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Why ‘Many Fed Cuts Are A-Comin” Recession Or Not
"Green shoots!" BofA's Michael Hartnett sees them. Exclamation point and all.
In the latest installment of his popular weekly "Flow Show" series, Hartnett flagged the dramatic jump in refi activity across the US housing market and a relatively decent read on small business sentiment in suggesting a multi-month bond rally is beginning to have an impact on Main Street.
"The pop in refi activity and the most optimistic NFIB small biz survey since February of 2022 [are] the first signs the drop i
BofA’s graph = simple truth and beauty. Not sure the logic will hold but does anybody have a better (w/ data) call?
I still reminisce about the mid1990s when the concern was that with no need to issue treasuries what would happen to mortgages and loans tied to treasury reference rates. Ah the good old days.
Traditionally excessive government debt is addressed through inflation, repaying debt with cheaper currency. Historically a third world solution. I thought in my conspiracy mode that due to congressional and administration free spending ways particularly over the past 2 administrations that inflation was the way to go. The “new” monetary theory referred to in the narrator comment to justify the deliriously high and rising level of govt debt ignores the crowding out of variable govt spending by the rising cost of debt service.
Of course neither serious candidate for president is pitching fiscal sanity. I feel like the ability of the Fed to manage inflation is like the kid trying to stop up a leaking dam. Eventually the dam will give way and swamp the kid and the town.
So what does that mean for equities? Still sell the first cut?