Operating at the Intersection of Technology and the Capital Markets
Tag: Jerome Powell
The Fed's economic projections coming out of last week's FOMC meeting are far too optimistic. Fed's Real GDP projections for 2022, 2023 and 2024: 1.7%, 1.7% and 1.9% respectively. 2022 is going to be a zero percent to down Real GDP year in our view. 2023 will be flat with 2022 in our view. 2024 … Continue reading The Delusional Fed
It would have made for great theater if the Fed truly wanted to win the war against inflation. Unfortunately, the Fed already blinked. If the Fed's mission truly was to get CPI back down to 2%, the valuation froth that began to manifest in 2019 peaking with 2021's valuation mania (which made the 1999-2000 dot … Continue reading The Fed Already Blinked
If the Fed were to follow today's 75 basis point increase in the Fed Funds Rate with 100 basis point increases during each of the July and September FOMC meetings, it still would not be sufficient to curb inflation this year. 2022 will be marked by a recession, elevated prices for goods and services, and … Continue reading Too Little Too Late. The Inflation Cake Is Baked.
The Fed's FOMC meeting will take place this week on June 14th and 15th. Fed Chair Powell has lost control of the inflation narrative. The Fed needs to act boldly to capture control of the inflation narrative. Price inflation was obviously never going to be transitory given the Fed grew the money supply as measured … Continue reading Will Powell Surprise To The Upside?
Will Fed Chair Powell increase the Fed Funds Rate for three consecutive meetings? We say look to the credit markets. Consensus amongst investors seems to be that the Fed will execute two consecutive rate hikes but may pause before executing a third. Our view is that Fed Chair Powell will execute Fed Funds hikes at … Continue reading Will He Or Won’t He?
Powell was confirmed for a second term as Fed Chair on May 12th. His nomination was held up for months in the Senate. Powell's confirmation will provide him with temporary courage - enough to talk in a hawkish manner, enough to take the Fed Funds Rate to 2% by summer's end - but not enough … Continue reading Jerome Powell Will Talk Tough This Summer
The Fed raised its Fed Funds rate by 50 basis points today as we and many others expected. The problem is that it is too little too late. It will be impossible for the Federal Reserve and its perma-dove Chairman Jerome Powell to take CPI back down to 2% in relatively short order without causing … Continue reading The Fed Won’t Have A Free Lunch
We expect a 50 basis point increase in the Fed Funds rate tomorrow. More importantly over the next number of months will be the Fed's actions with respect to its balance sheet. Our focus will be on the Fed's balance sheet over the next number of months (see chart below), which has ticked down recently … Continue reading Tomorrow’s Fed Decision
Our view is that the Fed will reset its 2% inflation target approximately one year from now if it wants to salvage the last vestiges of its credibility. While April's CPI number may come down some due to the retreat in the price of oil, we could continue to see core inflation march higher for … Continue reading The Fed Will Reset Its 2% Inflation Target
Our bet is the Fed will exit 2022 at 2%. If you look at the Fed over time, it has historically maintained interest rates close to the 2-year Treasury (see below). https://soundcloud.com/ceorater
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