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Link to report referenced in podcast: https://www.employamerica.org/blog/july-inflation-preview-used-car-downside-can-hasten-path-to-2-core-pce-outcomes/
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first to comment. lets gooooo!
"I recommend you Panic." H.H. 😀
Was does a loaded ex-hedgie need a patreon fee to reveal the full extent of his wisdom? Drug money???
4/10
Thanks Hugh
This kid. Pre 2008 was total incompetence by the Fed. They then made the situation far worse with their "quick responses" to prop up the mess.
The complete rentier nightmare we have today is because of these fools.
The recession is going to come in external markets, who don't have access to 30y fixed: Canada, Australia, UK
Morgage rates fixed is a loss to those who did the finance
It doesnt just disappear the conciconces will be felt it will move to other parts in the system
Friday and another Acid Capitalist Podcast
This week I sampled the teenage kicks of Skanda Amarnath @IrvingSwisher
With the heat, I'm struggling with names like that.
I couldn't decide if I was talking with the Swedish bank, Skandia or the nat gas hedge fund that blew up years ago, Amaranth.
In reality, Skanda is a child like prodigy of the NY Fed, a former hedge fund strategist, and he's now heading up the @employamerica foundation. The kid can weave some funky macro threads
What did I get from our meandering conversation ?
First, I had to come clean with my mea culpa.
I discussed this last week with @BobEUnlimited
I failed to see the household and corporate sector had immunised themselves from Fed rate hikes
That they had fixed their interest rates for 30 years at the remarkably low rates prevailing in 2020/21
Monetary policy had an almighty rate barrier to cross
A block on its effectiveness
A great economic sound barrier to overcome
Fed hiking cycles now mirror bankruptcy
Slow, Slow, Bloody Fast…
The resulting sonic boom will likely break things
Initially, in 2H 2022, the more the Feds hiked, nothing
Like air waves impeding the passage of a rocket ship
The Feds were confronted by an almighty rates barrier
They needed more speed, more and more rate hikes
The Fed had to get supersonic to overcome the rate insularity of the private sector
They achieved a supersonic boom in March 2023
They probably achieved Mach III when their supersonic rates felled several large US banks
Potency at last !
Less drag.
Who's the boss now ?
💪
But the resulting sonic boom broke some of the banks
Creating yet more aerodynamic drag…
3-month SOFR JUN 2024 fell by 2% points
The Fed was back at Mach I and impotent
Hence
The Bank Term Funding Rate Program
And further rate hikes
SOFR returned to 5%
The Stockmarket went nuts to the upside during this interregnum
Happy landing
Soft landing
No landing
Even the commodities caught a bid to the upside
But, as we near the end of summer,
Fed policy has regained supersonic speed, Mach III
The shock waves from passing this barrier
The Fitch sovereign downgrade is just one
Waning credit expansion from the bank sector another
They've been unable to pay back their federal SoS assistance
Fed omnipotence is on the threshold once more
Its breaching the private sector's immunity to rates
The shock waves are unknown
But likely they'll break more things again
Consider that present rates now handcuff the economy,
That the economic flow is ebbing day-by-day
Slow, slow…fasssssttttttt ??
Economic asphyxia ??
Want a new car and house ? Got to move state ?
That'll cost you 62% of the median US household income
– hat tip to someone on X, apologies for lack of tag
You work all day and you get to keep a third…
Where do I sign up for that program ?
Want a fiscal boost if things slow down quickly ?
If some financial institution has to confess the true mark ?
Forget it
The Treasury is politically tapped out with financing costs approaching 3% of GDP
That's just a fact
And these Fed Chuck Yeagers
These guys ain't made of The Right Stuff
They ain't gonna ease up on the throttle anytime soon
Sticky fingers rather than sticky inflation
Reputation is everything when you live in a house of subterfuge
The suits, the Egyptian et al, former bond kings, treasury secretaries, the consensual mouthpieces of the bland
They've convinced the Feds that a rate pivot will condemn them,
No one wants the mantle of being heir to Arthur Burns
So, we got supersonic Fed speed and no brake
It's worse overseas…
The BoE has gone very supersonic
Ridiculed for their rate hiking impotency
All those reseting 2 year variable rate mortgages
Are gonna make the UK a very scary place
Bankruptcies already in the pages of the FT
Cable looks ripe to rumble much lower
Canada, Australia also.
Their FX trades at the 2008 wides
Hong Kong and its $ peg.
Boy that stockmarket is heavy
The yen voices in my head scream 200 $/Y
And the Mad Max red cabbage, China ?
What they got ?
I don't see it.
Imagine all those waste-of-timers
The ones that clog the airwaves and get quoted in the financial press
A complete bunch of clowns…
What they hoping for ?
The subterfuge of yet more suicidally wasteful infra structure spend
China's national debt was 30% GDP back in 2008
Today its fast approaching 100%, no free lunch
But imagine a $30 trillion over mark on your domestic property stock ?
They say China ain't like us. That they can control stuff
They don't have the retribution of financial markets to deal with. They got a closed monetary system
Can just rob more wealth from the household sector
You know, extend and pretend.
Really long debt maturities
Negative real rates of return on savings products
Except, having done this for decades
The Chinese household sector is buckling
Just how long can you beat a horse before it collapses ?
So how do you deal with a sovereign asset bubble ?
Sovereign asset bubbles almost always result in currency devaluations, just ask @BobEUnlimited
It was politically impossible for the Japanese in the 1990s, a US ally et al
But the country of the red cabbage ???
All that Taiwan envy…
Desperate times, that chart screams caution
Mucho recent intervention achieved nada…
Merde, how I like the smell of global macro in the morning😎
Hope you enjoy the show
I'm seeking guests.
I need risk takers.
Portfolio managers
People willing to tread the light fantastic
The smart ones fed up with the banality of
Other peoples questions
Come on, DM me
The Acid Capitalist salutes the risk takers
The Contentious
The Curious
And especially the Playful.
patreon.com/HughHendry
buy hats from AcidCap.com
Maybe could do so much better giving all your content away for free and not charging people IMO. Love your content and I'm trying to buy but have to prioritise.
this is what is happening in my business.
"Eighty-one percent considered the current economic conditions to be bad, a jump of 23% since the survey recorded six months earlier.
The dark outlook is firmly linked to poor profit prospects for the sector, with only 2% reporting that they were making a profit currently, down a massive 26 points from January when 28% reported making a profit. '
TLT 🚀🚀🚀🚀🚀🚀
lil guy lost me the moment he got all giggly talking about and praising the FED
The FED culture and its lack of diversity when it comes to self criticism and ideology , is probably one of the worst in any organization in the world.
Wait so this guy wants the fed to control supply? What?
If there was a reverse praise of bill ackman section on Patreon I'd sign up immediately.
Hugh, your call on tlt is absolutely sucking wind. It could be months before recession is called, if it's called. You have lead many unsophisticated followers into losses we didn't have to eat. Horrible timing my friend.
Skanda is great
Hot sunny days in Scotland in June? 🙂
The sad fact is that the Federal Reserve could have done a much better job of "fighting inflation" by focusing on the balance sheet first, and interest rates second. Reduce balance sheet by decreasing/removing the IORB rate to get bank assets off the Fed Balance Sheet. Would've shifted the shock from employees, general corporates to banking system. Interest rates have little effect when balance sheet is > 16% of GDP. Just saying…we could've changed the dynamics had the Fed gone down that path. But the Fed knows that, the question is why did they chose the path they've clearly chosen?
Discouraging to hear the best of this generation think the Fed has any significant impact on the monetary factors that influence inflation.
Oh Bill Ackman, the kind of guy that will cry on the news so that his shorts print
Hugh…im a nomadic South East Asian Trader…
The chicken run is on again here in SEA.
The EU, The Americas and everywhere else there is smart money is coming here again just like in 1986, 2007 and now again in 2022…
It seems to be more & more apparent the EU, The Americas have little to no organic growth since lets say maybe 2006…
SEA is where The EU & The Americas were within the Industrialised Era..in the late 1800`s through to the 1950`s..so there is 250 years of organic growth left in SEA arguably…"DEMOGRAPHICS"…
i think the skit you did with Drukenmiller was pure "GENIUS"….AND NOBODY GETS IT !!!!!!!!!!!!!!!
Any chance at all we can have another discussion with PURE GENIUS again…please….TIK TOK TIK TOK TIK TOK… "GFC 2.0"…
So, Please tell us just exactly WHAT are the root causes of inflation since it simplistic to think of it being the labor market apparently.
From nobody gives a damn to macroeconomics to everybody cares too bloody much about it (labor markets) – quite a fallacy in like 25mins of the interview