Over the last two months, through liquidity interventions they insist are not ‘QE’, the US Fed has effectively reversed 40% of the quantitative tightening they had attempted over the preceding 21 months. Relentlessly easier monetary conditions have enabled spending and record debt to continue longer than it otherwise would have this cycle, but the hangover now weighing on future spending and investment returns is also unprecedented.
Record corporate debt, especially in sectors like retail, real estate and energy, now pose concentrated risks for lenders and the economy overall. See Oil and gas producers aim to slash spending for the second year in a row in 2020 to raise profits. There is a reason that the Saudis are desperate to raise cash now by offloading shares in Aramco before oil prices fall further.
Danielle DiMartino Booth, CEO of Quill Intelligence and former Dallas Fed advisor, discusses U.S. retail sales beating expectations and why she thinks the Fed may never normalize its monetary policy. Here is a direct video link.
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