Fed Watch

Recession Avoided or Imminent? - FED 153

This week we discussion bitcoin developments like RFK backing the dollar with bitcoin. FOMC monetary policy decision. US GDP. And finally China facing hard truths.

Hosts: Ansel Lindner and Christian Keroles

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Fed Watch is a macro podcast with a clear contrarian thesis of a deflationary breakdown of the financial system leading to bitcoin adoption. We question narratives and schools of thought, and try to form new understanding. Each episode we use current events to question mainstream and bitcoin narratives across the globe, with an emphasis on central banks and currencies.

In this episode, we discuss all the important bitcoin news of the last two weeks, including the Lightning Summit highlights and RFK Jr saying he will back the dollar with bitcoin. The main topic for today is the Federal Reserves FOMC rate hike decision. We watch a few clips, and react. Next, US GDP came in for Q2 hotter than expected, so we discuss that. Finally, we go through a tweet thread by Michael Pettis about the changing realization in China among elites that they have to change their economic model, and that won't be easy to do.

Fed Chair Powell's comments this week after the policy decision were probably the least informative of the last year. He stuck to script, saying we will take it one meeting at a time, "inflation" is coming down and have seen some softening in the labor market. We spend a lot of time discussing Powell's performance as a Chairman of the Fed, its power or lack there of over the economy in the first place, and discuss our views on recession.

Through the rest of the show, we cover Q2 GDP for the US coming it at 2.4% annualized, comparing that to a period before the Great Financial Crisis. It looks strong now, but anything can happen in Q3 or into 2024. It doesn't mean a recession won't happen, just that all the fearmongers screaming about a titanic recession being imminent are flat wrong.

Lastly, the China developments. This is perhaps the biggest shift in the global economy since the US became energy independent because of shale. China is starting to realize the system that birthed their success is ending and they must radically reshape their economy. But in doing so, they will have to voluntarily and forcefully give up on the formula that brought them that success, being the global factory, insatiable debt, and rapid economic growth.