Why investors should pay attention to William Dudley's speech

Why investors should pay attention to William Dudley's speech (Part 1 of 5)

Why investors should pay attention to William Dudley’s speech

About Dr. William Dudley

William Dudley is the President and CEO of the Federal Reserve Bank of New York and Vice-Chairman of the Federal Open Market Committee (or FOMC), the monetary policy–making arm of the Federal Reserve System. Before joining the New York Fed in 2007, Dudley worked at Goldman Sachs from 1986, holding the position of Chief Economist for a decade. Dudley holds PhD in Economics from the University of California at Berkeley.

William DudleyEnlarge Graph

About the speech

Dudley spoke at length about his views on the housing market, labor market conditions, the possible timing and pace of interest rate hikes, and the new monetary policy tools the Fed is testing at an event organized by the New York Association for Business Economics. In this series, we’ll try to decipher his speech and share important takeaways with our readers.

Why are we covering the speech?

Dudley is the Vice-Chairman of the FOMC and one of the 12 voting members who vote to set interest rates. The FOMCs actions have remained the talk of the town ever since Ben Bernanke hinted at tapering QE3 in the FOMC’s June 2013 meeting.

Dudley touched upon many significant points that can affect fixed income investors. The speech can also give our readers an idea of what’s happening with the economy and how the Fed plans to react to the economic changes.

As the speech covers the overall economy, housing market, labor market, and the Fed’s monetary policy, it’s relevant for investors interested in Treasury bonds (TLT), investment-grade bonds (LQD), and high-yield bonds (HYG) as well as stocks (SPY). The Fed’s decision to taper its asset purchase program has also affected emerging markets (EEM), as investors sought flight to safety in anticipation of tighter monetary policy. So our readers interested in emerging markets should also find this series useful.

To find out why GDP growth has remained subdued over the last five years, read on to the next part of this series.

The Realist Discussions

  • 101fitness

    I always like reading the “Experts” opinions and see them avoid some of the real problems because of Politics. Not one word about higher Taxes and its effect on disposable income. Not one word about “uncertainty” due to Obamacare. Not one word about millions of illegals pouring across the Border. Is there anyone with a I.Q. above 80 that thinks these are not relevant factors? I wasted my time reading this “experts” opinion.

    • Mayur Sontakke

      Dear 101fitness

      Thank you for taking off time to read and comment on the series. This series is our interpretation of Dr. Dudley’s speech on economic outlook. As a central banker, his comments are limited to the labor market conditions, inflation and possible monetary policy actions. While I agree that the points you have mentioned are relevant and of high importance, they are not covered here simply because they are out of scope of the article. We keep covering other expert opinions. I am sure we would be covering the points you have mentioned in some or the other series. Thanks.