The Fed is Making a Mistake (EP.252)
Animal Spirits Podcast
The Compound
4.7 • 2.1K Ratings
🗓️ 13 April 2022
⏱️ 41 minutes
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| 0:00.0 | Today's show is brought to you by white charts. So many people have requested free access. So |
| 0:04.6 | white charts has opened up the opportunity to give 50 more investors free access to the service |
| 0:10.7 | until April 30th. If you are a financial advisor, make sure to sign up with the link in the show notes |
| 0:16.4 | and check out their new model portfolio tear sheets, the economic indicator homepage with heat maps, |
| 0:21.6 | new integrations to Black Diamond, Orion, Redtail, etc. All right. I was using white charts this morning. |
| 0:27.9 | They have these pre-made charts you can click on. They have these templates made. And one of them |
| 0:32.0 | is the template for the Treasury yield curve. You can see rates have all come up across the board, |
| 0:37.5 | mostly in the low end. Ten year treasuries now at like 2.8%. Here's the thing. The inflation rate |
| 0:43.5 | went above the 30 year treasury in April of last year. And for months, you and I were saying, |
| 0:50.1 | why is it taking so long for interest rates to rise? Why aren't they going anywhere? We had all |
| 0:54.1 | these theories and ideas. The Fed was buying and bond people were buying. And now it's the |
| 0:58.3 | opposite way. Now they're catching up really quick. Why did it take so long for rates to rise? |
| 1:02.9 | And now why are they doing it so quickly when it seemed like for months and months it was obvious |
| 1:07.2 | inflation was here and it was high. Is the simplest answer the right answer that the Fed is |
| 1:12.8 | buying less bonds than they were two months ago, three months ago? Do you really think that's what it |
| 1:17.9 | is? What do you think? I don't know. That seems like the anti-fed. I hate the markets kind of thing. |
| 1:23.3 | It just surprised me that the bond market is so huge with trillions of... But the Fed was actively |
| 1:27.4 | buying tons of bonds and other buying less. What if it's that simple? Or you think it's not enough? |
| 1:32.0 | I think that's not enough. Maybe someone can screw me if they have like data on that, but I'm just |
| 1:37.1 | saying. Well, how about this? It seems like the bond market is supposed to be so smart. And why did |
| 1:40.9 | it take so long for rates to catch up? When the Fed said they were going to start purchasing ETFs |
| 1:48.2 | and bonds, that buoyed the market before they even really did anything. So if that was able to |
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