There are many reasons to be optimistic about the economy. Nobody can predict exactly how our nation’s budgetary constraints will play out, but it is important not to lose sight of them, especially when the economy is strong.
The Muni market is a good place for investors to have a positive social impact with their investment holdings. Our firm has not offered a specific ESG strategy, but we have always placed an emphasis on these types of Muni investments.
We have concerns about the rapid growth of Muni ETFs and the liquidity mismatch that exists. Investors may suffer performance drag caused by this mismatch during periods of stress in the Muni market due to negative fund flows caused by investor redemptions.
We do not believe current economic conditions warrant a Fed policy which is so restrictive it might create an inverted yield curve. Unfortunately, the Fed has a history of tightening credit conditions until something breaks. We would like to believe this time will be different.