Excess Returns The Market Illusion: Mike Green on Inflation, Geopolitics and the Hidden Recession
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Feb 27, 2025 Mike Green, an investment strategist known for his insights on market dynamics and economic trends, joins to unravel the complexities of today’s financial landscape. He discusses the outdated nature of traditional economic indicators in light of the gig economy. Mike explains how the Fed's interest rate hikes benefitted the wealthy while highlighting the dim realities masked by a strong S&P 500. He also draws parallels between current political and economic conditions and historical transformations, challenging listeners to reconsider their views on markets, inflation, and geopolitics.
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CFNAI and GDP Prediction
- The Chicago Fed National Activity Index (CFNAI) predicts GDP levels well, but this relationship has broken down recently.
- The CFNAI, focusing on cyclical components, suggests a recession, impacting manufacturing and interest rate-sensitive sectors.
Wealthy Household Spending
- Increased spending by wealthy households isn't solely due to the wealth effect, but significantly from higher interest income.
- The Fed's rate hikes benefited the wealthy who hold cash assets, boosting their spending power.
Flawed Unemployment Data
- The Fed's focus on unemployment claims is flawed due to the gig economy's impact and stricter claim standards.
- Traditional unemployment data doesn't reflect reality as gig work masks unemployment and discourages claims.