Hedgeye Podcasts The Best of Hedgeye: DiMartino Booth + McCullough: Fed Policy Mistake? Market Risk Rising
Nov 27, 2024
Danielle DiMartino Booth, a former Fed advisor and Chief Strategist at Quill Intelligence, shares her insights on the Federal Reserve's policy mistakes and their rising market risks. She examines the disconnect between inflation data and Fed responses, affecting housing affordability. The discussion also highlights the bureaucratic nature of the Fed, political pressures shaping monetary decisions, and the impact of fiscal policies on workforce participation. Booth's wit shines as she navigates these complex economic topics, making for an engaging conversation.
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Fed Policy Mistake
- The Federal Reserve is likely to make a policy mistake, either by raising interest rates or by not raising them.
- This is due to their lagging response to predictable inflationary pressures.
Double-Barreled Approach
- Following the 2008 crisis, markets responded to quantitative easing (QE).
- This time, QE and fiscal stimulus combined fueled inflation, impacting housing and prompting political concern.
Inflation and Housing
- Home price appreciation is a leading indicator of inflation, which is impacting shelter costs significantly.
- The Fed's policy mistake was calling inflation "transitory", ignoring base effects.