Juggling Dynamite

Danielle DiMartino Booth, founder and CEO of Quill Intelligence, joins Jack Farley and former senior Fed trader Joseph Wang to share her outlook on this week’s FOMC meeting. Booth argues that the Federal Reserve’s lateness to fight inflation has caused it to lose a lot more credibility, and makes the case that it risks to lose even more credibility if it fails to recognize that the economy is slowing rapidly. Booth notes that credit spreads are widening rapidly and argues that it will be a credit market blow-up, not an equity market drawdown, that forces the Federal Reserve to change course.

Wang and Booth discuss how rising mortgage rates will deter the Fed from shrinking its holdings of mortgage-backed securities (MBS), and they each give their take on the continued sell-off in Treasury bonds.  Here is a direct video link.

On today’s edition of “Boiler Room,” Alfonso Peccatiello is joined by Eric Basmajian, founder of EPB Macro Research. With a focus on cyclical and secular cycles in the economy, Eric joins the show for a deep dive into the housing market. He shares with listeners the indicators that allowed him to foresee the slowdown in economic growth that most investors are just now beginning to price into markets. Here is a direct video link.

Not sure why Hugh Hendry likes to present sweat-drenched in muscle shirts, but other than that, this discussion is illuminating.

Professor Richard Werner joins Hugh Hendry, founder and former CIO of Eclectica Asset Management, for a deep dive into the world of central banking. They explore the process of credit creation and examine the fundamental role it plays in inflating asset bubbles, the popping of which can wreck whole economies but can be very good for central bankers. They analyze the Bank of Japan’s (BOJ) remarkable record of credit expansion, including its use of lending quotas, through the lens of Werner’’ renowned book, “Princes of the Yen,” which was a number one bestseller in Japan. They also look at the ongoing efforts of the Fed and the European Central Bank (ECB) to provide liquidity during this unprecedented global crisis at all costs, particularly debt monetization and quantitative easing (a term Werner himself coined), which Werner suggests could lead to a widespread bank nationalization – or a “Sovietization” of the banking sector, as he says. Werner argues that the ECB is undemocratic and that it bears a closer similarity to the Reichsbank (1876 – 1945) than it does to the Bundesbank (1957-present). Filmed on May 15, 2020.  Here is a direct video link.

Werner’s 2003 book does not seem to be in print at present.  The 2014 Princes of the Yen documentary based on the book is available on YouTube, here is the link: