Danielle DiMartino Booth & Jim Bianco: Danielle DiMartino Booth & Jim Bianco: Recession or "No Landing," Rate Cuts, & Bitcoin vs ETFs
Feb 15, 2024
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In this episode, macro strategists Danielle DiMartino Booth and Jim Bianco discuss inflation data, recession scenarios, rate cuts, stock market trends, Fed spending and national debt, Powell's legacy, and Bitcoin vs ETFs.
The disparity between Trueflation and CPI inflation measures highlights the challenges of accurately assessing and understanding inflation.
Advancements in technology and remote work are reshaping the labor market, leading to changes in consumption patterns and job displacement fears.
Issues of inflation, income disparity, and uncertain job prospects are central concerns for voters in the upcoming election, with potential policy actions impacting the economy.
Deep dives
Divergence between Trueflation and CPI
The podcast episode discusses the differences between the Trueflation and CPI inflation measures. Trueflation, which is based on raw data and reflects real-time economic conditions, shows inflation at around 1.39%. On the other hand, CPI is influenced by weighting factors and currently reports inflation at 3.1%. The disparity in these measurements highlights the complexities involved in accurately assessing and understanding inflation.
Changing Nature of the Labor Market
The podcast explores how remote work and advancements in technology, particularly AI, are reshaping the labor market. Approximately 50% of the workforce can now work remotely, leading to changes in consumption patterns and demands for different services. Additionally, the rise of AI is expected to result in the displacement of jobs, but also the creation of new industries and employment opportunities that do not exist yet. This uncertainty and fear of job loss contribute to the overall economic anxiety felt by many individuals.
Implications for the Economy and Election
The podcast discusses the potential impact of these economic factors on the upcoming election. The issues of inflation, income disparity, and uncertain job prospects are central concerns for voters. The actions of policymakers, such as further stimulus spending or interest rate cuts, could influence the economy and shape voters' perceptions. However, with the exact nominees still uncertain, it is difficult to predict how the election will play out and what policies will be implemented to address these economic challenges.
The Stock Market's Divergence from Underlying Factors
The stock market's current high levels can be attributed to assumptions of future rate cuts by the Federal Reserve and increased federal deficit spending. However, this has created a false sense of security, as it is believed that the Fed will step in and provide support during future crises. The stock market is also facing competition from higher rates, making alternative investments like money market funds more attractive.
The Future of Interest Rates and the Federal Reserve
The podcast episode discusses the Federal Reserve's stance on interest rates and the potential direction for the next one to two years. While there is speculation on rates potentially reaching close to zero again, the focus is on the Fed's preference for keeping rates higher for longer. The Fed aims to continue shrinking its balance sheet and is determined to address issues related to the banking system and regulations. However, the episode also questions whether the Fed's actions are effectively addressing wealth inequality or if they are contributing to concentration of wealth among the top income groups.
In this episode with macro strategists Danielle DiMartino Booth and Jim Bianco we discuss:
Latest inflation data vs. 'truflation'
Danielle says we're in recession, Jim says we're in a "no landing" scenario
Remote work, wage growth, and AI's impact on jobs
Extreme wealth concentration
Will the Fed cut rates?
Why are stocks booming when rates are still high?
Government spending and national debt
Powell's legacy, the election year economy
Bitcoin and the spot Bitcoin ETFs
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Danielle DiMartino Booth is CEO and Chief Strategist for QI Research, an independent research firm. She spent 9 years at the Federal Reserve Bank of Dallas as Advisor to President Richard W. Fisher throughout the financial crisis until he retired in 2015. She's the author of "Fed Up: An Insider's Take on Why the Federal Reserve is Bad for America." Danielle's research firm: https://quillintelligence.com Follow Danielle on X https://x.com/DiMartinoBooth
Jim Bianco is President and Macro Strategist at Bianco Research. His wide-ranging commentaries have addressed monetary policy, the intersection of markets and politics, the role of government in the economy. Jim's firm: https://www.biancoresearch.com/visitor-home/ Follow Jim on X: https://twitter.com/biancoresearch
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