Supply Shock On the Margin: This Is Peak Hawkishness From The Fed | Joseph Wang
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Dec 18, 2024 Joseph Wang, an expert on the Federal Reserve and financial markets, shares sharp insights into recent Fed decisions. He analyzes the unexpected hawkishness of the FOMC meeting and its impact on economic projections. Expect more than two rate cuts in 2025, he argues, while highlighting bearish trends in U.S. equities. The conversation navigates the complexities of Fed communication strategies and the implications of a weakening dollar on assets like gold and Bitcoin. Wang's perspective offers a fresh lens on market expectations and the Fed's evolving policies.
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Hawkish Fed Meeting
- The Fed's latest meeting was perceived as hawkish, causing a rise in yields and a drop in risk assets.
- The market reaction stemmed from the Fed's revised dot plot, which now projects only two rate cuts next year instead of the previously anticipated four.
Labor Market Dynamics
- The Fed's mandate focuses on full employment and price stability, not solely on GDP growth.
- A significant influx of migrants can lead to stronger GDP growth but also a rising unemployment rate.
Predicted Rate Cuts
- Despite a hawkish dot plot, Joseph Wang predicts at least four, possibly six, rate cuts next year.
- He bases this on the Fed's unconcern about inflation, internal dissent, rising unemployment, and potential global recession.