What the Fed’s Rate Decision Will Mean for Markets | Andy Constan

Hidden Forces

Demetri Kofinas

Government, Business

4.8 • 1.6K Ratings

🗓️ 14 June 2023

⏱️ 57 minutes

🔗️ Recording | iTunes | RSS

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Summary

In Episode 316 of Hidden Forces, Demetri Kofinas speaks with Andy Constan about this week’s FOMC meeting and what the Federal Reserve rate decision could signal about the direction of interest rates, inflation, and economic growth. Will it be heralded as the long anticipate Fed pivot or seen as yet another head fake on our way toward “higher for longer,” serving as a drag on equity valuations and a headwind to economic growth?

Because Andy’s analysis is largely quantitative and flows based, he looks at not only what policymakers and investors are saying, but also what they’re doing, what they’re buying, and how they’re buying it. This holds important information for the direction of bond prices, equities (and other risk asset), inflation, and economic growth, all of which Constan and Kofinas discuss in the second part of their conversation. The two also run through different scenarios surrounding the Federal Reserve rate decision, the significance of Janet Yellen’s decision to refill the Treasury General Account (TGA) using largely T-Bill issuance as opposed to longer duration bonds, and why the long-anticipated recession has failed to materialize despite the most aggressive interest rate increases in 40 years.

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Episode Recorded on 06/13/2023

Transcript

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0:00.0	What's up, everybody? My name is Demetra Gafinas, and you're listening to Hidden Forces,
0:06.0	a podcast that inspires investors, entrepreneurs, and everyday citizens to challenge consensus
0:12.7	narratives and to learn how to think critically about the systems of power shaping our world.
0:18.6	My guest in this episode of Hidden Forces is Andy Constant, the founder and proprietor
0:23.5	of Damp Spring Advisors, who previously worked at Bridgewater Associates as an Idea Generator,
0:28.9	more recently at Breven Howard as Chief Strategist, and spent 17 years at Salomon Brothers,
0:34.6	where he served as head of Global Equity Derivatives.
0:37.7	I ask Andy to come on the podcast today to help provide some context for a very big news
0:42.8	week in markets that includes consumer and producer price inflation numbers, the Fed's
0:47.5	interest rate decision, and the committee's summary of economic projections, as well as
0:51.6	initial jobless claims, retail sales numbers, and much more.
0:56.1	What Andy brings that is most unusual is a perspective that is quantitative and flows
1:01.4	based.
1:02.4	He looks at not only what policymakers and investors are saying, but what they're doing,
1:06.8	what they're buying, and how they're doing it.
1:09.2	And this has important implications for the direction of bond prices, equities and other
1:14.0	risk assets, inflation, and economic growth, all of which we discuss in the second part
1:20.0	of today's conversation, where I also ask Andy about scenarios for the FOMC's rate decision
1:25.2	and whether it's going to be seen as the long anticipated pivot or yet another head
1:29.6	fate toward higher for longer, that's ultimately going to be a drag on equities and put further
1:34.6	pressure on economic growth.
1:37.0	If you want access to that part of the conversation and you're not already subscribed to Hidden
	...

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