Tag: monetary policy

Junk Sinks To The Bottom of The River

Junk Sinks To The Bottom of The River

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 Fed Will Reset Its 2% Inflation Target

The Fed Will Reset Its 2% Inflation Target

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

A Recession Is Inevitable

A Recession Is Inevitable

It is inevitable that the U.S. Economy will enter recession this year should the Fed continue to tighten monetary policy as inflation persists. Wall Street is already seeing slowed activity with some M&A deals and credit pricings put on hold indefinitely or cancelled outright. The real economy will feel the negative effects of higher interest … Continue reading A Recession Is Inevitable

Inflation Will Cause The Next Recession

Inflation Will Cause The Next Recession

Our opinion is that the U.S. economy is already experiencing negative Real GDP (Inflation and the GDP Deflator are understated by the Federal Government in our view). We believe that the Federal Government's published GDP figures will eventually show flat-to-negative Real GDP in 2022 as consumers lose confidence and pull back on spending. Double-digit percentage … Continue reading Inflation Will Cause The Next Recession

Rate Hikes Are Not Perfectly Priced In

Rate Hikes Are Not Perfectly Priced In

The Financial press has pushed a variety of narratives around interest rate hikes. One narrative is that four 25 basis point increases are priced into the market. Maybe, maybe not.A second narrative that was pushed yesterday was that a 50 basis point increase for the Fed's March meeting was priced in. Unlikely so in our … Continue reading Rate Hikes Are Not Perfectly Priced In

The Baby Will Get Thrown Out With The Bath Water

The Baby Will Get Thrown Out With The Bath Water

The Federal Reserve will pursue some combination of modest interest rate hikes and potentially shrinking of its balance sheet / Quantitative Tightening in the coming weeks and months. The Fed's "Too Little, Too Late" monetary policy will do little to curb inflation. However, the Fed's modest tightening will likely continue to drive Equities lower - … Continue reading The Baby Will Get Thrown Out With The Bath Water

Cash Rich Stocks & Other Ideas To Hedge Inflation

Cash Rich Stocks & Other Ideas To Hedge Inflation

Hate to say we told you so, but this inflation train is moving into high gear and will remain strong throughout 2022, particularly as higher home rental prices start to flow through the Fed's home rental price surveys. Our view is that the Fed will be forced to accelerate its tapering effort to perhaps conclude … Continue reading Cash Rich Stocks & Other Ideas To Hedge Inflation

Lael Brainard As The Next Fed Chair Is More Likely Than Pundits Believe

Lael Brainard As The Next Fed Chair Is More Likely Than Pundits Believe

Ms. Brainard is a vocal advocate for a Fed-issued CBDC ("Central Bank Digital Currency"). China has rolled out its CBDC and the public is about to hear more about it during February's Beijing Winter Olympics. Thus, while the consensus is that President Biden will soon reappoint Jerome Powell to begin his next term as Federal … Continue reading Lael Brainard As The Next Fed Chair Is More Likely Than Pundits Believe

U.S. Labor Force Participation Is Stuck In The Mud

U.S. Labor Force Participation Is Stuck In The Mud

Forget the reported unemployment rate figures - that propaganda does not tell the true labor story as it does not contemplate unemployed workers who are no longer trying to find employment. A better measure of the labor market (as TEK2day readers know), is the Civilian Labor Force Participation Rate. This measure stood at 61.6% in … Continue reading U.S. Labor Force Participation Is Stuck In The Mud

Inflation Is A Primary Driver Behind The Economic Slowdown

Inflation Is A Primary Driver Behind The Economic Slowdown

Whether it is the Wall Street Journal, Bloomberg or CNBC, the business press fails to mention price inflation as a primary factor behind the economic slowdown as measured by Real GDP of 2%. Supply chain bottlenecks and the Delta variant are not exclusively responsible for the stagflationary period we are about to embark on where … Continue reading Inflation Is A Primary Driver Behind The Economic Slowdown