At Marketing Wiz, our team actively monitors global financial markets to contextualize relevant stories for our clients and their stakeholders. This February, here are three themes that can serve as the foundation for a custom long-form article on behalf of your firm:
On the Bright Side: How Geopolitics is Driving Risk Premiums
- Across the world, geopolitical investment risks are rising. January alone saw tense rhetoric over Greenland, protests in Iran, and the capture of Venezuelan president Nicolás Maduro.
- For investors, the possibility of conflict and disruption can be disorienting, threatening episodes of market volatility. But in an increasingly multipolar world, higher levels of geopolitical risk may be par for the course.
- Nonetheless, this riskier world could have a silver lining for investors. For those with the discipline and foresight to look past near-term volatility, higher risk premiums may contribute to greater long-term returns.
The New Understanding: What a Renewed Treasury-Fed Accord Could Bring
- In late January, Donald Trump confirmed that he would nominate Kevin Warsh as the next chair of the Federal Reserve. The move sparked speculation about a renewed Treasury-Fed Accord, which could have profound implications for global interest rates.
- The original Treasury-Fed Accord, agreed upon in 1951, allowed the Fed to set rates independently from the executive branch. However, Warsh has argued that the Fed has abandoned the spirit of that Accord by purchasing huge volumes of government bonds.
- Although Warsh has acknowledged that the Fed should be able to buy Treasuries in ‘true emergencies,’ his tenure could result in a massive shrinking of the Fed’s balance sheet. In the past, similar moves have resulted in tremendous interest rate volatility, meaning that a renewed Accord could end up risking the very instability it seeks to curb.
Whiplash: Gold & Silver Collapse After Record Run-Up
- If January was defined by a parabolic rise in precious metals, early February has been defined by the brutal return of gravity. Following a record-breaking run-up, the market crashed this week, with gold suffering its steepest decline in over a decade and silver posting record intraday drops.
- For months, precious metals have been steadily rising due to geopolitical anxiety and currency debasement fears. After crowded positions began to unwind, prices saw a sharp and unexpected drop, although the market has since clawed back some of its gains.
- For investors, the episode is a reminder of the importance of balanced portfolios. As the last week has demonstrated, betting heavily on a single asset class can be a strategy that works well – right up until the moment it doesn’t.
Interested in building out long-form collateral relating to any of these themes? We invite you to reach out to our team today for a discussion of our custom content capabilities.
Craig Hall is founder and president of Marketing Wiz, a financial marketing firm specializing in the independent wealth management space.
