"Monetary policy itself will likely put us into recession, because we don't have normal economic cyc

Feb 11, 2022
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"Monetary policy itself will likely put us into recession, because we don't have normal economic cycles anymore. We have credit cycles that ebb and flow with the cost of capital, and now that the cost of capital is going up, even though historically speaking it's still very low on an absolute basis, the rate of change is already changing mentality." - Peter Boockvar

"Since the 70s we have not seen such a low intention to buy a car."

"The IPO market is beginning to tighten up, and companies have to start looking for private financing instead of the public market."

"For the Fed to look at the curve and say 'Okay maybe we should not raise rates,' it's somewhat circular because it's the market's belief of their rate hike in the short end that is resulting in this flattening."

"Now with respect to QE and how that influences the curve, it's tricky also because in theory you'd say 'Okay if the Fed is going to stop buying bonds, if they're going to shrink their balance sheet, long rates would rise, but as we saw after QE1 and QE2 the exact opposite happened. When QE turned on rates actually went up. When it turned off rates went down. So it's an impossible situation that they've put themselves in, and the question now is At what level of pain are they willing to tolerate, both in terms of economic activity and where the markets go before they get spooked? But because of the elevated level of inflation, even though it will slow on a rate of change basis, it's still going to leave them very little flexibility to react to try to pull back."

"In a sentiment perspective, if inflation is driving interest rates hgher, and interest rates going higher is driving the stockmarket lower ... perhaps. Then that sentiment is going to, it's kind of like a circular kind of effect, where those people (earning $100k or more, who make up a large part of the 'consumer sentiment being lower' right now a the U of Michigan study) are driving a lot of the sentiment lower." - Dom Chu
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<div><b>"Monetary policy itself will likely put us into recession, because we don't have normal economic cycles anymore. We have credit cycles that ebb and flow with the cost of capital, and now that the cost of capital is going up, even though historically speaking it's still very low on an absolute basis, the rate of change is already changing mentality." - Peter Boockvar</b></div><div><br></div><div>"Since the 70s we have not seen such a low intention to buy a car."</div><div><br></div><div>"The IPO market is beginning to tighten up, and companies have to start looking for private financing instead of the public market."</div><div><br></div><div>"For the Fed to look at the curve and say 'Okay maybe we should not raise rates,' it's somewhat circular because it's the market's belief of their rate hike in the short end that is resulting in this flattening."</div><div><br></div><div>"Now with respect to QE and how that influences the curve, it's tricky also because in theory you'd say 'Okay if the Fed is going to stop buying bonds, if they're going to shrink their balance sheet, long rates would rise, but as we saw after QE1 and QE2 the exact opposite happened. When QE turned on rates actually went up. When it turned off rates went down. So it's an impossible situation that they've put themselves in, and the question now is At what level of pain are they willing to tolerate, both in terms of economic activity and where the markets go before they get spooked? But because of the elevated level of inflation, even though it will slow on a rate of change basis, it's still going to leave them very little flexibility to react to try to pull back."<br></div><div><br></div><div> </div><div>"In a sentiment perspective, if inflation is driving interest rates hgher, and interest rates going higher is driving the stockmarket lower ... perhaps. Then that sentiment is going to, it's kind of like a circular kind of effect, where those people (earning $100k or more, who make up a large part of the 'consumer sentiment being lower' right now a the U of Michigan study) are driving a lot of the sentiment lower." - Dom Chu</div><div><br></div>
"Monetary policy itself will likely put us into recession, because we don't have normal economic cycles anymore. We have credit cycles that ebb and flow with the cost of capital, and now that the cost of capital is going up, even though historically speaking it's still very low on an absolute basis, the rate of change is already changing mentality." - Peter Boockvar

"Since the 70s we have not seen such a low intention to buy a car."

"The IPO market is beginning to tighten up, and companies have to start looking for private financing instead of the public market."

"For the Fed to look at the curve and say 'Okay maybe we should not raise rates,' it's somewhat circular because it's the market's belief of their rate hike in the short end that is resulting in this flattening."

"Now with respect to QE and how that influences the curve, it's tricky also because in theory you'd say 'Okay if the Fed is going to stop buying bonds, if they're going to shrink their balance sheet, long rates would rise, but as we saw after QE1 and QE2 the exact opposite happened. When QE turned on rates actually went up. When it turned off rates went down. So it's an impossible situation that they've put themselves in, and the question now is At what level of pain are they willing to tolerate, both in terms of economic activity and where the markets go before they get spooked? But because of the elevated level of inflation, even though it will slow on a rate of change basis, it's still going to leave them very little flexibility to react to try to pull back."

"In a sentiment perspective, if inflation is driving interest rates hgher, and interest rates going higher is driving the stockmarket lower ... perhaps. Then that sentiment is going to, it's kind of like a circular kind of effect, where those people (earning $100k or more, who make up a large part of the 'consumer sentiment being lower' right now a the U of Michigan study) are driving a lot of the sentiment lower." - Dom Chu

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