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The podcast episode discusses the recent statements made by Federal Reserve Chair Jerome Powell regarding the timing of rate cuts. Powell emphasized that the Fed is not planning to cut rates in March, but the possibility remains for later in the year. The speaker questions the rationale behind some people's belief that the economy is not bad enough for rate cuts in March and highlights that rate cuts can be beneficial for stimulating the economy and addressing issues in various sectors like housing and autos. The bond market has already priced in a rate cut cycle and the 10-year Treasury yield reflects this expectation. Despite the current debates and skepticism, the speaker believes that rate cuts are imminent, either in March or May, and that the Fed's actions will likely have a significant impact on the market.
The speaker delves into the topic of inflation, debt, and economic trends. They explain that factors such as the shifting global and near-shoring dynamics and rising energy costs contribute to potential inflationary pressures. The speaker also highlights how the massive amount of debt and money printing, especially during the pandemic, can impact inflation and change the policy landscape. The concept of fiscal dominance is discussed, emphasizing how fiscal stimulus can have a more significant effect on the economy than monetary policy. The speaker argues that the current fiscal policy and spending levels have led to a shift in the policy regime from nominal to real, indicating a potentially more inflationary environment in the future.
The podcast episode explores the Federal Reserve's influence on the bond market and discusses the concept of quantitative tightening (QT) and its relevance. It is mentioned that the Fed's balance sheet has significantly expanded, and the bond market has become accustomed to the Fed's involvement. The speaker argues that the bond market's anticipation of QT has not been accurately transmitted, with bond yields remaining lower than expected. They point out that there is ongoing debate regarding the impact of QT and its potential bearish implications. The speaker also suggests that fiscal dominance plays a role as fiscal stimulus often overpowers monetary policy.
The episode examines the state of economic resilience and forecasts. The speaker provides insights into the recent loosening and rebounding in the economy, highlighting a favorable environment for soft landing enthusiasts. They mention that job openings have declined while payrolls and the labor force have expanded. The speaker points out that the stock market remains resilient, and despite the optimism of some strategists, the forecast targets have not significantly increased. There is recognition of the uncertain nature of market forecasts and the potential for overestimation or underestimation of market performance. Overall, the speaker suggests that the current economic environment is dynamic and that future market movements and the Fed's role will shape the trajectory of the economy.
The podcast episode covers a range of topics including the potential impact of demographic shifts on the economy, the housing market, the sensitivity of stocks to interest rate changes, and the betting odds for the upcoming Super Bowl.
The podcast explores the potential implications of demographic shifts, particularly the transfer of wealth from baby boomers, on the economy. It questions the traditional assumptions about how boomers will pass on their wealth and highlights the increasing willingness to borrow against securities portfolios.
The podcast discusses the housing market, emphasizing the impact of delayed household formation from millennials and the unusually high number of cash purchases in the market. It challenges the assumption that all cash purchases are driven by millennials, suggesting there may be other factors at play.
The podcast explores the relationship between stocks and interest rates, focusing on the significant impact of interest rate changes on the Russell 2000 compared to other indexes. It suggests that this sensitivity is not solely due to the overrepresentation of financials in the Russell 2000, but also considers the borrowing needs and exposure of small caps in the current environment.
The podcast briefly mentions the Super Bowl and the betting odds for the game between the San Francisco 49ers and the Kansas City Chiefs. It highlights the importance of considering the coach and quarterback dynamics, while also acknowledging the unpredictability of the outcome.
On episode 128 of The Compound and Friends, Michael Batnick and Downtown Josh Brown are joined by Warren Pies to discuss: how stocks perform after all-time highs, the latest from the Fed, MMT, election year markets, Mark Zuckerberg: doomsday prepper, and much more!
Thanks to iShares for sponsoring this episode. To learn more about the iShares Bitcoin Trust, visit: https://www.ishares.com/us/strategies/ways-to-invest-in-bitcoin
Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com
Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management.
Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information.
Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/
iShares Bitcoin Trust (IBIT):
This information must be accompanied by a current iShares Bitcoin Trust prospectus, which may be obtained by clicking here. Please read the prospectus carefully before investing.
The iShares Bitcoin Trust is not an investment company registered under the Investment Company Act of 1940, and therefore is not subject to the same regulatory requirements as mutual funds or ETFs registered under the Investment Company Act of 1940. The Trust is not a commodity pool for purposes of the Commodity Exchange Act. Before making an investment decision, you should carefully consider the risk factors and other information included in the prospectus.
An investment in the Trust may be deemed speculative and is not intended as a complete investment program. An investment in Shares should be considered only by persons financially able to maintain their investment and who can bear the risk of total loss associated with an investment in the Trust.Investing involves risk, including possible loss of principal. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy advice.Investing in digital assets involves significant risks due to their extreme price volatility and the potential for loss, theft, or compromise of private keys. The value of the investment is closely tied to acceptance, industry developments, and governance changes, making them susceptible to market sentiment. A disruption of the internet or a digital asset network would affect the ability to transfer digital assets, and, consequently, would impact their value. iSHARES and BLACKROCK are trademarks of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other marks are the property of their respective owners.
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