Nouriel Roubini, CEO at Roubini Macro Associates, explains the “megathreat” he sees from higher interest rates, why he expects an economic and financial crash, and US labor market issues. He speaks from Cernobbio, Italy.
BlackRock Expects Fed to Keep Hiking Rates
(Bloomberg) — The Federal Reserve will press on with interest-rate hikes despite the collapse of Silicon Valley Bank, according to the BlackRock Investment Institute. Although stress in the banking sector is denting investor confidence and tightening financial conditions, the US central bank will need to continue to raise rates to combat rampant inflation, says the research arm of BlackRock Inc., the world’s biggest asset manager. “We don’t see these developments allowing the Fed to halt its rate hike campaign-this is a very different environment from 2008 when all monetary policy levers were used to support the economy,” BII strategists wrote Monday. “Instead, by shoring up the banking system, the Fed can focus monetary policy on bringing inflation down to its 2% target.” According to BlackRock, the collapse of Silicon Valley Bank is an example of “financial cracks” stemming from the fastest rate-hiking campaign since the 1980s. Knock-on effects for the economy will include tighter financial conditions and credit supply, particularly in the technology sector.
But the situation is different than the global financial crisis in 2008, BlackRock said. The assets at the center of the current bank troubles — US Treasuries — are among the most liquid and transparent, which will increase the effectiveness of the US government’s measures to prevent wider contagion. The firm also said that most equities aren’t fully pricing in the economic damage of the Fed’s hikes, and it is sticking with its underweight stance on developed market stocks. NN: US Treasuries are one of the greatest investing vehicles ever devised. BUT they are complicated buggers. The secret is duration and skillfully anticipating future rates. This is an art not a science. I do not care how many mathematicians you have. How many chalk boards you fill up with equations. Or how many super computers you string in a row, it will not work unless you have a overview of the economic fundamental events. The whole shit storm is because said mathematicians and 500 super egos with doctor degrees from prestigious universities made one obvious and simple mistake. They declared from on high that inflation was transitory. And the pompous prick professor elitist economists are making another mistake. They do not understand how big the inflation boogie man is and how hard he/she/it will be to kill…. that begs a question. Is the boogie PERSON a boy, girl, binary or transgender fluid? Really i could care less. I say kill the bitch, prick asshole while you still can. BlaskMask Podcast: