Federal Reserve

“And they are going to be slow and gradual for a long time to come, barring a tremendous exogenous shock.”

“So Fed funds doesn't get to 525 basis points like it did in O six. It gets to something like, oh, let's say, 300, which I think would surprise some people if we got there, but that's where I think it's the minimum.”

“The macro trade of just being long, everything is going away. The micro trade of security analytics, hedge fund investing, looking for strategies that reduce volatility, or have some level of non-correlation will come back into vogue. And so, for me, I think t…”

“And then if you look at, like, the big banks, only Goldman has a few leading indicators. Most economists, like the Fed, ignores them. The Wall Street banks ignore them.”

“Again, there's no mechanical feed through because it's reserves which are endogenous to the financial system. They can't be lent out. And they can be lent between banks and the Fed, but they can't be lent out.”

“And then, surprisingly for a lot of people, what promulgated the colossal unwind of all these RV positions was the Fed cutting those 50 basis points the other week out of the blue.”

“And in the absence of what the fed and what the government have done with this, I think the equities would be down 30 to 50% from where they are right now.”

“Now, most investors will say it was Paul Volcker that did this, and I have a huge problem with that. There's no way that an academic No matter how freakishly tall they may be. There's no way that they get to crush inflation by inducing a recession and high une…”

“If you have the Fed and the Treasury, in many respects, co-joined, and the Treasury's issuing a lot of debt, and the Fed is creating money to buy that debt, and then it's being spent and kind of pumped into the economy, and the Fed is actively trying to keep i…”

“Now I think people who work at central banks want to avoid recessions really at all costs. And that means they throw everything at it to avoid it. And when we're in it, we just saw unprecedented act after unprecedented act. So cycles are short. So you're not g…”

“Instead you had the first ever syndicated rescue market where thanks to the fed banks brought rescue deals for companies to sell to mutual funds and hedge funds.”

“I believe that's setting up a much bigger bond sell-off and interest rate rise than the markets are expecting.”

“But if you normalize airfare, lodging, growth of used cars, et cetera, you're going to run at two-ish percent, maybe a little higher. But I think they're right on the transitory thing generally.”

“I'm pretty wigged out, but I think the Fed's waiting too long, and I think they're making a mistake.”

“I still come back to the growth answer, which is that if you have companies that are growing 200% a year, that you can overcome changes in interest rates... A normalization of interest rates to being positive, I think won't matter for very high growth companie…”

“I think the That is extremely sensitive to the political risks domestically in the U S and they will not look to curb inflation at the risk of recession. I don't think they will, but I'm in that camp.”

“I tend to think that the Federal Reserve, they never seem to get it right. They're right in the direction, but in the execution, they never really navigate a soft landing, per se. We're expecting bumps along the ride.”

“I actually think inflation is rolling over. It's just going to take longer to come down to the acceptable levels, but it's rolling over. It's peaked in our view. The real risk on the headline is energy prices and maybe food prices. I mean, maybe headline can g…”

“As we take three trillion out, it has to have a significant impact on asset prices in my view, and we haven't even started.”

“Most of the programs that they established to buy securities were never funded at any material degree because the market reacted almost instantaneously and said, ah, the Fed's going to be there to the rescue, so I'm okay.”

“And the Fed has to show its seriousness after losing some credibility last time, so they'll probably raise rates even if they don't really need to.”

“I would expect there will be some distress, but I think it's going to take a little while before that develops because a lot of the paper that's been issued doesn't have covenants or has very, very light covenants, and coupons are really low.”

“Depletion is Something like 10% a year, and there's no new supply, and demand keeps coming from different parts of the world.”

“You have central bank reserves held at the fed for foreign central banks, which is for us a key indicator of liquidity that's been shrinking all year.”

“I personally don't think that we're going to be heading into a period of excess liquidity for quite some time. I think the expectations that once inflation's under control, we're going to go back to the Fed as it was before, I think is less likely to be the ca…”

“We have 70% of Americans have mortgages less than four percent. They're not selling their house anytime soon. I think when you go to five, the number's 95%.”

“So I really, truly believe that they are the new shadow banking system, that whenever something goes awry, there's a reason why Millennium hired who they hired, why Citadel hired who they hired, to make sure that when the calamity occurs, they call the Fed for…”

“But as we get into the back end of 2023, my best guess is no later than early fourth quarter. That's a guess. The cumulative impact of hikes starts to bite. The consumer starts to retrench a little. Continuing claims are heading up. The labor market keeps soft…”

“As you look at the seven big disinflations in the United States since 1951, the end of the Treasury Fed Accord, those big disinflations only occurred unsurprisingly When the real Fed funds rate or predecessor equivalents were notably positive, which makes a lo…”

“The pass-through effect this time, if the Fed's going to succeed in bringing inflation down back to target levels, it's going to have to be more persistent and more hawkish, I would argue, than any of us have experienced.”

“You have no idea what sufficiently restrictive monetary policy is until you are beyond it. That's the tricky thing. And if the Fed is genuine about risk management with regards to inflation, the Fed is incentivized to overdo it.”

“What everyone said about credit was wrong, and there was a book by Bradford Hittman on long-term Corporate bond and investor experience, and the riskiest credits were perceived as the best, and the best credits were perceived as the worst. Whether you were the…”

“I wrote a memo in December, 22, called The Sea Change, and it talked about the change in the interest rate climate, which I think is structural and long-lasting.”

“And we saw a hundred basis point cut in the Fed funds rate, and a hundred basis point moving the yields higher, which hadn't happened since the eighties.”