McCullough: Growth Expectations Falling (Faster)

In this clip from The Macro Show on 6/1/22, Hedgeye CEO Keith McCullough frames recent divergences in how bond yield Risk Ranges are moving across the yield curve, specifically within the context of Hedgeye’s GIP Model.

“Real Growth expectations are starting to fall faster,” notes McCullough. “What’s not anchored, and getting more negative, is [growth]. Both on the jobs front, and the consumption front, these numbers are going down at a faster rate.”

[ask_why]

Fed "Policy" is a desperate lurch to keep the stock market up (ish)... or at least not to loss control on the downside.

[rchicks]

Fed’s inflation fighting so far… Fed funds = 0.87%
Fed Balance Sheet = $8.914 trillion
Translation, monetary policy is still very easy, but the US stock & bond markets need extremely easy policy. Two 50bps max from here. Next move after that will be a cut, and yes, they’ll do QE again while the balance sheet is still well over $8 trillion.

[dirkdiggler]

What in the sam hell will raising interest rates do to bring down the (significant) economic sectors of price inflation that are caused by supply constraints, shortages, or supply chain bottlenecks?

Let's take gasoline. Domestic oil production is lower than in 2019, and refinery capacity is down 10% since 2019 also. So price goes up sharply, with relatively price inelastic demand. How does raising rates bring down this kind of inflation?

Well, I guess they could raise rates until nobody owns a car and lives in a mud hut. There are all kinds of sectors in the US economy that aren't experiencing the "cost push" variety of inflation, so I question how raising rates will help with that.

[mauricioguerreiro]

Because of economic crisis and the rate of unemployment, now is the best time to invest and make money💯

[DeFi-Macrodosing]

Useless clip, as usual. Glad I'm not subscribed.