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The Contrarian Investor Podcast

Jun 23, 2022

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Deer Point Macro joins the podcast to discuss his view that the U.S. Federal Reserve will only hike interest rates once more before easing.

Content Highlights

  • The Fed is not some magical organization that can control all parts of monetary economics (2:50);
  • The Fed can create demand for credit, but banks have to provide supply. And banks are pushing back (5:03);
  • What to make of the Fed's rate hikes this year? How has that affected bank portfolios? (9:37);
  • The eurodollar market plays a significant role in Fed policy and its implications. An explanation (13:24);
  • The Fed stands to raise once more, at its next meeting in July, before having to cut rates in September (16:21);
  • Inflation is stubbornly persistent. Doesn't this force the Fed to raise rates? (19:57);
  • Background on the guest (30:14);
  • Markets don't really react to ADP employment data, but for economic detective work it can be vitally important (31:48);
  • How this all translates to asset prices: good for bonds but commercial banks are maybe not as safe as some would think. But regional banks may be a better bet (35:11);
  • What about cryptocurrencies? (36:34);
  • Quick discourse on the so-called 'Fisher effect' that posits that inflation rises as Fed funds increase -- over the long term (39:14).

More on the Guest