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TD Interview: Inflation and Future Credit Risk

Here’s my interview with Oliver Renick and TD from yesterday. I brought my sledge hammer with me to demonstrate how Fed policy is currently operating. I also go into detail about the current macro environment and the risks going forward. Specifically:

  1. This environment is transitioning from an interest rate risk environment to a credit risk environment. This means credit markets could reamin under duress as benchmark interest rates adjust higher and debt gets reassessed at these higher rates.
  2. This is a credit and housing driven downturn. That means it’s going to be more of a disinflation story in the future and a longer drawn out economic event.
  3. The Fed can’t pivot at this point because they’ve already turned over the ball. I think they’re way behind the curve on inflation and this story will become more and more of a disinflation story as we head into 2023.
  4. This isn’t quite 2008 and it isn’t quite 2002. But it definitely isn’t 1978 in my view. That means it’s going to be a tough road to hoe. Patience and discipline are going to be essential for navigating this tough environment.

I hope you enjoy the interview.

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