1. raise rates 50bps a few times in a row (ideally, every month not just every meeting)
2. raise rates 75bps next meeting
3. immediately reverse the madness of bonds purchases
4. apologize to consumers and Congress for their inability to forecast the future
5. Replace Jay Powell with Jim Bullard
6. ALL OF THE ABOVE

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One would have assumed that all Technology stocks are down YTD
Yet, many reasonably valued, Technology companies are bringing in positive returns YTD.
Do you own any of them?
Or, are you still mesmerized by the infinite promise of SnowFlake – fighting the demanding valuation of (EV/Sales 44!) and incurring operational losses?

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1) keeping rates at zero for 15 months longer than needed when the unemployment rate is 3.8%?2) buying Treasuries and Mortgages (!) when the real estate market is red hot. So, what eventually happens to the grossly overheated economy? Is it supposed to land softly? Only in our wishful thinking…

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Well, unfortunately, that was true when the Fed was hiking early in the cycle.
When the Fed is hiking SO OBVIOUSLY late into the cycle – that hurts when they should think about easing. 
If only the FFR was already at 3% or so…

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In general yes, higher rates do help banks. But in reality, banks just transform liquidity from the short-term towards the mid-term. They take deposits at 0.2% and issue 3-year loans at 5%.I.e. banks need a relatively steep yield curve. To that effect – see how the Banks stocks index is negatively correlated with the slope of the US Yield curve. The Fed’s being so late to raising rates would succeed in flattening the yield curve. Given how late into this cycle we are, bank stocks would struggle with high-cost inflation and the flattening yield curve.
The evidence of the global economy being solidly in the late-cycle:

1. unemployment of 3.8% – the lowest in decades
2. commodities are ripping as if we are entering late-cycle tightness
3. the inflation of ~8%

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While we still believe that $200/barrel is almost inevitable, food inflation is far more important.
First, food is a much bigger expense than % of direct spending.
Second, the US has seen $150 nominal oil before, which adjusted for inflation since 2008, bringing us straight to $200/barrel.
Third, with the planting season being off in Ukraine we are likely to see global food shortages.
What countries are at risk?
Well, Ukraine and Russia produce about 25% of global wheat and lots of eat is shipped via the Black Sea to the Middle East and North Africa…
Tough, tough situation …

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Latin America stands to benefit from increased allocations
as Russia became uninvestable, and people are getting for related reasons even more cautious on China. Regional indices of Brazil, Mexico, and others are doing well – both in local currencies and in USD.

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Based on my contacts in Ukraine the planting season for wheat is off….
Ukraine produces about 13% of global wheat.
Russia produces another 14% and its traditional shipping routes through the Black Sea are closed indefinitely.
This disturbing war would echo on every table in the world.

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… and that is yelling out loud: recession.
I would say, stagflation.

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