Operating at the Intersection of Technology and the Capital Markets
Tag: fiscal stimulus
Assuming the recession deepens in 2023, 2024 won't be pretty, but not for the reason many may suspect. 2024 could be the year that sees more helicopter money mailed to U.S. households which, if it happens, will kick off a fresh round of steep price inflation. Let's begin with the premise that we are in … Continue reading A Further Slowdown Followed By Easing, Stimulus and More Inflation in 2024?
I believe that Inflection AI is yet to generate revenue. However, in this AI-bubble world, a $4 billion post-deal valuation on a $1.3 billion capital raise ($1.5 billion in total capital raised-to-date), sounds less crazy than the "AI"-related valuations I see in the public markets. If you have heard Bill Gates talking up "AI agents" … Continue reading Inflection AI. Reasonable as AI Valuations Go?
The equity market is too sanguine. Things feel too still. Could this be the calm before the storm, or, will another round of Fiscal stimulus and Fed easing abort the storm on the horizon, fiscal debt and inflation be damned? It is difficult to make a call on the fundamentals whether it be the price … Continue reading Nothing To See Here. Or Is There?
There are all sorts of fiscal stimulus programs associated with the CARES Act (a COVID relic), that are still in effect. The New York Times recently wrote about the Employee Retention Credit which has provided approximately $150 billion in refunds to date. While Total Tax Refunds as a Percentage of Gross Tax Collections normalized in … Continue reading Tax Refunds as Fiscal Stimulus & Inflation Catalyst
Core CPI accelerated month-to-month to 0.5% (from 0.4% in January), as "Shelter" accelerated to 0.8%. Our view is that the Fed will continue to hike rates but may slow the pace of QT, particularly as it relates to Treasuries. The Fed says it will maintain interest rate hikes as the Banking sector stumbles. More importantly, … Continue reading Price Inflation Persists. Now What?
The Atlanta Fed's GDPNow Q2 Real GDP estimate was -2.1% as of July 1st. This marks the second consecutive negative Real GDP quarter which means we are officially in a recession. A recession in 2022 was an easy call for us to make as there was essentially zero probability of the U.S. economy growing in … Continue reading It Is Official. We Are In A Recession.
Shares of junk companies such as American Airlines (AAL) and General Electric (GE) are back where they traded during the COVID doldrums. What was gained by bailing out these shit companies or the thousands of zombie companies that received COVID relief money? All of that wasted capital - trillions of dollars - that was printed … Continue reading Junk Sinks To The Bottom of The River
The CPI data category "Owners' Equivalent Rent" ("OER"), uses data derived from surveys of homeowners in select markets rather than real world data. This technique allows the BLS and the Federal Reserve to understate price inflation. OER understates CPI by 1% or more. September's 5.4% CPI increase was understated by at least 1% per our … Continue reading How The CPI’s Fuzzy Math Understates Inflation
Economists pushing the narrative that Real GDP growth will climb back to mid-single-digit percentages in 2022 have got it wrong. The combination of persistent price inflation and weak labor participation will ensure that Real GDP remains range bound between zero and 2%. The sooner Wall Street pundits learn to say "Stagflation" the more honest conversation … Continue reading Real GDP Growth Will Not Rebound In 2022
The Fed's "Fed Funds Rate" forecast for the next several years is not realistic. Our view is that the Fed will move to raise its Fed Funds Rate more quickly than its published forecast (see page 2 of 17). The Fed anticipates median Fed Funds Rates of 0.3%, 1.0% and 1.8% in 2022, 2023 and … Continue reading Fed Funds Rate Will Increase Faster Than Fed’s Forecast
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