Geopolitical Research

Geopolitical Research

By Christian TakushiNews
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Geopolitical Research episodes

  • FED could shock markets in 1st half 2022
    FS Insider interviewed macro economist Christian Takushi this Wednesday 12 January 2022 at 3 PM GMT to discuss FED Policy and Interest Rates. Christian explains how markets are unprepared for what is coming. Misled, they are focusing on guessing the number of rate hikes - which is not really the issue in 2022.  Consensus thinks the FED has had a change of heart on inflation, it will hike rates 3-4 times during 2022, but if markets crash, the FED will immediately rescue them.
    Christian believes FED chair Powell is only deviating from his script, because of massive pressure from his new boss, President Biden. It is about politics. Americans are furious about rising inflation and they are on track to hand over both the House and the Senate to Republicans this November. Thus, the FED has to shock markets within the next 6 months, not 12 months. The FED may allow interest rates to overshoot in the 1st half 2022 to achieve this! Christian expects a rate shock outside of the FED schedule. What matters most in 2022 is the degree of surprise. 
    After taming inflation the FED wants go back to over-stimulating the economy and printing money. Thus, while the FED doesn't want sustained high interest rates, it surely could use a strong interest rate spike before August 2022 - that opens the door for more monetary and fiscal stimuli after the Fall. Without excessive liquidity and stimulus G7 economies will otherwise shrink - thus, inflation and negative growth would set in (stagflation). Both FED and ECB are working together for years to create inflation, letting it run hot (by keeping rates near zero while inflation runs at 7%) and taming markets with "we will hike interests rates next year". 
    In a nutshell, the high inflation we are facing around the world has been induced by central banks and aided by the financial industry's rush into ESG and green investments. Good idea, but flawed implementation - For over one decade energy companies among many other industries have not been investing enough in facilities. Banks and investors wouldn't even lend them the money. Now, in desperation a totally Russia-dependent Europe is trying to put nuclear and coal plants back on the grid. The same they did with Europe's military. Another example of Europe's lack of strategic foresight. 
    30 min
  • Ten difficult months for investors ahead!
    Politics matters! FED chairman Powell has said "We've got a problem with inflation", but since he won't do nothing today and has only announced some hawkish measures for 2022, many investors think it is the old "trick". They talked for 10 years they will normalise monetary policy, markets moved, FED did nothing. Investors think they know the FED - that served them well over the past 12 years: Buy the dips no matter what. 
    But over the next 10 months investors may pay a high price for this FED view. They grew accustomed to the fact that political and geopolitical factors were mere noise. Not so this time. Politics rules: The FED is on a "short leash" by President Biden and he won't let the FED hand over the House and the Senate to Republicans next year. Currently it looks very bad for Democrats. Americans are upset about higher consumer prices. Thus, President Biden must have said to the FED Chairman "Fed policies funned this inflation for years, now you bring it under control". This is why Powell II has nothing to do with Powell I - Not over the next 10 months. Once the Mid Term Elections are over, President Biden will let Powell have more leeway again in monetary policy. 
    G7 Central banks became Russia's and China's best friends 
    During the next 10 months there will be more volatility for equities and other risk assets - the Dollar could easily break out on the upside and markets may build in expectations of higher interest rates. All that could make overpriced assets correct significantly. Worse off, the enemies of the West are now closely monitoring our highly vulnerable economies and stretched financial markets. They are conceiving plans to set off events so that the implosion of our financial markets, inflated wealth and vulnerable supply chain do most of the damage for them. As I have been saying last year, our Central Bank Policies have become the biggest threat to our National Security. G7 central bankers became in a way President Putin's and President's Xi Jinping's best allies.
    13 min
  • Update on inflation

    After inflating the price of bonds, stocks and real estate, central bank policy is now inflating consumer product prices thanks to excess money. But there is now a "policy bias" tension between the FED and ECB - something we didn't have over the past decade. The former has been given a mandate to fight inflation again to help President Biden avert a disaster at the Mid Term elections, while the latter is still fanning inflation and keeping interest rates at zero in order to reduce its debt burden. While most experts talked the USD down for months, a stronger USD could emerge. President Biden is shifting to the centre in order to lure back moderates. After years of fanning inflation a new role for central banks. And they are now been held on a "shorter leash" than in past years. Less central bank independence means more deficit spending in the long run. In the short term though governments can fight inflation by overreacting to the new Covid variants this coming winter. But the geopolitical-structural problem "energy" won't go away. Europe sits in the trap.  

    45 min
  • Biden shifts to the center - even FED policy

    President Biden is shifting to the center to avert a catastrophic outcome at Mid Term elections. Pres. Biden has given Mr. Powell a mandate to fight inflation in order to avert a Mid Term Elections disaster. This is also affecting Fed policy, the USD and real interest rates. Now a new "policy bias" between FED and ECB (which is still fuelling inflation) has opened that could feed a stronger USD. Swiss Franc is also winner in the short term, while Bitcoin and Gold have to digest the shift.

    10 min
  • The Big Reset
    How crypto investors are helping central banks - The coming Normalization of inflated asset prices to catch most investors wrong-footed. Interview with Financial Sense’s Chris Sheridan
    42 min

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Geopolitics - Economics - Markets.