A 'Too Strong' Economy The Biggest Risk For Investors? | Bob Elliott
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- Опубликовано: 19 июн 2024
- Bob Elliott, cofounder and CEO of Unlimited, which uses machine learning to create index replication ETFs of 2&20 style alternative investments like hedge funds, venture capital, and private equity, joins Julia La Roche on episode 170.
In this episode, Elliott discusses the macro picture and highlights that the economy is in an income-driven expansion, where people are spending out of their income, leading to sustainable growth. However, this income dominance is creating challenges for the Federal Reserve, as inflation remains elevated and nominal growth is strong. Elliott believes that the Fed will continue to collect more information before making any significant policy changes.
He points out that assets are in an “air pocket” right now, and that the biggest risk for equity investors is the economy remains too strong, creating pressure on the bond market. He suggests that investors should consider holding more cash, allocate a portion to gold and commodities, and be cautious about stocks and bonds.
Links:
Twitter: / bobeunlimited
RUclips: / @bobeunlimited
Website: www.unlimitedfunds.com/
Timestamps:
00:00 Introduction and welcome Bob Elliott
01:15 Macro picture today + income-driven economic expansion
03:34 Different angles of looking at inflation
06:11 Fed's policy outlook
09:15 Implications of higher for longer
11:50 Long-end of the bond market is the critical driver of asset prices
14:47 The biggest risk for equity investors is the economy remains too strong that creates pressure on the bond market
16:00 Allocating in this setup
18:30 We’re in an 'air pocket’ right now
23:19 The Fed
25:50 Gold allocation and commodities
30:10 Parting thoughts
32:46 Confusion of the income-driven expansion
36:00 Recession
#investing #inflation #gold
At the end of the video, Bob says bond yields have to rise as a result of raised rates. The Fed raised rates and there's always an 18-month or so lag time for the effect to occur. It looks like that's happening in this, and next quarter as the Fed allows rates to stay high as long as possible. The federal domestic spending is partially hiding the effect of higher rates now but the lower class is already in recession and when the next rung up the ladder feels the impact the economy will crumble very quickly along with the Fed rates.
Hey everyone! I hope you enjoy this thought-provoking conversation with Bob Elliott. Please join me in the comments section. Also, who else do you want to see on the show? Let me know! Thanks so much for your support. 💙Julia
9:56 Do the vast majomajority of households in the U.S. have jobs with regular pay increases, own a home, have a 401k? I’d love to see that data. 😊
Holy tone deaf alternate reality. The typical household owns the house, owns the car, carries no revolving debt and has income rising to keep pace with the costs of maintenance and insurance let alone entertainment? Maybe if typical means top 0.02%. My card statement says this month that should I ever need to carry a balance they now want 35%, and that's the pre-penalty rate.
Thanks Julia...great information, guest, and interview.
Super interesting, this was a great pod. So fascinating to hear all the different views and explanations of what we're seeing in the financial markets today.
Tysm dear Julia for such an instructive and informative interview!!!🇧🇷
Bob is one of the Best Economic analysts out there
Really? I just listened to him and he has absolutely no clue what's really happening.
Great episode, I really like Bob's take on things.
One thing I am more worried about than Bob is that the Middle Class Household he describes (36:51) is by no means the median American. The median American does not even have a 401k. So 50 or 100% extra on zero dollar still is zero dollar. Also it is very debatable if the median American owns his/her own house, so no luck there either.
This means that at least 50% of people are not enjoying assets price increases and are only negatively impacted by the 20% overall inflation impact since 2021. At some point this will lead to problems..
The Fed is in a "tightening" cycle based on manipulated data, but they are losening under the table through the manipulated data (example: continued excessive borrowing from the Treasury)
Exactly, you know financial conditions are still as loose as they've ever been when all indices (except small caps) are breaking records, Bitcoin is in the stratosphere again, and even the wallstreetbets clowns have enough spare money to try their games again!
Economic investigator Frank G Melbourne Australia is still following this informative content cheers Frank 😊
Yay bob!
I live in Santa Clara county (Silicon Valley). Sales tax revenue has gone down for the past 2 quarters.
Think of the absurdity of this title: "Biggest Risk for Investors is a Strong Economy." We are in serious trouble when a strong economy is a deterrent for investors. Goes against all basic investing principles.
Are you sure? What about Houston housing market? Are the listings and price reductions not an indicator of asset price declines?
I guess if you call consumer debt at all time highs positive and government debt in the same boat a strong economy than I must be in outer space . Shouldn't we have surpluses in a strong economy. Asking for a friend
Enjoy Bob's concise articulation of broad macro components, especially emphasizing this is a Public Sector Asset Appreciation Income vs Private Sector credit driven economy.
Although I expected more discussion about the magnitude of Fiscal Dominance and the continuing Bideneconomics Trillion USD deficits which actually do increase money supply and is one form of a credit driven economy.
The FED is also running a deficit fueling household incomes with its 2023 $140 Billion Operating Loss buried as a US Taxpayer Receivable on its Balance Sheet...no one seems to highlight/discuss these unprecedented deficit transactions.
Consequently NOBODY knows where this deranged CASINO is headed? Personally I anticipate icebergs!
Thanks so much for your feedback. I'll bring this up with my next guest. In the meantime, if you'd like more fiscal dominance conversations, I'd also recommend my conversations with Dr. Charles Calomiris, Luke Gromen, and Lyn Alden. We dive into that topic in those episodes.
Where is this wage growth of 5 or 6% a year happening?
if there is wage growth of 5 or 6% is just going to cause a wage-price spiral. Do a google search. In my province in Canada: "In 2023, B.C. increased the minimum wage by 6.9%, which was the increase in the cost of living in the province in 2022."
Not in my neck of the woods. I've only gotten a 6% raise since covid. I'm losing ground. Plus no OT!
Now that's taking hosting to another level....wearing black to match Bob who you know is gonna be in black. lol!
I did know that! I also wore a tank for my Hugh Hendry episode.
38:00 minutes of the video: So to slow the economy and inflation, "bond yields have to raise". Do that not mean the Fed has to raise interest rates? Because Bob doesn't actually say that.
Either the Fed has to raise or the bond market will need to do it for them.
scary stuff incoming
The economy is Too Strong? What drugs are you taking. Persons are suffering. WTF are you taking?
"The strength of this economy"? The people are dying.
Young People, and Young Economist have not lived through a significant downturn as adults, or even as cognizant youths if their parents dodged a bullet. Not enough flowers and butterflies in our economy to sustain their optimism forever with such poor fundamentals.
Do not be surprised to see in next 9
Years
Dow down 70%
Nadaq down 75
Mirage rates 10%
Bitcoin
Under 20,000
USA depression!