Gang Hu, a managing partner at WinShore Capital Partners, is warning that it could take more than a year for inflation to fall enough for the Fed to cut interest rates. “My personal judgment is that the Fed is not going to 2% inflation very quickly, but I don’t see flyaway inflation either,” Hu said. “The Fed, for right or wrong reasons, is likely to stay at 5.25% or 5.5% with rates in 2024, even if you think the steady state of inflation is 4%.” In other news, Frank Giustra, CEO of the Fiore Group, is throwing a red flag amid all of the buzz around new AI technology. He said that AI could potentially put billions of people out of work. He also said that mass joblessness that AI causes could pave the way for a universal basic income, which would be distributed via CBDCs. “If governments, using AI and surveillance, implemented that around the world, and had access to your bank account, and could either punish you or reward you for your behavior through Central Bank Digital Currencies, what a scary world that would be,” he said. “In the end, the government will have more control over its population… and governments are controlled by politicians, and politicians have their own agendas.”
MarketWatch/Vivien Lou Chen
Inflation could ‘easily’ take more than a year to decline enough for Fed to cut rates, trader says
Hu of New York hedge fund WinShore Capital Partners came away with these four takeaways from January’s data:
- It could “easily take more than a year” for inflation to meaningfully decline by enough to prompt policy makers to their benchmark interest rate once they reach 5.25% to 5.5%. That’s a roundabout way of saying rates could stay that high in 2024, up from the current level of 4.5% to 4.75%.
- Rate hikes thus far aren’t having the same impact on the economy as they used to because Covid has taken millions of people out of the workforce, boosting job availability relative to the number of job seekers. Economic growth will have to come down by even more than expected to put a dent in inflation, Hu said.
- Key parts of the inflation market, namely the Treasury-inflation protected securities (TIPS) market, may be incorrectly concluding that the Fed is going to be in control of inflation. The TIPS market is indicating that inflation will go back to the Fed’s 2% target within a year, and that policy makers will maintain control for the next 30 years, in Hu’s estimation. He says the TIPS market is working on the assumption that the Fed’s will power is very strong when it comes to arresting inflation. As of Tuesday afternoon, 5-, 10- and 30-year TIPS breakevens were all around levels that implied less-than-2.5% CPI inflation rates, according to Hu.
- CPI fixings, or derivatives-like instruments, currently suggest that the annual headline CPI rate could gradually drop to below 3% by September, but that “could very well be wrong,” the trader said.
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Kitco News/Cornelius Christian
Frank Giustra warns that the dollar will be dethroned in ‘bifurcated’ global monetary system, CBDCs and AI could usher in a ‘terrifying’ world with mass joblessness and digital ‘control’
The U.S. dollar will be dethroned as the sole global reserve currency, leaving a bifurcated monetary system with the BRICS (Brazil, Russia, India, China, and South Africa) and their allies using a reserve currency backed by gold, alongside Western countries retaining the U.S. dollar.
That is according to Frank Giustra, CEO of the Fiore Group and Founder of Lionsgate Entertainment.
Giustra, who also chairs the International Crisis Group and is Founder of the Quantum Gravity Institute, made the forecast of a global monetary reset several years ago, and observed that de-dollarization trends have accelerated since Russia’s invasion of Ukraine.
You can read the full article, here.
Finbold/Justinas Baltrusaitis
Gold’s market value now 6x higher than world’s 10 largest banks
For centuries, gold has been regarded as a status symbol, alongside acting as an important financial product that has retained significant valuation. Notably, despite gold also being impacted by economic headwinds in recent years, the precious metal still controls a superior market capitalisation compared to that of established global banking giants.
In this line, data acquired and calculated by Finbold on February 14 indicate that gold controls a market capitalisation of $12.34 trillion. The valuation is at least six times more compared to the combined market cap of $2.03 trillion controlled by the world’s ten largest banks.
Indeed, the American banking giant JPMorgan Chase (NYSE: JPM) is the most valued bank with a market cap of $418.34 billion, followed by Bank of America (NYSE: BAC) at $285.08 billion, while Industrial and Commercial Bank of China (1398.HK) is third with a market cap of $216.61 billion. Wells Fargo (NYSE: WFC) occupies the fourth spot at $184.52 billion, while Morgan Stanley (NYSE: MS) is fifth with a valuation of $166.54 billion.
You can read the full article, here.
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