Eurodollar University

Central bankers are clinging to tariff inflation fears despite declining price pressures and recent data showing an economic slowdown. The U.S. CPI report surprises with lower-than-expected numbers, hinting at a weakening demand and rising job losses. Meanwhile, both the ECB and Bank of England seem at odds with their claims as unemployment rises. The discussion explores the tension between central bank narratives and reality, bringing critical insights into the current economic landscape.

The latest jobs data reveals a troubling trend in the US labor market, confirming flat Beveridge territory. This shift has significant implications for credit markets, with rising concerns about hidden risks. Retail sales are down, driven by tariff-induced price hikes, while game console sales plummet due to price-driven volume drops. The Fed's response is also evolving as unemployment rises and underemployment surges. Join a detailed webinar for a comprehensive analysis of these trends and their potential fallout.

China's economy is facing a major downturn, with investment and consumer spending crashing dramatically. Retail sales plunged by nearly 0.5% in November, signaling deeper issues in household lending and bank credit. The country is stuck in a troubling cycle of deflation and ineffective stimulus, leading to production cuts that threaten job security. Meanwhile, falling oil prices and weak global demand suggest a broader economic malaise. As housing prices plummet, the labor market shows distress, with rising unemployment concerns looming large.

Jay Powell's recent press conference revealed alarming job losses of 20,000 monthly, shaking investor confidence. The Treasury curve's final form is emerging, highlighting the market's reaction to this shift. Central banks are critiqued for distorting rather than stimulating the economy. The normalization of the yield curve points to a retreat from previous policies, with recession risks flagged by the steepening 3M-10Y spread. Powell's 'cooling' rhetoric contrasts sharply with rising job risk acknowledgments, signaling greater economic uncertainty ahead.

Steve Van Metre, a macro and markets commentator, joins the discussion to analyze IBM's bold claim that AI spending may never yield returns. They delve into the funding risks tied to tech firms' negative cash flow and burgeoning debt, raising alarm bells about the AI bubble. The duo also tackles the disappointing performance from Broadcom and Oracle's risky debt strategy. They connect the dots between investor sentiment, the critical role of AI in the economy, and how wealth concentration could spell trouble for consumer spending.

China is facing a dire economic crisis, prompting its government to dump goods abroad to cope with domestic weakness. European leaders are alarmed, calling the trade imbalance a life-or-death issue for their industries. With banking and real estate in decline, China’s past strategies are failing. Global responses, including new tariffs from Mexico, show increasing resistance to Chinese imports. As credit collapses and even banks resort to fake loans, the pressure mounts for China to find solutions or risk significant fallout.

Falling gasoline prices may not signal relief for consumers; instead, they hint at weak demand and worsening affordability. The upcoming oil spike in 2024 could trigger significant economic challenges. A global crude surplus is emerging, driven by low demand, while shifts in WTI futures point to recession warnings. U.S. gasoline usage remains stagnant, reflecting this weak demand. Declining real incomes and increasing layoffs further exacerbate the economic landscape, suggesting a rough road ahead.

Dive into the complexities of the Federal Reserve's recent decisions! Discover how FOMC divisions reflect in cautious inflation policies. Explore the troubling insights from the Beige Book pointing to labor market weaknesses. Unpack the stress in the repo market, revealing why the Fed is shifting tactics. Learn about the implications of a recent rate cut and the debate over inflation versus labor factors. Finally, get Jeff's take on how these signs could impact future monetary strategies.

Swiss central bankers are caught between negative interest rates and falling consumer prices, with the CPI dropping for four consecutive months. This situation reflects broader global disinflationary trends. Despite cuts, the Swiss National Bank has struggled to stimulate real growth, leading to rising unemployment. Markets are anticipating further negative rates, even as central banks shift their focus to inflation narratives. Ultimately, Switzerland's economic struggles may serve as a crucial warning signal for the global economy.

The podcast dives into the turbulent world of private credit, highlighting ongoing debates and market uncertainties. It discusses the opaque lending practices that could lead to significant disappointments as valuations come into question. Comparisons to 2008's financial crisis reveal alarming similarities in risk structures. Transparency and audits are deemed crucial for restoring confidence. The conversation also covers the substantial risks shadow banking poses to both the financial system and the real economy.