Watch the video on Youtube here: https://youtu.be/93JL4dsOrPg
Real Talk
Q: The daily headline in the media is “Inflation, Inflation, Inflation.” Are there any signs of relief in sight?
1.) Inflation Trends
a. Supply Chain
i. PMI
ii. Los Angeles -# of ships waiting
iii. Discounting by Majors – TGT, WMT, Nike
b. Labor – Unemployment Rate
c. Rents and Housing - new multi-family starts (record)
Q: We hear the term “Stagflation” daily in the business media. What does it mean and is it a threat?
d. Stagflation- Inflation and Recession simultaneously
i. Inflation – as indicated, looks to have peaked
ii. Employment – still looks strong, but new layoff announcements are a concern
iii. Economy - likely entering a recession if not already in one
Q: In the Great Recession, there was a financial crisis – the banks didn’t have enough cash or capital. Is that a threat in today's world?
2.) Bank Liquidity
a. Money Center Banks
i. Reverse Repo usage – High and rising
ii. M2 Money – was high (enabled inflation) but now M2 growth is low and going down
b. Shadow Banks
i. Private Equity marketing – Haven’t seen pricing resets yet, nor have yields gone up with interest rates
Q: Most other central banks are hiking interest rates. The European Central Bank seems to be hesitating. Is this a problem?
3.) European Central Bank
a. Current Rates
i. Inflation - high
ii. Rate hikes – hesitant because some countries are quite weak (Italy, Spain) while others are strong (Germany) – they need different policies (strong argument to go back to a central bank for each country and separ