Russia Bond Default, Crypto Fund Blow-Up No Concern to Markets (Yet)

Published June 27, 2022

The following is an amended form of the Daily Contrarian briefing from June 27. This briefing and accompanying podcast are released to premium subscribers each market day morning by 0700. To subscribe, visit our Substack.

Over the weekend we received a couple of troublesome headlines about a Russian bond default and potentially the blow-up of a crypto hedge fund.

Markets appear to have shrugged this off, moving higher in the pre-market. While this bounce faded at the open, major indexes are only down a few basis points at the time of this writing (0940 EDT on Monday). Cryptos are down a bit, with bitcoin dropping by about 2% to dip below $21,000.

Fed Will Reverse Course on Rate Hikes, And Soon: Deer Point Macro (Szn 4, Ep 17)

Published June 23, 2022

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Deer Point Macro joins the podcast to discuss his view that the U.S. Federal Reserve will only hike interest rates once more before easing.

Content Highlights

The Fed is not some magical organization that can control all parts of monetary economics (2:50);
The Fed can create demand for credit, but banks have to provide supply. And banks are pushing back (5:03);
What to make of the Fed’s rate hikes this year? How has that affected bank portfolios? (9:37);
The eurodollar market plays a significant role in Fed policy and its implications. An explanation (13:24);
The Fed stands to raise once more, at its next meeting in July, before having to cut rates in September (16:21);
Inflation is stubbornly persistent. Doesn’t this force the Fed to raise rates? (19:57);
Background on the guest (30:14);
Markets don’t really react to ADP employment data, but for economic detective work it can be vitally important (31:48);
How this all translates to asset prices: good for bonds but commercial banks are maybe not as safe as some would think. But regional banks may be a better bet (35:11);
What about cryptocurrencies? (36:34);
Quick discourse on the so-called ‘Fisher effect’ that posits that inflation rises as Fed funds increase — over the long term (39:14).

Powell Testimony: What to Look For

Published June 22, 2022

The following is an amended form of the Daily Contrarian briefing from June 22. This briefing and accompanying podcast are released to premium subscribers each market day morning by 0700. To subscribe, visit our Substack.

Federal Reserve chair Jerome Powell starts two days of testimony in Washington, D.C. today. Powell addresses the Joint Economic Committee and take questions from the politicos. Don’t expect anything in the way of nuanced or educated questions from these folks. They’ll all be trying to score political points for the cameras.

Meme of Fed chair Jerome Powell: "There are no guarantees in life"

Still, some details may emerge regardless. Investors will be looking for any indication for when the Fed may stop its interest rate hikes and quantitative tightening. Specifically they’ll be looking for what Powell says the Fed will consider victory over inflationary pressures.

Tag: economy

Russia Bond Default, Crypto Fund Blow-Up No Concern to Markets (Yet)

Fed Will Reverse Course on Rate Hikes, And Soon: Deer Point Macro (Szn 4, Ep 17)

Content Highlights

Powell Testimony: What to Look For