In this week's Off The Cuff podcast, Chris and Axel Merk discuss:
- The Fed's Flip-Flop
- Powell suddenly starts singing a dovish tune
- Which Risks Are The Ones Most Worth Watching
- Not all risks are created equal
- Corp Profits vs Wage Inflation
- Why does the Fed value one and hate the other?
- Outlook For Gold
- Looking better and better
Our resident Fed expert, Axel Merk, does his best to interpret the abrupt capitulation Jerome Powell has recently demonstrated:
I praised Powell on your program in the past because he's been more consistent — and I deny I ever said that now. [laughs]
The problem is the Fed—and we talk a lot about the Fed—the Fed is the benchmark of the risk-free asset. They set the Fed funds rate. The Treasury securities are trading very closely linked to that. And then all other assets are priced off from that.
If you don’t know where the benchmark is, then that adds to volatility in the market. It makes it more difficult, and it's bad for economic growth. So it is not helpful for them to flip flop that. Now you can say hey, when you have new data come in you change your mind.
But just take this thing about quantitative tightening. We've talked before. I've been at some of these conferences where the academics hang out, at the Hoover Institute most notably.
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