Truist CIO says market reaction to Powell investigation is a ‘tepid’ initial response
Speakers
Keith Lerner
— Chief Investment Officer, Truist Wealth
Summary
Keith Lerner, CIO of Truist Wealth, discusses the market reaction to the DOJ investigation into Fed Chair Jerome Powell. He describes the initial response as tepid and says the key risk to watch is the 10-year Treasury, while noting dollar softness, international outperformance, and gold strength. Lerner remains favorable on gold, recommends greater global diversification, and still keeps a modest U.S. equity bias due to technology earnings momentum.
- Keith Lerner of Truist Wealth joined to discuss Fed independence and markets.
- He called the market's initial reaction to the Powell investigation tepid.
- He said the 10-year Treasury is a key risk to track this year.
- He noted dollar softness, international market outperformance, and gold up over 2%.
- Lerner said Truist remains favorable on gold this year.
- He recommends more global diversification and a greater pivot toward international equities.
- He still keeps a modest U.S. equity bias because technology earnings momentum remains strong.
- He mentioned Walmart's AI announcement as a market example.
Ideas
10-year Treasury move is key risk
Lerner says Fed independence is important and the way to track the political/Fed risk is through the 10-year Treasury. He calls the movement in the 10-year Treasury one of the biggest risks to the market this year, even though equities have been positive so far, and notes the initial market reaction has been relatively muted.
Remain favorable on gold this year
Lerner says Truist has been favorable on gold all last year and remains so this year. He points to gold rising over 2% amid Fed independence concerns, a softer dollar, and the need for more diversified portfolios.
Favor global diversification, keep modest US bias
Lerner recommends investors be more diversified and more globally diversified than a year or two ago. He expects a greater pivot toward international/ex-U.S. equities, while warning against overreacting to one headline, and says Truist still has a modest U.S. equity bias because the technology sector retains strong earnings momentum, though that U.S. bias is smaller than in recent years.
Tech still has strong earnings momentum
Lerner says that even though the U.S. technology sector has underperformed somewhat recently, it still has a lot of earnings momentum. He cites that as a reason Truist maintains a modest U.S. equity bias and notes the market's positive reaction to Walmart's AI announcement as evidence of ongoing tech/AI momentum.
