75 basis points: the biggest rate hike by the Federal Reserve since 1994 with additional aggressive moves expected. It looks like Fed Chair Jerome Powell is proving the naysayers wrong, who doubted he had the stuff to fight inflation. As influential Fed watcher Paul McCulley told WEALTHTRACK months ago Powell will “do whatever it takes” to fight inflation, just like Paul Volcker did in 1979/1980. Volcker succeeded, setting up conditions for the great bond bull market of the last 40 years but caused a serious recession to do it.

How do you manage through a cycle of rising interest rates and higher inflation? There aren’t too many money managers who have that experience and have a track record of excellence through many different types of markets. This week’s guest does. She is Mary Ellen Stanek, Co-Chief Investment Officer of Baird Advisors.

Stanek was recently named Morningstar’s Outstanding Portfolio Manager of 2022 for her “disciplined and risk-aware approach, thoughtfully navigating various market environments,… and generating impressive absolute and risk-adjusted returns” in her 22 years at Baird.

I interviewed Stanek a few days before the Fed meeting but she was prepared for it. We talked about the need for the Fed to get more aggressive in word and deed – which they did, where we are in the interest rate cycle – early days yet, and why she says “bonds are back!”

WEALTHTRACK Episode #1851 broadcast on June 17, 2022

Listen to the audio-only version here:

MORE INFO…

Investment legend Jeremy Grantham is known for his prescient forecasts of some major turning points in the markets over the years including his “epic bubble” characterization last year. He elaborated on the theme on WealthTrack saying that not only was the stock market trading in the stratosphere but so were the housing, commodity, and bond markets, the latter being the biggest bubble of them all.

WEALTHTRACK July 2, 2022

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MARY ELLEN STANEK

Co-Chief Investment Officer, Baird Advisors,
President, Baird Funds

ACTION POINT

PAY ATTENTION TO LIQUIDITY IN YOUR PORTFOLIOS

Cash & Equivalents:

Cushion against market declines
Provide funds to invest

High-quality funds or securities:

A potential source of liquidity
Psychological comfort

ONE INVESTMENT

COMPELLING VALUES

OWN MUNICIPAL BONDS

AA rated 10-15 year maturities yield 4%, 7% tax-adjusted
New York & California taxpayers around 8% tax-adjusted
Provide a solid portfolio foundation

WEB EXTRA

SERVANT LEADERSHIP MENTALITY

Baird is recognized as one of the best places to work by Fortune magazine and others. Baird Funds’ President Mary Ellen Stanek explains the importance of having what she calls a servant leadership mentality to serve clients, colleagues, and communities.