Dec 7, 2022
Summary:
As rates continue to increase, it is difficult to pinpoint the
Fed’s plan for the year ahead. I sit down and chat with Jim Welsh,
who explains the thinking behind the rate increases and how to plan
ahead using this information. Jim predicts that the Fed is going to
keep the funds rate and monetary policy tighter for a longer period
of time. Ultimately, we’re going to have to address problems that
have been building up for decades, and although inflation will be
reduced, it’s still going to hold above 3% for a while. Tune in for
more valuable insight from Jim.
Highlights:
-Back in March/April, no one thought they were going to raise the
Fed funds rate. By summer, people started to panic about rates
going up
-Rates increasing by 50 basis points does not represent a pivot
-They are going to hold the funds rate at a high level for all of
next year
-Rather than jamming on the breaks to ease, they’re aiming to do it
in a gradual manner—which will probably lead to a recession
-We don’t have enough people to fill the jobs that are open, which
is problematic
-Energy prices will probably stay at a higher plateau
-Globalization helped to bring costs down over the last 20
years
-We’re going to see a reduction of inflation, but it’s probably
going to hold above 3%. From there, we will see what the Fed
decides to do.
-We’re still seeing supply chain issues, commodity shortages, and
high deficit
-Either we’ve already started a bear market in the stock market, or
we are about to
-We’re going to have to address problems that have been building up
for decades
-Buy and hold isn’t working because the market isn’t buying higher
highs
-Every secular bull market has been followed by a secular bear
market
-China has used real estate residential development to power the
economy
-Real estate, however, will not continue to support the demographic
it has
-The risk of China going after Taiwan is rising
-The secular bear market affects a lot of things
-Rather than buying and holding, focus on being tactical
Useful Links:
Financial Survival Network
Macro Tides
jimwelshmacro@gmail.com