Don't Give Up on the 60/40 Portfolio, Says Schwab's Jones

The video discusses the impact of CPI data on interest rates and the yield curve inversion, which signals potential economic trends. It explores the reliability of different yield curve signals in predicting recessions and the challenges posed by quantitative tightening on Fed policy. The viability of the 6040 investment portfolio is debated, considering recent market trends. Finally, the video highlights attractive investment opportunities in bonds and treasuries, emphasizing investment-grade corporate bonds and municipal bonds for different durations.

What is the likely market reaction if the upcoming CPI report shows a higher than expected core month-to-month change?

• The Fed will halt all tightening measures.

• The market will build in 75 basis points going forward.

• The yield curve will steepen significantly.

• The Fed will likely cut interest rates.

Which yield curve spread is considered a more reliable signal of recession?

• Five-year to thirty-year spread

• Three-month to ten-year spread

• One-year to five-year spread

• Two-year to ten-year spread

What is a potential consequence of a persistently negative yield curve inversion?

• Increased economic growth

• Higher inflation rates

• Slower economic activity due to feedback through credit and lending

• Immediate recovery in stock markets

What challenge does quantitative tightening present to the Fed's monetary policy?

• It simplifies the balance sheet management.

• It makes it easier to cut interest rates.

• It leads to immediate economic expansion.

• It creates distortions if combined with rate cuts.

What is the expected outcome of the Fed's balance sheet reduction over the next few years?

• No change in the balance sheet size

• An increase in the balance sheet size

• A decline of two to two and a half trillion dollars

• A decline of one to one and a half trillion dollars

What is the current stance on the 60/40 investment portfolio strategy?

• It should be completely abandoned.

• It still makes sense as a base case.

• It guarantees high returns in the short term.

• It is only suitable for high-risk investors.

Which type of bonds are considered attractive for higher income investors according to the discussion?

• Long-term treasuries

• Municipal bonds

• High-yield bonds

• Emerging market bonds