment Management in Louisville for five years. Prior to Deutsche Bank, Willer worked at INVESCO Worldwide Fixed Income for more than 11 years, first as portfolio manager and product specialist and then as senior CDO portfolio manager, according to his LinkedIn profile.

Willer, who is a chartered financial analyst charterholder, earned a Bachelor of Science from the University of Richmond.

“I want to thank Mr. Eager and the boards for this opportunity,” Willer said. “I am excited to take on this challenging role and continue to build on the team’s success in delivering strong risk adjusted investment returns for the plans and participants.”

Chiu has been with KPPA since August 2016, and has served as director of private equity and alternative investments. Prior to KPPA, Chiu was a vice president at the Presidio Group, where he was head of asset allocation and researching equity, credit and alternative investment strategies. He also worked as an equity analyst for a long/short hedge fund and as a debt underwriter for leverage buyout transactions in multiple industries at GE Capital, according to KPPA.

Chiu earned an MBA from Duke University’s Fuqua School of Business and a Bachelor of Arts in economics from Stanford University. He is also a CFA charterholder.