I am back with my CFA Society Chicago colleagues to speak about financial conditions, the outlook for the components moving forward, and what this means for various asset classes
To agree with a FED outlook is a brave position. That the FED is correct in forecasting zero rate cuts in 2023 may be popular at this time, seldon are FED forecasts right! By rejecting their forecasts one will be correct far more often than when aligning with them.
We have to ask the question of what are we disagreeing with. I disagree with a market that is pricing in rate cuts but then rallying stocks because it thinks there is a soft landing. I think there won't be rate cuts this year because inflation will stay persistently high, which will bring about a hard landing and then rate cuts next year. We push back against rate cuts this year. Even if inflation somehow falls to 2%, that does NOT mean the Fed needs to cut rates. How so we forget the discussion about the Fed needing to 'normalize' rates. 5% Fed funds is pretty normal
I enjoy these fireside chats that you publish. Always insightful.
To agree with a FED outlook is a brave position. That the FED is correct in forecasting zero rate cuts in 2023 may be popular at this time, seldon are FED forecasts right! By rejecting their forecasts one will be correct far more often than when aligning with them.
We have to ask the question of what are we disagreeing with. I disagree with a market that is pricing in rate cuts but then rallying stocks because it thinks there is a soft landing. I think there won't be rate cuts this year because inflation will stay persistently high, which will bring about a hard landing and then rate cuts next year. We push back against rate cuts this year. Even if inflation somehow falls to 2%, that does NOT mean the Fed needs to cut rates. How so we forget the discussion about the Fed needing to 'normalize' rates. 5% Fed funds is pretty normal