Tom welcomes back Michael Kao, former hedge fund manager and commodities trader to discuss the FOMC meeting and its impact on the market. Michael shares his thoughts on why the Fed chose to not hike rates this month, despite the stimulants passed by…
Tom welcomes back Michael Kao, former hedge fund manager and commodities trader to discuss the FOMC meeting and its impact on the market. Michael shares his thoughts on why the Fed chose to not hike rates this month, despite the stimulants passed by the government to counteract their depressant measures. He believes that the Fed will continue to stay higher for longer, favoring cash flow over terminal value plays, due to four factors unique to the US economy. However, this could lead to wage inflation and a potential wage-price spiral. Michael also expresses concern that the Fed's actions are creating a "recency bias" in the market, leading to overvalued risk assets.
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He also discusses the changing environment for equity multiples and the impact of China's labor force entering the market. The conversation then shifts to the role of gold as a hedge against inflation, deflation, and geopolitical uncertainties. They also talk about the potential for a resurgence of the US dollar and its impact on central banks and gold. Michael and the interviewer then dive into the macroeconomic issues concerning Japan and China, particularly their demographic changes and the potential consequences for their economies.
They also discuss the balance sheet recession in Japan and the need for a coordinated effort in China to find a solution. Lastly they conclude with a discussion on the long-term structural issues facing China and the potential for high inflation for the next 15 years.
Time Stamp References:
0:00 - Introduction
1:00 - FOMC Meeting Thoughts
7:05 - Wage Inflation Spiral
12:23 - Faith in the Fed?
14:16 - Q.E. & Risk Assets
18:16 - Long Curve Concerns
20:34 - Oil & OPEC Cuts
22:30 - Dollar Wrecking Ball
26:45 - Energy & Europe
32:50 - Japan's Bond Market
36:33 - B.O.B. Rally & Gold
41:20 - Golden Opinion..
