저자: Kevin · 외국인
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연준이 임금 상승을 인플레이션 주범으로 보지 않는 쪽으로 입장을 바꾸는 중이라며, 고용을 희생하지 않고 금리 인상을 멈출 수 있어 주식시장에 긍정적이라고 주장. 임금 상승률 둔화와 인플레 분리, 역레포 잔고 감소로 QT 충격이 완충된다는 근거 제시. 약세론자(트리마스 등)를 반박하며 증시 신고가 가능성을 언급.
다듬은 글
there's potentially another flip-flop happening at the Federal Reserve and it has huge implications for you if you're in the stock market now yesterday I posted a video on a lake and if you go back to that video and you listen to what I said six minutes in you'll find something very important I suggest that within six minutes into the video I suggest the Federal Reserve might let us know that they're going to be more impatient or they're going to be more patient with inflation because they don't want to cause as much economic hardship to employment in other words they don't believe that they actually have to crush employment to get inflation down well when I woke up this morning and I read this I just about uh freaked out because here's an article in Bloomberg that literally reiterates the maybe I talked about yesterday and I'm absolutely Blown Away listen to this fed backs away from wage Focus bolstering case for rate pause and I'm like you've got to be kidding me the very next day I'm not trying to Pat myself on the back I'm just trying to say like this this is obvious If the Fed stops trying to crush employment then the FED will not hike again this is potentially highly incredible and and almost certainly then if that is true the end of the cycle so listen to this Federal Reserve officials are rethinking their view that wage gains are fueling inflation a key intellectual shift of flip-flop that bolsters the case for a pause in their tightening campaign now this is important they don't give this context but there's something known as the Phillips curve and it's basically to say that when inflation is or sorry when when unemployment the unemployment rate is low so in other words a lot of people are employed well inflation should be high that's the idea of the Phillips curve and the Phillips curve teaches you that if inflation is high you must increase unemployment to lower inflation that's the point of the Phillips curve this ability to sort of one up to get the other one down that's the thesis if you have too low of inflation then you want to get to maximum employment that is the the principle behind the Federal Reserve uh in and their rate hike thesis one of them at least and so the Phillips curve has been relatively broken for the last about 13 years because if you look at about 2013 uh well so maybe last 10 years 2013 to to just past covet you've really found an even until now you've really found that unemployment could be very very low without causing substantial inflation and this has led to a lot of economists wondering okay so is the Phillips curve dead is it broken was was it never actually accurate in the first place and more recently uh you're finding well it's probably going to be true again we just needed an inflationary impetus to prove that it was true but now economists especially at the Federal Reserve are scratching their head again going but what if the Phillips curve was never correct in the first place what if we can actually have low unemployment and then High inflation for a period and then come back to low inflation this is pretty incredible because listen to how this continues until recently many policy makers at the U.S Central Bank maintained maintained that a the road to lower inflation ran through the job market the idea was that because labor costs make up a substantial portion of the cost of providing Services an area where price pressures have especially been persistent or been especially persistent workers would need to feel some pain and so this is another very common argument especially when we talk about core inflation and services inflation so you're more Super core inflation with your more Super core inflation what you're actually saying is hey look super core is really focused on Services services and stripping out a lot of the goods the volatile Parts like some of the auto sales the housing sector stripping out the uh the energy inflation figures we take all that out and what we're left with are the things that we really spend money on that require labor which are going to be things like haircuts dentists CPAs Medical Care Services doctor Services Attorney Services funeral services right these are all relatively labor intensive and so what you find is if you have super low unemployment there's this thesis that okay well that's going to drive inflation up right because people feel like they can just switch jobs and get higher pay and that has been true for a very long period of time especially since there have been so many available jobs and the argument has been that's clearly what's driving inflation but now economists are somewhat flip-flopping and they're suggesting no maybe maybe that's actually not the case in fact the article goes on to say new research and commentary from officials and economists especially at the FED suggest a link between the link between wages and prices may not be so direct and it's arriving just as the FED is nearing the end of its historic hiking cycle if the link between wages and inflation isn't as strong as policy makers believe then you do run the risk of solving the softening the labor market without seeing much progress on inflation now yesterday I suggested that we might end up having a Federal Reserve that says look we don't necessarily need to end up causing unemployment and that is what I think so incredible is this idea that if the FED comes out you know in two days and says we're okay keeping people employed and not throwing people out of their jobs and at the same time we can be patient with getting inflation down then we have a massive Game Changer ahead because markets are not pricing in the FED being unwilling to let employment or unemployment rise in other words markets were pricing in that the FED is going to cause unemployment That's What markets are pricing in and that is the basis of the bear thesis because the Bears believe once we start causing unemployment we're going to have an earnings recession but wait a minute if the FED changes the script and says wait no we don't actually need to cause unemployment first of all the Bears are going to lose their sh-19 because we're going to realize oh my gosh the whole narrative that we've been told which is the fed's going to cause unemployment will end up being false that's remarkable and it's especially remarkable because of the following so I was debating this bear and then we'll keep going with this piece here I was debating this bear just the other day and uh it was well I guess I shouldn't oops that's the other thing I guess I shouldn't necessarily call it a debate I would call it more of uh me asking some pointed questions we'll put it that way uh the reason I ask these pointed questions is because uh this person has a bearish tilt I think they're very educated I think they're very smart and they have very good arguments but I do I think they very clearly have a bearish tilt uh and that's okay so so they make this argument here lots of comments about bears being dead lately I think what people are forgetting is something broke in the system the regional banking system fed forced to inject liquidity via the bank term funding facility uh and uh and markets bottoms since then and have been higher since you know the end of last year now what's interesting is markets are higher because of the wealth effect or driving the wealth effect higher rather which you'd think would reignite another round of inflation there have been slight cracks in the job markets and a sign that the economy is slowing but people's assets are up so people have more money to spend and overall the job market has been relatively resilient so basically buried into this argument is is this idea that hey look you need to cause unemployment because the jobs Market has been resilient and people's wealth is going too high and that's going to cause inflation now my personal counter to that which is sort of more of a tangent to where I want to get to my argument to that is obviously check out the coupon code linked it down below because we have a big expiration coming up this Friday which is after this crazy week but this Friday we'll be uh having another coupon expiration mostly because we're going through the the starting phases of a new refresh of adding a ton of lectures we're going to keep the old lectures for adding a ton of new lectures to make sure people get a great start in all of the courses so we've got some really cool updates coming from those but really built into this argument here is the the thought that if we don't cause wage loss or sort of job loss then people's wealth will be too high and will cause inflation the counter to this is well look at 2012 really to 2020.
we didn't cause inflation solely because people's wealth went up right so there's not a direct link between I would say the stock market necessarily always driving people spending up and causing inflation the wealth effect has a larger effect on consumer spending when it comes to real estate prices but even then can if our economy can absorb that additional spending that is because Supply is becoming more efficient or becoming more productive as workers and we don't necessarily cause that inflation so now what I think is interesting is actually I'm not trying to Pat myself in the back here but I end up I end up replying with hey so to clarify you're basically saying the wage effect is going to lead to higher uh higher spending uh and therefore a higher propensity of businesses to raise prices right and so uh the response here is without Demand Being crushed inflation will remain sticky and elevated the wealth effect is driving assets higher and that keeps the stickiness going and so the stakiness argument is probably at this moment one of the most powerful arguments the Bears have which is that as long as inflation remains sticky the fed's gonna have to have to act harder and raise rates more now I dispute that because I believe the Federal Reserve does not actually have to raise rates more I believe the FED could actually say look we're happy with rates where they are and what we'll do is we'll just we'll just wait for that stickiness to go away unfortunately only for really the Bears if if the FED just Waits For That stickiness to go away well then what you end up with is a situation where patience prevails and if patience prevails that sticky inflation will probably Trend away uh without crushing markets or employment but my favorite response here was actually where's my chart I had a little chart that I replied with oh maybe it wasn't actually in this reply oh here it is okay uh so I wrote and services inflation is still sticky that was sort of my I was summarizing his argument pre-summarizing his argument and uh and so then I asked him I go you know how much fed patients do you think markets are pricing in right now because take a look at this chart this chart here shows that U.S wage growth continues to soften but what I really want you to pay attention to when we look at this chart when we blow this chart up that I posted on Twitter follow me on Twitter by the way at realme Kevin uh when you look at this chart closely what you'll actually find is that it peaked it right at the beginning of where that 2022 number starts so Jan January of 2022.
well inflation didn't Peak until six months later which suggests that if there is a link between wage growth and inflation what will actually end up seeing is a six-month delay and if you look at this chart you can see we've had the largest declines most recently in wages which somewhat suggests that if the largest declines in inflation have been res or in wages have been recent then the largest declines in inflation are yet to come so this really coincides potentially with this flip from the Federal Reserve on hey you know what we're going to be more patient we're not going to force a job loss because why would we cause job loss if we don't have to if we could just let the Dynamics of basically inflation prove itself to end up being transitory by being patient now don't get me wrong when I say that there are a lot of people say oh but Kevin they were wrong the last time they were that is correct but that doesn't mean they have to be wrong twice in a row now there's a chance of that of course where jaded against the FED at this point remember last time they were still printing money in March of 2022 when inflation was six percent that was stupid my seven-year-old knows you don't still print money when inflation is six percent but that's what happened anyway so uh so looking forward when you overlay and this is an interesting chart as well when you overlay what's actually happening with inflation and you overlay that with what's happening with wage growth you could see this a little bit more clearly so I'm going to throw this on screen here and that would be uh well hopefully it actually ends up appearing so I'm having a little bit of an issue getting getting it up at the moment hold on a sec it's supposed to be there but it's not okay I will plug that in again but basically it just overlays inflation coming down with uh wage growth coming down and uh the argument is that okay well if both are slowly trending down then maybe we don't need to raise rates more this article continues and also suggests that the prospect of oh here it is I finally got it to show up oh how interesting it's um it's presentation mode is a little funky but you know what um that could end up being okay so we'll just go with it I think we'll just go with it yeah it's just showing the whole presentation mode which is usually it's cleaner and just shows the picture but whatever so anyway so here you have that U.S wage growth inflation slowly moderating and we want this moderation to continue here on the white line You'll see U.S average hourly earnings right here and we can see we've notched the lowest level here at the lowest advance of wage gains in the last 12 months so we could see we're really seeing this moderation happening uh slow slowest advance in nearly two years actually look at that nearly two years you have the slowest advance in wages here and then the blue line is inflation and you're actually what you've seen is you've seen this decoupling right so you see this inflation uh right here this blue line and you see this wage growth wage growth actually falling and decoupling away from inflation uh that's actually quite remarkable because again it's reiterating this idea of wait a minute maybe wages aren't what's actually driving inflation maybe this really is a supply or was a supply chain issue uh anywho so that's a pretty big charm but then there's this idea that okay well you know uh what about you know the banking crisis or how is this going to affect jobs in general and this article goes on to say that uh initially while we thought really cooling the labor market was important this article points out that in just the last cycle in the last of in the May meeting Jerome Powell in his press conference said the following quote I do not think that wages are the principal driver of inflation I think wages and prices tend to move together and it's very hard to say what's causing what Powell's remarks alluded to a crucial question in the emerging wages versus prices debate or wages a large driver of inflation or is it more likely to be the other way around is inflation a driver of wages and this is fascinating because it goes back to the argument of the wage price spiral the thesis used to be that if wages go up people will be able to spend more money because they can spend more money businesses uh can end up demanding more money and then wages go up again because now because businesses demand more money hence there's more inflation you end up getting employees going well too that I can't survive I need to I need I need more pay maybe that argument is actually entirely flawed maybe what's more likely to be true is hey uh a lot of people have more money and they're buying our crap a lot more and business is doing really well and we actually have supply chain shortages leading to price increases but that's leading to profits rising at businesses he uh how about letting the employees share in some of those wage gains employees get wage gains then the supply chain shortages go away and profits stop growing as wildly and what happens oh wow maybe wage growth plummets so maybe wages don't actually drive the prices businesses are setting maybe it's really just demand okay interesting so anyway a new research from within the FED system also supports this thesis a statistical analysis suggests faster wage growth has contributed quote only minimally to faster inflation in recent years according to a column by the San Francisco fed the columnist noted that businesses can absorb those costs via lower profit margin or using automation this is when wages go up uh businesses can basically absorb those with more productivity or why that whatever rather rather than solely uh continuing to raise wages before the pandemic often groups often referred to pay bumps as basically the start of inflation but we've really not seen that inflation uh let's see here we also oh this was a good chart as well then they go into this chart on small businesses and uh wage gains there we go I fixed the iPad in the meantime take a look at this fewer small businesses plan to boost pay sheriffs companies actually raising wages remains elevated so in other words you have the blue line indicating net percentage of small businesses raising wages uh or sorry that's the white line and then the blue line is net percentage of business uh of businesses planning to raise wages in the next three months so you have this differential of basically hey have you raised wages versus are you going to raise wages now I'd really like to see uh Bloomberg or somebody do is I would like to see this chart for companies like uh Pepsi and uh Kimberly Clark and Procter and Gamble and basically your Consumer Staples where they keep bragging about having raised prices but I actually think the chart here is very much the same where you have a lot of businesses who have just raised prices or year over year have raised prices but the number of businesses planning to raise wages going forward or companies planning to raise raise prices going forward is much lower than those who have so I'd actually think this is quite a fascinating chart because it really shows you that difference additional additionally they have some quotes in here about how there's this mismatch between mapping inflation and wages and I think that really just goes to reiterate some of the things that we've just talked about but I want to talk about some of the implications of of what this Federal Reserve policy shift could mean and specifically how we might identify it in the fomc conference so first of all if the Federal Reserve suggests that yes indeed we are willing to let uh the unemployment rate stay low because we don't believe that the unemployment rate causes inflation then what the FED is really doing is they are telling you hey everyone we're not going to force a recession in fact we think that inflation can slowly go away without causing joblessness and your songs are going to go up that I think is in the most clear English what this fed flip-flop could mean now I understand there are these traditional arguments uh for example somebody who takes this argument very clearly is actually somebody I met on a playground which sounds very odd uh but but chamoth has this sort of traditionalist argument of we need to see the Federal Reserve absorb liquidity we need to see the the Federal Reserve continue with their quantitative tightening and basically all of that money that was injected into the the system needs to be sucked out and that sucking out is going to drive markets lower you know trimath has been a very big proponent of sort of not being in the market not being exposed to a quantitative tightening regime because we don't know the outcome of quantitative tightening uh and this is a very fair argument because technically he should be correct but he might not be correct because when we look at the first sort of real drawdown of uh of refilling the treasury general account for example last week we look at this first real liquidity drawdown as and again I'm not trying to Pat myself on the back it was just a very clear prediction what ended up happening was what we talked about the reverse repo facility saw its balance go down and we saw the treasury general account go up in other words some of this quantitative tightening that everybody is afraid of is really being buffered by the uh the repo facility now so what is the repo facility and like you know explain it to me like I'm five basically when banks have extra money bags sitting around they can put those money bags at a special place and we call that the repo facility and the amount of money bags sitting there is roughly in the amount of uh two trillion dollars which is pretty remarkable because it's a lot of money and we just saw reverse repos drop about uh uh let's see here I'm trying to pull up a chart of reverse repos if I can but we we just saw the the reverse repo facility drop about 106 billion dollars as the TGA the treasury general account was being filled up and it's not a surprise because you can actually make more money buying six month t-bills right now that you can make in the reverse repo facility uh and so what's great about this is is really another way of saying that the Federal Reserve can uh can allow this tightening to occur and all we're really doing is removing some of the buffer that banks have we're not necessarily taking that away from people this is phenomenal so really you're in this I hate to say it but like potentially giddy scary Goldilocks environment where we don't cause massive unemployment we therefore don't cause a recession or if it is a recession it's very nominal quantitative tightening doesn't actually hurt us because the reverse repo facility buffers us once the reverse repo facility draws down to zero which will take a very long period of time and we consider even if you're you're tightening to the tune of a 100 which you're not you're kite into the tune of about 80 billion dollars a month but let's consider along with treasury borrowings it's 100 billion dollars a month it would take you 20 months to draw down the whole repo facility 20 months of drawdown is is basically just over a year and a half a year and a half from now will be in 2025.
the economy could be so beyond a recession that any of the actual impacts of tightening might not matter or at all at that point at that point it's like sure go ahead and tighten don't worry the party's still going so again I'm not trying to come across as like this this Perma Bowl I really am trying to study the Bears as much as possible and I'm trying to understand what you know what what everything is happening in the economy and it's very difficult to put it all together but when you start putting the pieces of the puzzle together you go wow If the Fed on Wednesday reiterates their shift away from causing unemployment first of all that'll be very politically popular and you're going to get a lot of uh people alleging that Janet Yellen and Joe Biden gave the uh you know Mr J Powell a little phone call and they're going to put their tin foil hats on and they're going to make the argument that this is all politically motivated to ensure that Donald Trump can't be elected you know that's that's the argument that's going to be made Trump by the way goes to court tomorrow in Miami at 3 P.M but anyway aside from all that it's it's interesting because it seems like the the folks peddling the bear narrative or grasping at straws and I'm not suggesting there won't be a Black Swan but let me just put it this way I don't think right now other than the inverted yield curve there's so much terribly scary and this flip from the FED really reiterates that potential and it's kind of mind-blowing to me uh kind of mind-blowing so I'm I'm I want to be as I say the cautious Optimist but the more studying we do and I think together the more we we discuss this the more we start realizing the FED is not trying to destroy this economy and that is going to be statistically very very good for the stock market which is also quite strange because it doesn't feel like we should be hitting you know all-time highs over the last year I guess that's that's one year high so it's on all-time Highs but soon enough we will probably surpass November of 2021 and uh I think people are going to lose their mind if the stock market surpasses November of 2021 and goes back to sort of this euphoric area era uh without some kind of recession first uh but uh you know what I'm here for it so uh yeah uh with that said have I reminded you about our paid promotions like stream yard stream yard is what I'm bringing this content to you by uh I can throw up little banners like paid promotion I could throw up a little screens around the edge if I wanted to uh take a look at this take advantage of a special price on the courses I'm building a rough link down below you can also use buy now pay later now which is kind of cool well I'd say maybe about 30 of people are using clarna after pay a firm to check out on the courses although you can get in pretty uh I would say overall inexpensively for the value you get uh and you get lifetime access you get our course member live stream which we'll be going to after this stream and I look forward to seeing you there so uh uh yeah check that out link down below we've also got some other links down below another link down below that I really wanted to point out is actually a new one see this uh this Divine well actually the camera that I'm filming on and I'm still playing with some of the settings on this so I still have some learning to do uh but what's really incredible is uh I have this little thing called an insta uh what is this thing called I don't know just go to go to metcaven.com webcam and so I have this new camera that will actually follow my head where I go uh you can see that and so I have my hands free right here and this camera will actually follow me uh where I'm going oh I just I disabled it by doing visual commands so you can actually also disable this with visual commands like I could put my finger up like this and then it flashes blue to acknowledge me uh and then hold on let me make sure I'm doing it right something to this effect and then I should be able to is it going to work somehow uh that's probably oh there it zoomed in a little bit it's on it's on face tracking so I saw it zoom out again right away but the point is you could do like these hand signals and I'll zoom in and out I really think the face tracking thing is pretty pretty cool though because uh um it just keeps you centered in here and it zooms in on you as you move around uh you know I don't want to cause anyone queasiness but it's really cool uh device so uh check that out uh metcaven.com webcam it's probably I would argue the best webcam that I've used and I've been traveling quite a bit I think I've tried about five different webcams there was actually a point where I just resigned myself to using the Mac webcam but then I was in New York and I had this massive glare and I couldn't get rid of it because it's the computer webcam and I'm like I need to I need to get a better camera so I finally did and here it is met kevin.com webcam all right so um that concludes that uh that Fred piece
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