Fed Funds Rate Predictions

[12:37] particularly with a changing at the Federal Reserve in the United States here with Kevin Warsh coming in, he's actually been fairly explicit that he's looking to redefine exactly what inflation is and redefine a lot of these parameters which ultimately, and I might be getting ahead of myself here, I think it's kind of a way to push through more of this nominal growth visa vis inflation transmission mechanism without necessarily having to explain for it and perhaps having a um cover to maybe be a little bit more dovish whether it's with rates or the Fed balance sheet.

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[11:27] I actually think, you know, there's a good some possibility, some nonzero possibility that June rolls around and he cuts 50 bips. Now, watch. Watch. He won't do it. I'll look... I'll look Yeah, I'll look like a complete idiot if that doesn't come true.

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[12:26] I believe that's what's going to happen when Kevin Worsh comes in. And I think this is part of the market positioning um that has been evolving in the wake of the Iran war even with the higher spikes we've seen in oil driving higher inflation costs is that we're going to see more bond buying from central banks whether it's called QE whether it's um less runoffs

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[40:50] Contrarian call - Fed must raise rates in 12 months

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[19:20] I think that over the next 12 months, assuming the war is ended, not ended, but like some type of fugazi deal uh or real deal in the next couple of weeks that gives him the runway by the end of the year to probably do a cut before the end of this year, which is non-consensus. And if you want to, you know, place a a high high return bet on those gambling poly markets or whatever you're referring to, that's probably the one to do. Everyone's betting on a hike. They'll probably wind up with a cut

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[19:54] he'll follow through again probably next year as well. And I don't think he'll have much more room to do a lot more than that regardless of how much uh liquidity he stops up by selling bonds on the open market.

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[14:13] I think we could even see a hike this year, particularly after the midterm elections. So that creates a context in 27 of global liquidity tightening.

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[29:54] I doubt the committee is going to take action as a new chairman is being seated. So I wouldn't expect them to do anything in June. Although I do believe they will remove the language from the statement that alludes to a cut in the future.

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[31:20] I wouldn't be surprised to see a majority of the committee in favor of a rate hike in July.

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[12:32] I think circumstances as of right now, the Fed's not going to be cutting. Now, I don't necessarily think that they're going to hike, but the long end of the bond market has already hiked for them.

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[6:49] I disagree with that... Bond markets price in hikes and then they're never delivered. I think we're seeing a repeat of that.

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[7:30] I was pricing in one to two cuts this year. That's now completely off the table. I'm now thinking on hold for the rest of the year.

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[32:06] I think the Fed is probably going to cut here some at some point even though um you know the stock market is is going parabolic.

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[10:25] the Fed will find uh as even under Kevin Wars who who wants to cut will find it very hard to to cut. So um and we so that's the gist of the growth picture just based on growth alone it is not weak enough to justify uh for uh for Kevin Ward to find evidence to cut.

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[10:31] Oh, I can't see how they cut rates at all. I mean, they would really they would look they would be looked on poorly if they did that.

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[6:03] I think the Fed is not going to raise rates. I think the Fed will be cutting sometime towards the end of this year.

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[17:49] I have a very hard time imagining that Worsh would raise rates as his first um course of action. Um you know I think that they believe that this oil price situation is is going to be transitory... and that um once they wrap up this Iran thing, oil prices are going to come crashing downward... I I think that's probably what he'll do is he'll he'll expect that uh this is just short-lived and uh give it a minute and he'll have an opportunity to cut.

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[14:06] I personally don't think he believes those anymore and that he'll moderate to a more of a neutral stance. And that's where I think we're going to be for the next several months.

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[13:31] I don't think they're going to hike at that meeting.

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[27:01] as we get towards the end of this year, um that the evidence will become more will become stronger that we have an inflationary problem and therefore you need to be raising rates. Now whether we will do that, the pressure that will be on the Fed not to do that is the question I cannot answer for sure. It depends on how this FOMC goes. But then as you get into next year, I think the odds on a rate increase are much higher. Uh and and I don't know how they avoid it.

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[11:25] the central banks and the Fed in particular are going to have to expand the balance sheets, become dovish at some point to save the bond market because the government runs on those IUs and they'll sacrifice the currency to do that. Whether that happens this month, next month, or the end of the year is irrelevant to me. That's the endgame. That's the direction.

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[7:35] I think we're going to start to see more and more talk of rate hikes to deal with this, you know, simply due to the understanding that it's it's much more than than an oil situation.

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[10:40] Uh the Fed's not going to cut until inflation falls... he wants to hike rates a little bit further because inflation is dramatically out of control, especially with the high price of oil.

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[30:28] He'll be confirmed by the Senate the same way, straight down party lines. But for now, the GOP controls the Senate. He will be confirmed.

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[29:39] All I know is is the Fed is going to turn ultra dovish while claiming to be ultra hawkish. They're They're going to go on a a complete printing bender.

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[28:40] Fed meeting coming up end of April... What do you think? Do you think cuts are on the table or no or hope? No.

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[6:06] This is going to go down as one of the biggest policy errors in the history of the Federal Reserve. The Federal Reserve is going to ignore what's staring them in the face and keep monetary policy overly tight into recession.

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[18:45] My my view is the Fed's not going to do anything. It's too early. Um cut or hike, it's too early

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[13:30] I think late in the year, uh, there will be kind of I'm not calling for a hike. I'm actually calling for nothing to be done, but the Fed will start communicating and start leaning uh, hawkish towards the end of the year

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[8:08] given current debt levels, the things that we've all studied for 20 years and given oil at 100 and malinvestment and shaky credits, uh there is absolutely no chance the Fed's next move is going to be tightening.

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[8:37] We're going to go from three K uh three cuts expected to zero and maybe even hikes coming in later in the year as inflation really bounces

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[27:52] I don't think the Fed's going to cut much. I think that's a bit of a contrary opinion right now.

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[35:29] 92% no change. Okay. So that's that's where I am. I'm I'm with the market. I'm with the market.

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[10:41] I think that that could be a good way for him to um for worse to come into office if indeed Powell does stand pat uh through the end of his term.

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[6:28] So my expectation more rather than less. I'm going to expect one more cut in January to take place.

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[4:43] I think the Fed is kind of a bit stuck in terms of its ability to respond uh policy-wise uh as aggressively as they might otherwise. I think that inflation is telling them one thing and labor market is telling them something else. So, we're going to get, you know, maybe one or two more cuts over the next 6 months, but not a lot.

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[5:14] my base case would be 50, but I don't think 75 is off the table

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[10:00] The Fed's tools are completely inadequate to a stagflationary environment. It's they're damned if they do and they're damned if they don't. So what do they do? I I can't tell you what they will do. Uh I'm guessing that they will probably heir on the side of throwing the dollar under the bus. that meaning loosen make easy money easier to support the labor market.

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[10:45] I think we've got to go at least two. And I think that's all we're going to get. Uh we should probably do 75 to 100 basis points.

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[37:21] I mean, maybe they cut once, but it's not, you know, this is not um I think a lot of people really popped up on this idea that that there's going to be, you know, a shadow fed chair and that the the Fed's going to be pushed into uh easing materially. Like, I'd probably describe it this way. If we get anything more than roughly, you know, zero or one cuts, um it's the type of conditions that you sure don't want to be holding equities in.

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[26:10] They're expecting two cuts this this year. Is that is that reasonable for you? I think there's a good chance we get no cuts.

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[16:46] I think right now they're pricing in two rate cuts the remainder of the year. I wouldn't be surprised if we have three by year end

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[37:21] I think I think let me just add by the way uh the Fed will be scrambling to cut interest rates in the second half of the year

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[26:18] I think the Fed's going to be forced to lower rates this summer

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[20:02] I I think it's at least 6 months down the road.

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