According to recent comments by Federal Reserve Chairman Jerome Powell, the central bank still has more than $4 trillion in bonds left on its balance sheet. According to Mr. Powell, the Feds may not raise interest rates in 2019. But anything can happen while Donald Trump sits in the White House.
China and Russia continue to sell U.S. bonds, and that should continue, according to a recent report by the Federal Reserve. The bond market is not the safe haven it once was for investors. The yield spread between ten-year and two-year bonds doesn’t do much for investors who want to reduce their exposure in the stock market. Shervin Pishevar, the angel investor who backed Uber when it was a startup, made that point clear in his March 2018 tweetstorm.
Shervin Pishevar’s reputation for picking startup winners is a legend in the investment world. Not only did Pishevar back Uber when he was an asset manager for Menlo Ventures, but he also put up the money to fund Warby Parker, Postmates, Airbnb, and Dollar Shave Club. Those startups became consumer favorites, and Shervin Pishevar’s reputation soared around the world.
But Shervin hit a personal brick wall in 2017 when he was the CEO of Sherpa Capital. He resigned as CEO and decided to stay away from day-to-day investing for a couple of months. But in March 2018, Shervin Pishevar put his tweeting thumbs to work, and he tweeted non-stop for 24-hours. His more than 50 tweets gave investors a lot to think about back then. Most investors enjoyed the rewards of a bull market in 2018 until the bottom fell out in December. Pishevar warned investors that could happen in one of his tweets.
The Pishevar tweetstorm made some investors think twice before they invested in bonds or stocks. Shervin Pishevar realized Donald Trump’s economic agenda would hurt investors as he turned up the heat on China. He knew Trump’s tax cut was a short-term fix for an overvalued stock market. But most investors didn’t believe Shervin Pishevar’s tweets until Trump shut the government down. But they believe his tweets now.