Despite hawkish rhetoric the Federal Reserve’s monetary policy remains accommodative. Real interest rates remain negative by a wide margin (8.50% CPI compared to a 2.25-2.50% Fed Funds Rate range) and we are nowhere near a “neutral” rate. Our outlook calls for muted Real GDP growth and high prices (i.e. Stagflation) for years to come. Commodities and alternative assets may provide some inflation relief.
Anemic Growth and Persistent Inflation: Our best guess is that Q3 will be another quarter of negative Real GDP as will Q4 as will all of 2023. Against this backdrop inflation as measured by the CPI will remain well above 2% for all of 2023 and 2024 as we have written ad nauseam.
Persistent Inflation: Inflation well north of 2% is here to stay for another 3-5 years – at least. Therefore look to commodities and alternative assets as a hedge against inflation.
- See our TEK2day Alternative Asset piece and podcast (including our Spotlight Report) HERE.
- Read our book – Stagflation Is Imminent – HERE.