Investors should be under no illusion......the US faces a lose - lose scenario
couple of big signals to keep an eye out for:
This inflation number has a somersault roll that will
cause and effectwell beyond the US ....and as such play back into the volatility
global food and energy insecurity will be further erode as global financial conditions get tighter - increasing appreciation of the dollar which aggressively aggravates imported inflation and undermines their debt sustainability in and out of all domestic financial markets
the worlds most powerful central bank has got it wrong in a big way and the consequences have not even begun to unfold yet ...they dilly dallied around Q1 as inflation showed signs of exactly this saying it was 'transitory'....ha! nope ....its not
it will ease for 8 to 10 weeks at this number of 9.1 ......then breakout again
the Fed has to be
far more aggressive and leverage productivity monetary policy asap or the 3rd wave inflation breakout will happen....
you cannot control inflationary expansion with interest rate rises - history is clear on this simple fact - especially when the globe has
record high levels of indebtedness.....
US Govt GDP to debt sits at around 250% today...ridiculous number
at the end of Jan 2022 US Fed debt crossed the 30 trillion line....I think its beyond 31.4 t now....
Imagine this number if they aggressively raise interest rates ....!!!! and that's just govt gdp / debt - thats why they are slow to lift
......big mistake .....inflation shock will come and it will be a dooozy
rising interest rates in a cooling / slowing economy is toxic for high debt levels - that is a simple financial realitynot shouting .....simply emphasizing( this is why all the infrastructure spend policies are stalled....chips act included.....they don't want to increase those debt levels in such an environment ......makes sense right ?
wrong......productivity, productivity - and more productivity investment is required through proper monetary policy ....
all the money they were throwing at markets was just keeping the casino rolling.....now the tap is off ....woops look what's happening.....imagine if they had thrown that figure at proper monetary policy initiative......we wouldn't be where we are right now
so bet ya this is what the Fed does .....(in the US)
they must respond to this and will ....maybe a full 1% rise in rates ....definitely .75% will happen
as per above too little too late unfortunately ....economic slowdown is here now.....demand easing
this rise puts income security at risk tightening spending further combined with reduced buying power due to the inflation number ( that the rate rise will only exacerbate)
Aus?
the
Reverse Bank ( cos they never get it right ) here did the same damn thing ???
same shyte ....different language .....and the extra worrying number here is that household spending in the goods and service sector has actually increased ?????
what does that mean - means we are oblivious to what is potentially about to unfold.....simply look at what Mr Lowe was espousing 6 months ago no change to interest rates till late 2023/4 ......nope....sorry Phil.....no idea
and levels of indebtness.....Aus holds the world record for personal debt to income at 180%.....can't get my head around that number but its real.
Enough from me on this subject -
apologies for boring everyone to tears with it .......luckily......and I mean luckily .....
none of this effects WBT .....
.....
that's the damn beauty of this disrupter ....it disrupts all normal concepts and realities to establish a new paradigm shift into a lucrative mass adoption commercial model.....
Ill be off the air for a while - increasing work commitments atm
keep up the great posts all and stay strong some - the news will be worth it I suspect
glah
(20min delay)