BREAKDOWN: What the Highest Inflation in 4 Decades Means for Markets
CoinDesk Podcast Network
CoinDesk
4.8 • 689 Ratings
🗓️ 12 January 2022
⏱️ 16 minutes
🧾️ Download transcript
Summary
It all comes down to market expectations.
This episode is sponsored by Nexo, Abra and FTX US.
Markets have been nervous since last week’s FOMC meeting minutes revealed the Fed was considering early “balance sheet normalization” or quantitative tightening. At yesterday’s confirmation hearings, Fed Chair Jerome Powell tried to soften the Fed’s stance on QT, saying nothing had been decided. Today, December inflation numbers came in at a 39-year high of 7%. Find out why markets are rebounding in the wake of the news.
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“The Breakdown” is written, produced by and features Nathaniel Whittemore aka NLW, with editing by Rob Mitchell, research by Scott Hill and additional production support by Eleanor Pahl. Adam B. Levine is our executive producer and our theme music is “Countdown” by Neon Beach. The music you heard today behind our sponsor is “Time” by OBOY. Image credit: Bryan Allen/The Image Bank/Getty Images, modified by CoinDesk. Join the discussion at discord.gg/VrKRrfKCz8.
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Transcript
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| 0:00.0 | this is what the popular discourse is becoming. These are no longer fringe conversations. These are |
| 0:06.1 | no longer boring conversations. They're important conversations. And so every time you see a terrible |
| 0:11.7 | take on inflation or any other macro issue, whether it's from a traditional finance person or a |
| 0:17.0 | crypto person, just take a moment to remember how awesome it is that that's the discussion |
| 0:21.3 | that we're having at all. |
| 0:23.7 | Welcome back to The Breakdown with me, NLW. |
| 0:27.8 | It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. |
| 0:33.6 | The breakdown is sponsored by nexo.io, Abra, FtX, and produced and distributed by CoinDesk. |
| 0:41.4 | What's going on, guys? It is Wednesday, January 12th, and today we are talking about what the highest |
| 0:47.2 | inflation print in four, count them four decades means for markets. First, though, if you are |
| 0:53.9 | enjoying the breakdown, subscribe to the show, |
| 0:57.3 | give the show a five-star rating, leave a review, or if you want to get deeper in the conversation, |
| 1:02.6 | join the breakers discord. It's at bit.ly slash breakdown pod, and that link is also in the show |
| 1:10.5 | notes. Now, today is CPI Day as in. It's the day that we found out |
| 1:15.8 | how inflation fared for December. This is, of course, the big macro conversation and has been for a year. |
| 1:24.1 | In 2021, the battle was between, on the one hand, the Federal Reserve saying they were going |
| 1:29.9 | to keep dovish monetary policy conditions because they believed inflation to be transitory, |
| 1:36.0 | i.e. just the product of supply chain dislocations and supply demand mismatch, coming after |
| 1:41.9 | the worst of the shutdowns of the COVID crisis, and on the other |
| 1:45.0 | side markets who are saying you simply will not be able to handle inflation running as hot |
| 1:50.8 | as it's likely to run. The Fed did its best to keep the transitory language going, but ultimately |
| 1:56.6 | there was, in fact, a hawkish shift, and that happened between, call it September and December. |
... |
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