Hope is not a strategy.
There have been a couple consistent points that we’ve been making over and over again when it comes to our national economic policy.
The Federal Reserve has been incredibly clear – and almost unbelievably frank – that it will continue interest rate increases even at the cost of economic growth.
There’s no complicated analysis required for this, nothing like the Kremlinology from the Cold War when so-called experts would make sweeping declarations based on who was standing where during the May Day parade.
Federal Reserve officials have been very consistent. They are in lockstep. Agree or disagree with their strategy, one has to admire their truthfulness.
I mean it.
It’s rare in politics.
They keep telling us over and over again that fighting inflation is the priority and if that means a recession, so be it.
So why do people keep broaching the idea of a “pivot?”
The problem is the nature of the Internet. Sensationalism sells, and so do counter-intuitive takes.
So if the Fed says it is committed to interest rate increases, there’s always someone out there who can say: “ACKCHYUALLY, THIS MEANS THEY ARE REALLY GOING TO CUT RATES.”
Look, sometimes the truth is just in front of your face… even if it’s a hard truth.
I’m inclined to agree with Jamie Dimon that we are heading into a global recession… and “Mr. X” warns that the war in Ukraine will extend into 2023.
It will not be a universal bear market and there will be plenty of opportunities for profit.
But we can only prosper if we go in with no illusions.
Keep Moving,
WORD ON THE STREET
Russia Intensifies Bombing, Dimon Warns Of Recession, PayPal Plunges
- Doomer Dimon – “Very, very serious” obstacles are what Jamie Dimon sees ahead for the global economy. While he conceded that the current American economy was “actually still doing well,” he argued the USA would be in a recession six to nine months from now. Europe, he said, is already in a recession.
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Russia Unleashes Strategic Bombing – In response to an attack on a key bridge that connects to Crimea, Russia unleashed airstrikes on a level that hadn’t been seen since the start of the invasion. Critical infrastructure, including government buildings and power plants, were hit. Civilian casualties were also reported.
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Get Woke, Go Broke – That slogan doesn’t always seem to capture the truth, but it definitely described the situation for Paypal yesterday. PYPL was down more than 6.2% after a report that the company would be fining clients $2,500 direct from their account for spreading “misinformation.” The company denied the report, but not before blistering criticism spread on social media. PYPL was down further in after-hours trading.
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Fed Officials – Fighting Inflation Trumps Economic Growth – Fed Vice Chair Lael Brainard said that there is “clarity that monetary policy will be restrictive for some time, until there is confidence inflation comes down.” Meanwhile, Charles Evans of the Federal Reserve Bank of Chicago said “inflation is the most important thing to get under control.” That might make unemployment go up, he conceded, but said that would merely be “unfortunate.”
HOT SPOTS: What’s Going on in Geopolitics
- Russians Moving Into Belarus – As reinforcements trickle into Russia’s wavering defensive lines, there are reports that Russian troops are once again gathering in Belarus. Belarus has served as a staging ground for the initial Russian attack, though its own forces have not been directly involved in the conflict. President Alexander Lukashenko said that he is deploying his forces alongside Russian troops because of a supposed threat from Ukraine – within Belarus’s borders. The European Commission warned of additional sanctions against Belarus if it serves as a staging area for another attack on Kyiv. If Belarus is pressed too hard, will it join the war in earnest?
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Iranian Oil Production Threatened By Protests –Demonstrations in Abadan and Asaluyeh are reportedly threatening oil production in Iran, as protests continue to spread. At least one man was killed by security forces as Tehran tries to crush the protests. However, with some security forces already killed, the people may have lost their fear of the regime.
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China’s “People’s Daily” Defends Zero COVID Policy – China’s zero tolerance approach to COVID-19 has wreaked havoc on the economy, leading to production shutdowns that have put economic growth targets well out of reach. However, the Communist Party’s “People’s Daily” said the policy is “sustainable,” removing hopes that President Xi Jinping is going to let up after the Party’s leadership conference.
CUTTING EDGE: What‘s Happening In Tech
- Hulu Jacks Up Subscription Prices – Inflation is hitting everywhere. Hulu, owned by Disney (DIS), is raising its ad-supported plan to $7.99 a month and its ad-free plan to $14.99 per month. The Disney bundle that includes ad-free Disney+, ESPN+, and Hulu will stay the same at $19.99 a month… possibly a ploy by the company to get Hulu subscribers to pay for the whole thing for just five bucks extra per month.
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AI Doctor To Diagnose Illness On Your Voice – The National Institute of Health is funding an ambitious project that will collect voice data and use AI to diagnose patients simply based on their voice. Sound crazy? Well, you are paying for it in any event – the NIH’s “Bridge to AI” program has received more than $100 million from the federal government.
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Study Finds Colonoscopies Ineffective In Preventing Death – In a shocking study published in the New England Journal of Medicine, health experts found that colonoscopies don’t significantly reduce the risk of death in patients. The study threatens to upend conventional wisdom on colon cancer – the American Cancer Society recommends the procedure be performed regularly for those over 45 years old.
FOR YOUR CONSIDERATION
The war will continue into 2023. No side has a way out, and Russia’s position isn’t as weak as reported.
Mr. X called the Russian invasion… and now he’s predicting the war will continue into next year. For those who are simply reading the Western press, it may look like Russia is on the brink of surrender. However, Moscow can only escalate from here.
And a new player may enter the game…
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