The Cure Is Worse than the Disease - Jim Welsh #5672

Summary: As rates continue to increase, it is difficult to pinpoint the Fed’s plan for the year ahead. I sit down and chat with Jim Welsh, who explains the thinking behind the rate increases and how to plan ahead using this information. Jim predicts that the Fed is going to keep the funds rate and monetary policy tighter for a longer period of time. Ultimately, we’re going to have to address problems that have been building up for decades, and although inflation will be reduced, it’s still going to hold above 3% for a while. Tune in for more valuable insight from Jim. Highlights: -Back in March/April, no one thought they were going to raise the Fed funds rate. By summer, people started to panic about rates going up -Rates increasing by 50 basis points does not represent a pivot -They are going to hold the funds rate at a high level for all of next year -Rather than jamming on the breaks to ease, they’re aiming to do it in a gradual manner—which will probably lead to a recession -We don’t have enough people to fill the jobs that are open, which is problematic -Energy prices will probably stay at a higher plateau -Globalization helped to bring costs down over the last 20 years -We’re going to see a reduction of inflation, but it’s probably going to hold above 3%. From there, we will see what the Fed decides to do. -We’re still seeing supply chain issues, commodity shortages, and high deficit -Either we’ve already started a bear market in the stock market, or we are about to -We’re going to have to address problems that have been building up for decades -Buy and hold isn’t working because the market isn’t buying higher highs -Every secular bull market has been followed by a secular bear market -China has used real estate residential development to power the economy -Real estate, however, will not continue to support the demographic it has -The risk of China going after Taiwan is rising -The secular bear market affects a lot of things -Rather than buying and holding, focus on being tactical Useful Links: Financial Survival Network Macro Tides [email protected]