Real Vision: Finance & Investing #1030 - Are Dollar Bears About to Roar? with Brent Donnelly | The Fed, U.S. Dollar, & Japanese Yen
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May 6, 2024 Brent Donnelly, President of Spectra Markets, discusses the impact of jobs data on Fed rate cuts, weakening dollar effects on global currencies, and yen volatility. Topics include market dynamics, currency sentiment, interest in Japanese stocks, China's currency stability, stagflation, soft landings, trading strategies, and financial opportunities.
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Fed's Volatile Policy Shifts
- The Fed's policy swings have created volatility and confusion in markets.
- They moved from pricing multiple rate cuts to hikes, and now to a "higher for longer" stance without clear data justification.
Soft Data Diverges from Hard Data
- Soft or survey data typically leads hard economic data by about six months.
- Currently, soft data is weak while hard data remains strong, a divergence caused by inflation's impact on sentiment versus nominal growth.
Fed Easing: Strong vs Weak Data
- Fed easing against strong data stimulates animal spirits and inflation.
- Easing in response to weakening data reflects a deteriorating economy and slowing growth, resulting in different market implications.