Tag: monetary policy

How The CPI’s Fuzzy Math Understates Inflation

How The CPI’s Fuzzy Math Understates Inflation

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

Fed Funds Rate Will Increase Faster Than Fed’s Forecast

Fed Funds Rate Will Increase Faster Than Fed’s Forecast

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

Powell Acknowledges Inflation Could Persist Longer Than Anticipated

Powell Acknowledges Inflation Could Persist Longer Than Anticipated

Fed Chair Powell's statement to be made Tuesday at 10:00am ET to the Committee on Banking, Housing, and Urban Affairs acknowledges that inflation may not be as "transitory" as the Fed initially thought. Powell's statement to the committee is below. Powell knew this would be the case months ago but the Fed will never admit … Continue reading Powell Acknowledges Inflation Could Persist Longer Than Anticipated

A Fed Critique By Time Stamp

A Fed Critique By Time Stamp

We critique Fed Chairman Powell's recent FOMC YouTube clip comments (video below) by time stamp. 0:07 - The Fed continues to purchase Treasuries ($80 billion per month) and MBS ($40 billion per month), thereby artificially suppressing interest rates while inflating the money supply. The Fed's actions - increasing the money supply - are solely responsible … Continue reading A Fed Critique By Time Stamp

Fed Officials Trading Behavior Is Disappointing, Not Surprising

Fed Officials Trading Behavior Is Disappointing, Not Surprising

One would think Fed officials would have the common sense to not trade in stocks at a time when the Fed's heavy hand dominates the capital markets. Fundamentals have mattered little since April 2020 as a result of the Fed's ultra-dovish monetary policy. Yet as reported by the Wall Street Journal certain Fed officials engaged … Continue reading Fed Officials Trading Behavior Is Disappointing, Not Surprising

Interest Rates Follow Real GDP

Interest Rates Follow Real GDP

Interest rates have historically followed Real GDP. The below graph plots the 10-year Treasury at constant maturity vs. the year-over-year change in Real GDP as measured each quarter. It will be interesting for markets ("interesting" meaning "disruptive"), should the Fed tighten in what is now a slowing economy in Real GDP terms. Reach us at … Continue reading Interest Rates Follow Real GDP

It Is Beginning To Look Like Stagflation

It Is Beginning To Look Like Stagflation

The Atlanta Fed's real GDP estimate of 3.7% is well below inflation as measured by the Fed (CPI of 5.4%) and well below any real world price inflation measure. We do not subscribe to the Fed's theory that price inflation is transitory. Our view is that price inflation will grow from here. If real GDP … Continue reading It Is Beginning To Look Like Stagflation

Leveraging The Fed’s Digital Dollar

Leveraging The Fed’s Digital Dollar

The Fed's digital U.S. Dollar will happen. The question is which FinTech firms and traditional Financial Institutions will best leverage it. The Fed will quickly become a FinTech firm and Consumer Depository Institution of primary importance once it goes live with its digital U.S. Dollar. A whole new slate of FinTech firms will rise, building … Continue reading Leveraging The Fed’s Digital Dollar

Our View On Fed Tightening and M&A

Our View On Fed Tightening and M&A

Our view is that the Fed will only truly pursue an extended tightening course (full wind down of QE followed by rate hikes), if price inflation continues to where the Biden Administration feels it will cost the Democrat Party in the 2022 mid-term elections and/or hurt Biden's chances for re-election in 2024. The Fed is … Continue reading Our View On Fed Tightening and M&A