An economic downturn is on the cards, bearing in mind that is what the Fed’s restrictive tight monetary policy to put out the inflation fire will do, crush aggregate demand in the economy. Already a staggering 37% of Americans lack enough money to cover a $400 emergency expense, up 32% in 2021. With household disposable income already tight, the Fed’s latest September rate decision to keep the Fed funds on hold was...
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The Fed’s QT Quantitative Tightening continues as inflation remains elevated and could even keep rising as WTI crude oil prices hit an all-year high at nearly 90 USD a barrel. The Fed has already reduced 24% of the Treasury securities it had added during pandemic QE. Moreover, the Fed’s QT liquidity unwind from the bank bailouts in March continued: The Fed’s total assets fell by $105 billion in August, and by $864 billion...
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Mind the gap, as the most splendid housing bubble is about to burst. US home sales keep falling; demand is anaemic as buyers do not want to transact at these prices. Sellers have yet to react to the reality of spiralling interest rates, which makes purchasing a home with an average-size mortgage now more expensive than the alternative, renting. US mortgage rates have climbed to 7.16%, the highest since 2001 (higher than the 2008...
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There has been a lot of recent chatter about a superconductor breakthrough, but at this early stage, it would be wise for investors not to dive in headfirst but keep developments on their radar. The scientific community remains divided as to whether the latest superconductor breakthrough is genuine. In other words, the superconductor breakthrough could be just hype leaving gullible investors holding the bag. Alternatively, if the...
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Fed tightening cycle could be maturing, and the engineered recovery in financial assets may be allowed to continue making a soft landing possible. The Fed is in the cockpit of a metaphorical jumbo plane, navigating global financial markets, the global economy mindful to fly clear from the coffin corner. A too-high altitude, red hot economy, raging bull market with runaway inflation, and the jumbo loses control and crashlands. If the...
Read MoreQuantitative tightening QT continues as the Fed restricts its asset purchases. The Fed’s total assets dropped again by $87 billion in June and by $667 billion since the historic peak in April 2022, according to the latest Fed’s H.4.1 weekly balance. The Fed’s total assets stood at $8.298 trillion, the lowest amount since August 2021. QT started in April 2022, with the downward trajectory in the Fed’s total assets...
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