Top Three Videos – January 20, 2024

Economic Impact and Monetary Policy

• We live in a fantasy world. Now reality has been destroyed.
• The underlying inflation trends are still relatively strong, with super core CPI and wages holding above 4-5%.
• Tightening in monetary conditions is expected to hit the economy, leading to increased bankruptcies and refinancing of debt.
• The chances of achieving a soft landing without creating a recession are slim, given the historical patterns of inflation coming down from elevated levels.
• The FED’s hands are really tied in its battle with inflation, suggesting that inflation has sustainably entered a new elevated era.
• The market is expecting double the rate cuts the FED has ever made, indicating potential financial stability concerns.
• The era of 0% interest rates and quantitative easing is likely done, and investors need to wrap their heads around that.
• The new monetary cycles may be between 1 to 2% on the low side and 5-6% Fed funds rate on the high side, totally different than the last decade.
• The more the Fed raises interest rates, the more the fiscal deficit will blow out, leading to an era of fiscal dominance.

   

Commodity Market Trends

• The supplies of major fracking areas have hit peak production, potentially causing strain on oil production for the first time in US history.
• The supply demand picture for Commodities is very bullish, indicating the early stages of a commodity super cycle.
• “They’re massively out of favor which I think is ironic with gold price above 2,000 an ounce finally breaking out in a sustainable way above 2,000 from a technical standpoint.”
• The exact opposite of a soft landing is stagflation, which could drive people to invest in precious metals due to weak economic growth and high inflation.

   

Investor Sentiment and Market Behavior

• The fact that investors are shunning the miners even as the gold price breaks out to new highs tells me that investors are extremely bearish.