Regardless of Powell’s convictions I think the more important factors are our sovereign debt level and tax receipts collected. Our debt/GDP ratio went from 130% down to 122% with 8% CPI inflation. Tax receipts don’t even cover all of entitlements and interest expenses. If FED lets a recession happen tax receipts get even lower and their aren’t enough bond buyers to fund government let alone our debt. FED will have to print (start buying bonds again ie QE or some form of QE) into inflation to keep the lights on.
Excellent video as always. I think some of the confusion I have with these videos centers around time frames.
I don’t see any real scenario where the current Fed funds rate is in fact the peak in the short term. I can’t imagine the FED not increasing the FED funds rate in May and June for example. And probably by .5 points. Unless of course something dramatic changes in the economy between now and then.
I could definitely see the FED starting to raise the FED funds rate and a year from now inflation peaks and after it is is considerably higher than today, it starts to back off as tightening (including from the bond market) slows the economy. Where it announces either a slow down or reversal of Fed funds and an end to QT or even QE.
I wonder if you would be so kind to address the time frame issue. Again this video seems to imply that the current FED fund rate has peaked and that would be truly shocking to me and many others who are carefully listening to the FED. I could definitely see it peaking a year from now, but not in the short term.
Another great video. Being a visual person the charts you produce along with your interpretation of them is pure gold.
It will be interesting to see the next CPI (I think due this week) readings to see if the base effects you have discussed previously start to play out and we see a decrease in CPI. If this happens along with a decline in the PMI readings then it seems the FED will turn dovish and look to QE as the only means available to stimulate the economy and miss a double dip recession.
March Core CPI readings remained almost the same as February readings, while higher CPI was mainly due to energy prices soaring during the Russian invasion. Energy prices have already cooled down suggesting that April’s CPI is expected to drop. This may well prove to be a dramatic catalyst for the next final leg upwards.
Regardless of Powell’s convictions I think the more important factors are our sovereign debt level and tax receipts collected. Our debt/GDP ratio went from 130% down to 122% with 8% CPI inflation. Tax receipts don’t even cover all of entitlements and interest expenses. If FED lets a recession happen tax receipts get even lower and their aren’t enough bond buyers to fund government let alone our debt. FED will have to print (start buying bonds again ie QE or some form of QE) into inflation to keep the lights on.
Excellent video as always. I think some of the confusion I have with these videos centers around time frames.
I don’t see any real scenario where the current Fed funds rate is in fact the peak in the short term. I can’t imagine the FED not increasing the FED funds rate in May and June for example. And probably by .5 points. Unless of course something dramatic changes in the economy between now and then.
I could definitely see the FED starting to raise the FED funds rate and a year from now inflation peaks and after it is is considerably higher than today, it starts to back off as tightening (including from the bond market) slows the economy. Where it announces either a slow down or reversal of Fed funds and an end to QT or even QE.
I wonder if you would be so kind to address the time frame issue. Again this video seems to imply that the current FED fund rate has peaked and that would be truly shocking to me and many others who are carefully listening to the FED. I could definitely see it peaking a year from now, but not in the short term.
Another great video. Being a visual person the charts you produce along with your interpretation of them is pure gold.
It will be interesting to see the next CPI (I think due this week) readings to see if the base effects you have discussed previously start to play out and we see a decrease in CPI. If this happens along with a decline in the PMI readings then it seems the FED will turn dovish and look to QE as the only means available to stimulate the economy and miss a double dip recession.
Sorry Charles this was meant for the normal forum but I was reading your comments and must have clicked reply under your name 🙂
Are you a buyer of TLT here or suggest wait until 123? Or would you be a short term seller while interest rate spikes play out and a buyer later?
Probably the best macro video’s on YouTube for 6 month to 12 month outlook! Every video and post is extremely high quality.
March Core CPI readings remained almost the same as February readings, while higher CPI was mainly due to energy prices soaring during the Russian invasion. Energy prices have already cooled down suggesting that April’s CPI is expected to drop. This may well prove to be a dramatic catalyst for the next final leg upwards.