Jul 15, 2021
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Alfonso Peccatiello joins the podcast to discuss his contrarian
views on inflation, bond yields, and interest rates.
The guest doesn't buy the inflation narrative entirely, believing credit creation has peaked. We are likely to see negative economic surprises and drawdowns in risk assets starting in the fourth quarter. Yield on 10-year bonds should peak at 0.5% due to a 'Eurofication' of the U.S. yield curve.
Why concerns about inflation are misguided (1:54);
The Fed is right. Inflation is transitory (6:37);
Demand for bank loans is "terrible," despite extremely low yields (13:54);
Why do bond yields continue to drop? (18:16);
The bond market is saying growth and credit creation has peaked (23:24);
Why central banks' digital currency experiments are potentially a game-changer (27:49);
Background on the guest (33:04);
The 'four quadrant' approach to macro investing and where we are right now (36:26);
The Fed tightening cycle should start in late 2022 and peak around 0.75% (47:50);
How low do we go on the 10-year this cycle? (57:00)
Not intended as investment advice.