Economic imbalances often require some type of adjustment to reflect economic realities and achieve a sustainable level of economic activity. There are currently three major imbalances in the US economy that can lead to a lower level of economic activity, higher interest rates, and/or a currency devaluation. READ MORE
Paradigm Shift at the Fed?
Kevin Warsh became Chair of the Federal Reserve System on May 22, succeeding Jerome Powell. There are 12 voting members of the Federal Open Market Committee (FOMC) which determines monetary policy. READ MORE
The Fed’s Dilemma
Inflation expectations have subsided during the last two years. In July 2024, the US consumer price index was 2.9% compared to the prior year. According to the Federal Reserve Bank of New York’s Survey of Consumer Expectations READ MORE
Reading the Fed’s Tea Leaves
Financial markets price securities based upon future expectations. Based on the shape of the yield curve, financial markets reflect anticipation of the Federal Reserve (Fed) cutting rates aggressively in response to a recession. Given the recent market rally and high equity valuation levels… READ MORE
The Fed’s Boomerang
After many years of ultra-low interest rates, the Federal Reserve decided to raise interest rates and close the gap between the inflation rate. The consequences are now reverberating through the financial system. READ MORE