Stephanie Pomboy, a macroeconomic analyst and founder of MacroMavens, shares her insights on the fragile state of the economy. She discusses the potential impact of the Fed's upcoming rate cuts and how they could expose market mispricings. Stephanie highlights the risks of a weakening consumer and tight credit spreads while advocating for gold as an economic hedge. She even ties in the cultural moment surrounding Taylor Swift, suggesting that celebrity events could influence consumer behavior. Expect keen analysis and surprising connections!
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insights INSIGHT
Fed Cuts May Not Lower Long-Term Yields
Markets have long priced a Fed pivot after tightening, but that assumption may be wrong because fiscal dominance and soaring debt change the mechanics.
If long-term yields don't fall when the Fed cuts, the risk-asset rally's foundation unravels and contagion risks grow.
volunteer_activism ADVICE
Prepare For Yield Pathways And Hedge Dollar Risk
Watch for either a short-covering rally in long yields or Fed balance-sheet intervention as the main routes to lower long rates.
Position with assets that hedge against dollar debasement, such as gold and energy, rather than assuming bond relief arrives.
insights INSIGHT
Short-Term Rally, Medium-Term Yield Headwind
A near-term rally in Treasuries could come from short-covering if growth weakens, but medium-term pressure is upward on yields.
Persistent fiscal deficits and rising average interest costs will push yields higher absent direct Fed yield control.
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Stephanie Pomboy returned this morning for her biweekly macro session on Thoughtful Money.We discussed her views on Fed rate cuts, inflation, credit spreads, the weakening consumer, recession risk, the housing market, her outlook for the US dollar…even the Taylor Swift/Travis Kelce engagement.Stephanie is eagerly awaiting next month’s FOMC decision, as she thinks it has potential to be the event that punctures the market’s current blind optimism — if the Fed starts cutting its policy rate but bond yields don’t come down as hoped.What does she expect to happen if they don’t?Find out by watching this video.
Thoughtful Money with Adam Taggart 