Stocks Will 'Crush' Bonds In 2024, Argues 'Fed Guy' Joseph Wang

On today's episode, Former Fed trader, CIO at Monetary Macro & Author Joseph Wang joins the show to discuss his outlook for 2024.

Joseph walks through his stock market "crack up boom" thesis, the rise of fiscal dominance & the path ahead for bonds as the U.S runs record high deficits. We then deep dive into the Fed's QT program, the reverse repo outlook as well as broader financial plumbing and how it may impact markets in the year ahead. To hear all this & more, you'll have to tune in!

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Timestamps:
00:00 Introduction
00:58 Disinflation Is Transitory
08:13 Record Deficits Will Fuel A Stock Market Rally In 2024
11:59 The Fed Will Cut Rates Three Times In 2024
16:57 Why Isn't The Fed Pushing Back Against Market Pricing?
19:46 Fading The Recessionista's
23:49 The U.S Dollar
27:16 Quantitative Tightening
36:09 The Reverse Repo
46:56 Mortgages Role In The Fed's QT
55:03 Housing
01:01:34 The Rise Of Fiscal Dominance

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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

[BenTodd-flnv]

My spouse and I are diversifying our long-term investment portfolio by adding various stocks and ETFs. We've allocated $220k to begin with, focusing on Indexed bonds and companies with strong cash flows. I think the market presents a good opportunity for long-term gains, but I'm also interested in learning ways to make short-term profits.

[sagitta]

Man, it is always such a pleasure to listen to Joseph. He is truly one of the best minds on fintwit. In a sector like economics where there is an overabundance of data, having the right perspective and looking at the right things, as he does, makes all the difference.

[blaquopaque]

I want a balanced portfolio with growth investments, safe investments, and also focus on dividends to gain up to 20K monthly, my concern is picking the right stocks that can survive a recession. How do i go about this?

[basimms]

Joseph does a great job of describing how the Fed or the financial status quo sees markets, and how those with assets hope things go. Essentially without fiat money printing our economy is cooked.

[DreamweaverShade-hp]

I think investors should always put their cash to work, especially In 2024, we'll start to see more market diversification. I'm hoping to invest about $350k of my savings in stocks this year. Hope to make millions in 2024.

[alexandroskatsis]

Joseph, one of my greats. Every time this man talks, i open my ears and brain cells and absorb..

[brianborse]

10:24 I wouldn't say that the tremendous price increases we've seen in just 10 years' time is "no inflation". Especially for real estate, and services like healthcare and insurance. Would have appreciated some more pushback there tbh

[stoneyja]

You guys need to do a conference in the Midwest US somewhere, that would be cool.
Joseph knows lots of useful info. Great mind. Great interview again.

[Notrocketscience]

“Bonds will be crushed”, guess I better buy bonds😂

[Dipali-Meghamala]

Hes so happy about the Recession coming in, like hes super excited to be witnessing it.

[jingmu]

Wonderful New Year episode with Joseph Wang! Great analysis and conclusions! The fiscal will be taking over the monetary policy until probably a new monetary standard like Bitcoin is established with the improvement of new technologies.

[adamc]

I like Joseph but i have to disagree with most of what he is saying. Most of the important leading indicators are pointing to recession and these typically take 12-24 months from start of inversion to recession. Looking at lagging indicators like gdp and the unemployment rate aren't helpful in predicting a recession. He is right that we are running large fiscal deficits which are stimulative but most of the recent spending is just interest on the debt and bondholders by definition are savers. They aren't going to rush out and spend the interest they receive on their t bills.

[yodurk]

How the heck do stocks crush it this year if inflation points up higher and yields go up again? If that happens I would think the market panics a bit and sells off.

[notfromthisworld]

Joseph Wang the man good stuff brother

[utubeuser]

“If we get to keep our job” is a huge qualifier. Glad to hear someone associated with the Fed mention this as a priority over of saving us 15 cents on a can of peas.

[Lali-Gajagamini]

Cant deny the fact that Amazons AMS65X is the strongest bet to bring power back to this industry after we suffered FTX, Celsius, Tera and so on. Sure if they fail its done for good, but I dont see that the biggest tech company in the world would put ev

[nonexistent]

I think Joseph's point about longer dated yields selling off pushing into recession is something to pay attention to. It is unlikely that the highly levered economy is NOT much interest rate sensitive, but rather the debt is structured such that maturity is termed further out than this brisk clip in the tightening cycle would otherwise lead one to conclude. Can point to lag effects on this one insofar as the lag in fear was not as great as the lag of the actual monetary impact itself. Forward looking markets just overreacted to medium term threats in the near term and economists saw the slow moving wrecking ball swinging ever closer at a faster speed than it truly is. Patience will pay dividends on this one.

[jonEmontana]

Happy New Year Jack. Look fwd to some great interviews out of you this year! Thx 😊

[martynfenton]

Not sure about inflation outlook in US but its going to go up again in Europe when the Red Sea area kicks off

[jeffsurfanderson]

Joseph Hwang the interest rates going up crush the banking sector don't you remember March of 2023. Commercial Banks will fail again this next march if they don't extend the btsp. Raising rates also crushes the bond market