The Pomp Podcast

#856 Inflation is At Least 10% w/ Darius Dale

Mar 11, 2022
Guest
Darius Dale
Darius Dale, Founder and CEO of 42 Macro, delves into the pressing issues of the macro economy and financial markets. He shares insights on the true inflation rate, noting it could be closer to 10%, and discusses the Federal Reserve's struggles to manage it amidst rising commodity prices. The conversation also touches on market volatility, highlighting unique investment strategies like 'GTFO signals'. With a blend of humor, they debate the implications of rising food costs and even dive into personal health and sleep preferences.
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INSIGHT

Inflation Momentum

  • Focus on inflation momentum, currently at 10%, rather than the 7.9% static figure.
  • High inflation causes incrementally tighter monetary policy, making the Fed's battle against inflation harder.
INSIGHT

Fed's Tools and Resolve

  • The Fed primarily uses policy rate, balance sheet adjustments, and forward guidance as its tools.
  • Markets may be underestimating the Fed's resolve to combat inflation, similar to the Draghi moment in 2012.
INSIGHT

Recession Choices

  • Investors face two choices: recession due to inflation eroding purchasing power, or recession caused by the Fed tightening policy.
  • The Fed likely prefers the latter to maintain credibility, impacting investment strategies.
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