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CNBC’s Leesman in a recap with the staff on Squawk on the Street weighed in with some of his thoughts.

  • If the Fed are to do a 1/4 basis points, they should do 50.
  • He commented that Bostic said that the Fed is “sufficiently restrictive” (argues for staying the course)
  • Fed’s Bowman said specifically “hikes. (argues for more than 1 hike).
  • Thinks the “Big Guy” wants to take a step back and wait, but also says that he does not want to be the guy who can’t stop inflation.

My thought is the fiscal stimulus is spoiling the Fed’s intentions and work now.

T Fiscal stimulus is still out there and will remain out there and is leading – and will continue to lead -to a shortage of workers. I commented earlier how workers are tearing up the curbs in our neighborhood that already had ramps on them, and putting in new ramps. Admittedly they may not have the little nubs (they are smooth), but it’s in a residential area with little traffic too. Do they really have to be done now?

Other roads are being repaved (again).

Intel is down the road and they are continuing with their new “fab” helped by the Chips Act. TSMC is up the street and they have put a pause on their new manufacturing facility as demand slows and workers are hard to find.

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I saw my pool guy who resurfaced our pool a few years ago. He says daily laborers are asking for $200 per day, an hour off for lunch, and free Gatorade (I found that interesting).

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Fiscal spending just doesn’t disappear. It’s appropriated and then spent. Biden yesterday said that money is there to build the wall. So he will start building it again. Interesting.

I commented to Adam yesterday that the impact of Covid is still being felt and mistakes continue to be made. The Fed was too low for too long, and then did not raise rates fast enough. They are now on a higher for longer, but they still had the Fed Funds rate coming down 50 basis points next year (assuming one more hike in 2023).

Fiscal stimulus was strong when needed at the start of Covid, and then stayed strong as politics from the last election took over at the end (PS Trump was also looking for additional stimulus during the election process).

I still see commercials saying that if your business was impacted during Covid, that you could still apply for federal relief. Do we really need it?

Of course, the supply issues were real and it seems that is now more normalized but it was a shock that raised prices/inflation (which has not been retraced). The Ukraine war was another shock.

It does seem that the bond vigilantes have gotten to their “come to Jesus” moment where they now look at the negative yield curve and say “HMMMM. That is not right”. The 5% level seems like an obvious target for the 10-year yield, but I am thinking 5.5% is more like it to get the yield curve positive – but still not by much.

Longer down the road. Baby boomers are retiring and looking for their Social Security payments. Higher deficits.

Higher interest rate costs on US debt look like they will increase the deficits as well.

This ain’t going to be easy.

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