The John Batchelor Show

VIDEO: Predicting the Fed

June 14, 2016

Tuesday  14 June 2016   / Hour 1, Block B:  Sudeep Reddy, Wall Street Journal economics editor, in re: on Wed will be on video to talk about the FOMC meeting and where we are with short-term rate and direction for the rest of 2016.  Tonight, overview of global confusions The bond market holds that the Fed will not move tomorrow.  Clear that the Fed’s ueber-alles mantra is caution.  Fed’s leading index has been falling, and also has an overall jobs index that’s declining.    . . .  The problem now is a sudden slowdown; see same in autumn 2007; a few month later we had a recession.  . . . 38,000 jobs a month [?}  Return on capital is near zero on ten years – need 4% or 5% for a healthy economy; and not just here but globally.  . . . The US is a refuge in the sense that the dollar is still the world’s reserve currency, but Japan and much of Europe have serious demographic problems.  . .  The Fed saved us in 2008 with a burst of liquidity, but now, fiscal blockage, I think the Fed needs to send out an SOS to Congress.  Yes, regulatory issues and others; same in Europe. This is a problem in democratic societies where we had over the reins to unelected officials because they don't have to face the polls.  Eventually, Yellin will be able to pull interest rates up a little bit, but I doubt much more.