Wag the Dog: The Fed & The Real Economy

Published on
October 10th, 2019
Duration
32 minutes


Wag the Dog: The Fed & The Real Economy

The Expert View ·
Featuring Julian Brigden

Published on: October 10th, 2019 • Duration: 32 minutes

Julian Brigden, co-founder and head of research at MI2 Partners, unpacks the bind the Fed finds itself in as the economy approaches the end of a 10-year cycle. How does the Fed keep the markets going as asset prices continue to soar? Brigden explains the potential channels and methods of intervention and explores specific trades that may benefit in different environments. Filmed on October 4, 2019 in New York.

Comments

Transcript

  • RA
    Richard A.
    15 October 2019 @ 12:04
    The spotty use of question voiceovers is really getting annoying. Every new expert view should it. Let’s not go backwards. Let’s go forwards. This one didn’t have it. Whining done. Love hearing JBs thoughts.
  • IH
    Iain H.
    14 October 2019 @ 11:02
    I think Julian is broadly correct, some sort of MMT type policy is where we are headed. As a parent I feel sad that the political landscape/ world call it what you will, is so polarised and basically such a shit show that their is universal failure to recognise the preciousness of the economic situation so sensible ideas and a collective effort can be applied, to avoid what will eventually become a run of the mill inflationary bust can be avoided. When say an inflationary bust, I am talking in years to come as fiscal spending monetised by CB's is implemented and just as QE and the decades long decline in interest rates were, this will only be short term solution and more is always needed as diminishing returns always pervades these interventions. When you start pouring money into the economy, where ever you direct it will inflate, then more will be required to permanently prop the targeted sector up. The problem will be seen as not enough and next time should be bigger So it will go on till your currency is blown up.
  • FS
    Fagundes S.
    13 October 2019 @ 22:17
    Omega Dark Side of the Moon? Great watch.
  • RT
    Rex T.
    13 October 2019 @ 02:31
    Julian is excellent at talking in simple terms everyone can understand. Unfortunately, his analysis is a little skimpy on details. Hope this feedback helps.
  • dp
    david p.
    12 October 2019 @ 17:12
    Call it what you like, QE, REPO, THEFT... They are already at this point. END the Fed!
    • SF
      Shariff F.
      12 October 2019 @ 19:21
      I second that, 👍🏽
  • WM
    Will M.
    12 October 2019 @ 13:50
    An excellent week of guests. Just feels like the 4th quarter is going to see fireworks!
  • BH
    Bernard H.
    12 October 2019 @ 07:05
    Top drawer as always. Lucid thinking from JD
  • ly
    lena y.
    12 October 2019 @ 00:35
    Julian is fun to listen to. He lays out his arguments clearly. Msg delivered! THX!
  • RW
    Raymond W.
    12 October 2019 @ 00:05
    As he says - QE four ... the fed prints money to finance federal deficit spending. Japan has been doing this for years already. The Japanese central bank prints 30% of the money that the Japanese federal government spends. You can see it for yourself if you go to the Japanese Ministry of Finance web site. Some of this money is spent buying stocks and bonds in order to keep their markets from crashing. Europe will eventually do this and so will the US.
  • AA
    ALBERTO A.
    11 October 2019 @ 19:37
    as usual...great!!
  • AL
    Aaron L.
    11 October 2019 @ 09:01
    Not sure about everyone else, but there were some audio issues. I listen at 1.25x speed
    • DP
      Daniel P.
      11 October 2019 @ 10:36
      don't think it's audio issues - he just speaks a bit slowly
    • AW
      Adam W.
      27 October 2019 @ 09:05
      No issues here at normal speed.
  • SK
    Sergejs K.
    11 October 2019 @ 08:29
    So precise and on point!
  • GG
    Gary G.
    11 October 2019 @ 05:27
    Brilliant!!
  • JK
    James K.
    11 October 2019 @ 04:14
    Excellent, as usual.... Thanks
  • GF
    Gordon F.
    10 October 2019 @ 23:47
    I like Julian's assessment of the situation, but I worry about unforeseen shocks - those notorious black swans. A banking failure somewhere that cascades, or any one of dozens or hundreds of other things could upset everything. And while the US economy feel strong, it also feels fragile, i.e., not prepared to handle sudden disruptions.
  • RT
    Rex T.
    10 October 2019 @ 23:10
    Basically... Central bankers are not so smart to see what I see.... but I pick and choose their data and analysis to draw my conclusions. Fair summary? Financial downturns lead to economic downtowns which lead to political tensions. If this is news to anyone I’m happy to come visit you once a month in return for some tea and biscuits (off peak TFL travel rates apply).
  • TK
    Tim K.
    10 October 2019 @ 20:41
    Really enjoyed the interview and insight provided here, but what about when the game is over in 2020-2021 and every single piece of ammunition has been used... then what? A restart of QE isn’t going to make the cycle go forever it is just going to extend it as you say and make the fall a whole lot worse as we continue to inflate assets to unrealistic levels. you can’t put a bandaid on an infection and expect it to heal.
    • BF
      Brad F.
      10 October 2019 @ 22:13
      Julian sees the handover from monetary (central bank) policy to fiscal (government) policy at that time to continue the stimulus. Probably with some form of MMT.
    • JL
      J L.
      11 October 2019 @ 04:01
      he gives the cycle another 7-8 years of nominal GDP growth mostly due to inflation if needed
  • JE
    James E.
    10 October 2019 @ 20:28
    Very refreshing from Julian, and entertaining.
  • WM
    William M.
    10 October 2019 @ 18:59
    It's always great to hear from Julian .... no matter how dire the outlook...
  • CM
    Chris M.
    10 October 2019 @ 16:33
    On keeping rates low to support the housing market, get the logic, but believe it is negatively impacting housing as low rates drive up home prices. There is a balance there between the level of rates and home affordability and at current interest levels, you can't lower rates far enough to make up for the skyrocketing home prices in many of the metro areas. This is the issue in Nashville where homes are beyond the reach of many first time buyers.
    • CM
      Chris M.
      10 October 2019 @ 16:39
      To add to my comment, if you are a cash flow based home buyer, your monthly payment is lower on an 8% loan for a $500,000 house than a 4% loan on an asset inflated $800,000 home. Long term, it is the over inflation of home prices that will hurt housing, not whether mortgage rates go from 4% to 3%.
    • JM
      John M.
      10 October 2019 @ 17:36
      Not just Nashville! Abnormally low (suppressed) rates is forcing a generation of people to to buy homes at inflated prices and reducing their ability to consumer other goods and services. I assume this policy error will also impair ability to build longterm household net worth? What mess!
    • AJ
      Aaron J.
      13 October 2019 @ 04:59
      Agree. It seems that in almost every location with good employment opportunities housing affordability is an increasing social issue for younger people. It’s happening almost everywhere ie. the bigger cities in the EU, Australia, US, etc etc. The trend towards urbanisation doesn’t help but it’s also a clear sign of the central-bank induced Everything Bubble.
  • PJ
    Peter J.
    10 October 2019 @ 16:01
    Always good to hear from Julian. Looks to significantly diverge from Raoul’s DoomLoop thesis , at least in the short / mid term. Would be good to get them both on again at some time to argue / agree / disagree on the how their views differ on the way forward from here.
    • SC
      Sean C.
      10 October 2019 @ 16:07
      They do it monthly - but only for Macro Insiders subscribers
    • as
      andrew s.
      11 October 2019 @ 18:56
      Good cop bad cop routine
  • CD
    Cheryl D.
    10 October 2019 @ 14:36
    great thinker - great interview!!!!!
    • MK
      Monty K.
      11 October 2019 @ 03:32
      I agree with Julian, mmt is coming. It's a matter of when and how, not if.