Aug 30, 2021
Summary:
Investors alike are asking: where are the markets heading, and what
is the Fed going to do? Today, we have Jim Welsh on the podcast to
give us some insights about what is happening and what is to come
in the ever-changing market. He provides useful insight on what is
going on in regard to the treasury, thoughts on Afghanistan and the
repercussions that may follow, and what to expect out of the dollar
as currencies around the world shift.
Highlights:
-Where are the markets heading? What is the fed going to do?
-Everyone talking the loudest are not voting members on the fed
this year
-The fed is in somewhat of a box; QE purchases were intending to
stimulate demand in the housing market, but housing prices and
rents are going up
-People who use ‘tightening’ to describe what is about to happen
are missing the math behind the process
-Treasury had a balance of $1.6 trillion—since March, it has gone
down to $400 million
-Treasury yields have come down
-We are going to see an avalanche of issuance in the fourth
quarter—when does congress raise the debt ceiling?
-Lack of effective supply in the treasury market has allowed
treasury yields to come down, which is going to switch dramatically
in the fourth quarter
-Markets are anticipating higher rates; Welsh believes the trend is
going to be higher
-Inflation is going to be anything but transitory; either way,
higher consumer prices are in the future
-Companies don’t have to worry about market share because all
companies are in the same boat
-It was only a matter of time before the Taliban took over
Afghanistan—it was just a question of when
-There are going to be repercussions for many years
-Have we turned the corner from the health issues that have been
facing the world? The current wave of infection should likely peak
soon and then recede—we should hopefully see cases come down
soon
-If rates go up, this will most likely not lead to a stock market
crash
-We will still see liquidity flowing in—just slightly less over
time
-The dollar will probably benefit and strengthen in the next 12
months
-Gold and the gold stocks are at a make or break point
-Dollar strength comes from being better than other currencies, but
in Europe, a crisis will most likely not come to bear
-There is so much liquidity, and people are trying to park it to
get a positive rate anywhere they can
-Bank reserves are part of M2 money supply, and the money in the
reserves isn’t getting into the economy
-If bank reserves turn into bank loans, then this has positive
implications for economic growth and inflation
Useful Links:
Financial Survival Network
Macro Tides