Forward Guidance What A Growth Scare Means For The Fed & Markets | Warren Pies
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Jan 15, 2025 
Warren Pies, Founder of 314 Research, provides his insights on macro investing and monetary policy. He discusses his outlook for 2025 and the current state of the housing market, emphasizing inflation fears as overblown. The conversation shifts to equity market valuations, critiquing S&P 500 assessments amidst rising bond yields. Pies also explores the Fed's decisions on interest rates and the delicate balance between unemployment and inflation. His thoughts reveal a complex landscape for both growth and value stocks.
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Discovering Neutral in 2025
- The overarching theme of 2025 is discovering the economy's true nature post-pandemic.
- A growth scare, potentially caused by housing market deterioration, is expected in the first half of the year.
Bond Market Repricing
- The bond market's sell-off after the September Fed cut reflects a repricing of recession risk and Fed policy expectations.
- The market initially priced out recession, then priced out future Fed cuts, driving yields higher.
Restrictive Rates and Housing
- A 4% terminal Fed funds rate implies a restrictive 7% plus mortgage rate, impacting the housing market.
- The housing market's reaction to rate changes offers real-time insights into the neutral rate.