Does Anyone Want to Talk About Stagflation?

Real Vision: Finance & Investing

Real Vision

Business News, News, Investing, Business

4.1 • 1.1K Ratings

🗓️ 4 May 2022

⏱️ 33 minutes

🔗️ Recording | iTunes | RSS

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Summary

Not since March 2000 has the Federal Open Market Committee announced a 50-basis-point increase to the federal funds target rate. Now, the FOMC is a day away from doing just that. And traders are pricing in near-even-money odds of a 75-basis-point hike in June. The FOMC is also expected to introduce its plan to reduce the Federal Reserve’s balance sheet on Wednesday, a process with its own implications for interest rates. U.S. equity indexes held solid gains late Tuesday. Factory orders for March rose a better-than-expected 2.2%, job openings reached an all-time high of 11.5 million, and U.S. natural gas prices hit a 13-year high on growing concern supply will fall short of demand this summer. The data suggest the Fed has room to do what it needs to do to fight inflation. But, as Warren Pies notes, “Oil is driving this market…” And there are structural factors at play that could make the central bank’s job impossible. Pies, founder of 3Fourteen Research, joins Real Vision’s Weston Nakamura to talk about today’s price action, tomorrow’s decision by the FOMC, and the prospect of stagflation afflicting the economy. Want to submit questions? Drop them right here on the Exchange: https://rvtv.io/3kEtIKN Learn more about your ad choices. Visit podcastchoices.com/adchoices

Transcript

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0:31.0	Welcome to the real vision daily briefing. My name is Weston Akamuro from Tokyo, Japan. It is Tuesday, May 3rd, 2022.
0:39.0	I am filling in for Warren Pies. And I'd like to welcome Mr. Warren Pies, the founder of 314 Research. How are you?
0:48.0	I'm good. Nice to talk to you.
0:50.0	Yeah, indeed. So Tommy Thornton will be back. And so you were supposed to kind of be in this seat.
0:57.0	Instead, I'm going to be kind of grilling you along with grilling per se.
1:02.0	But yeah, let's just go through some of the overnight data. So in Asia, you basically, so you had Japan trying to close the reserve.
1:11.0	Think of Australia Hikes rates by 25 basis points, which was more than surveyed expectations is the first hike by the RBA since 2010.
1:19.0	RBA governor loads fairly hawkish. And you saw Aussie dollar rallying nearly about a one and a half percent as Aussie yield spike.
1:28.0	Europe slightly in the green at the close euro stocks ended up about half percent led by energy.
1:34.0	10 year German yields are now above 1% for the first time since 2015.
1:38.0	And then it seems like US equity indices, which open flat are closing about a half percent up on SPX.
1:48.0	Is getting below 30. 10 year real yields are back in positive territory.
1:53.0	And we wait for the May FOMC policy tomorrow, where we are expected to get a 50 basis point rate hike and potentially rather hawkish Powell press conference thereafter.
2:08.0	Also on the data front, US job openings rose unexpectedly to a record 11 and a half million.
2:15.0	So that's the set up going into FOMC tomorrow.
2:19.0	Warren A to miss anything and be what what are your thoughts heading into FOMC tomorrow.
2:26.0	I think that was a good rundown of the daily kind of state of affairs.
	...

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