This topic-packed CONVERSATION opens on a favorite theme, the peaking in US inflation with the latest Consumer Price Index (CPI) numbers in the spotlight. Consumer prices overall rose 0.1 percent in August compared with July when prices stayed flat. The 12-month inflation rate last month dropped to just 8.3 percent, down from 8.5 percent in July. That was higher than many economists had expected. Core CPI rose 0.6 percent in August, double the rise in July. According to Moody's Analytics, the average American household is spending $460 more per month compared with a year ago for the same basket of goods and services. Still, DICK BOVE, chief investment strategist at ODEON CAPITAL GROUP, says all the latest data confirms that inflation is peaking. "It went in the right direction, " he says. MAT VAN ALSTYNE, ODEON co-founder and managing partner, agreed, noting that the CPI is a lagging indicator. VAN ALSTYNE nevertheless lays out a scenario in which the Fed could reverse course on its present campaign to tame inflation with a succession of interest rate rises.

The CONVERSATION learns from BOVE about the sharply different strategies by Goldman Sachs and Morgan Stanley in the face of the recession anticipated by many on Wall Street. "It is going to be a tough period ahead for us," BOVE says, referring to the general population. "People are going to lose their jobs." When the CONVERSATION turns to the housing market, JOHN AIDAN BYRNE presents the bullish forecast of one realtor in New Jersey despite the rise in mortgage rates. BOVE picks it up.

This episode of the CONVERSATION is on the heels of the latest US unemployment numbers from the Bureau of Labor Statistics. In August, U.S. employers hired more workers than expected by economists. The unemployment rate edged up to 3.7 percent as record numbers, some 800,000, entered the workforce. The survey of establishments showed nonfarm payrolls rose by 315,000 jobs last month, after soaring by 526,000 in July.  Employment is now 240,000 jobs above its pre-pandemic level. DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, examining a host of indicators, including the Household Survey, sees signs of mounting layoffs on the back of declining productivity. "What I see in the [unemployment] numbers is very concerning," BOVE says. 

Across the Atlantic, the British pound hit its lowest level against the US dollar since 1985 as the UK's new Prime Minister, Liz Truss, officially took office, laying out a plan to rein in household energy bills for consumers at a staggering cost to the British treasury. BOVE says the plan will be massively inflationary for the UK economy. MAT VAN ALSTYNE, ODEON co-founder and managing partner, argues that the the best approach to slashing the cost of energy across Europe this winter, is the elimination of red tape and bureaucracy, and with an increase in the natural supply of domestic energy supplies. Joining the weekly CONVERSATION is journalist, JOHN AIDAN BYRNE.

E-Mail Questions & Comments: [email protected]

Markets dropped in response to the speech by Fed Chairman, Jerome Powell, at Jackson Hole, Wyoming last week. In strong and unambiguous language, Powell pledged the Fed's efforts to crush inflation, saying the overarching objective was to bring inflation down to the agency's 2 percent goal. "Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy," the Fed chairman stated. Powell pointed to higher interest rates in the future as well as a "restrictive monetary policy." DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP,  praises Powell's speech in this latest episode. "I really loved the speech, it was short and sweet and to the point," he said. BOVE explains why investors were shocked.  MAT VAN ALSTYNE, ODEON co-founder and managing partner, weighs in on what investors may really be thinking of Powell's posture.

The CONVERSATION also picks up on BOVE'S comprehensive new study on US inflation in the modern era. BOVE warns that many analysts have often overlooked the broader causes of the inflation that ravaged the US economy and led to stagflation in the 1970s. With lessons for today's soaring prices, BOVE says that to tamp down inflation, it was imperative to rein in the creation of credit. With student debt forgiveness in the headlines, the CONVERSATION has a lively debate on the US college system and student financing. The college system is broken, the CONVERSATION concludes. JOHN AIDAN BYRNE notes, for instance, the shortage of skilled vocational and professional workers in the labor markets as evidence of an education system that is underachieving.

The CONVERSATION presents a far-reaching study of the US economy from 1964 to 1991 by DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. The study covers a turbulent period of stagflation, oil embargoes, economic stress, street riots and political upheaval. It is a textbook case of the big “guns and butter” spending programs that fueled the inflationary spiral of the 1970s, from outlays on housing and the military to Medicare and Medicaid, according to BOVE. As BOVE reminds listeners, social unrest led to riots on the streets. MAT VAN ALSTYNE, ODEON co-founder and managing partner, says the study stands in contrast to the popular narrative of how the adoption of a fiat currency and oil embargoes were at the root of the economic stress during this period. At the same time, JOHN AIDAN BYRNE notes the complex reality of this era, pointing to the breakdown in the social order, a cultural revolution, de-industrialization and other factors.

The CONVERSATION returns to the persistent theme of inflation with an eye on this week’s Annual Economic Policy Symposium in Jackson Hole. “The Fed should take a strong cautionary stand that they are going to kill inflation,” BOVE said. Rising prices would cause the economy to collapse, he adds. VAN ALSTYNE wonders how credible and impactful the US Fed’s statement will be coming out of Friday’s meeting at Jackson Hole, since this time last year, the Fed thought among other things the then signs of inflation were “transitory.”

E-Mail Questions & Comments: [email protected]

The Conversation takes another close look behind this month's labor numbers released by the Bureau of Labor Statistics. DICK BOVE lays out the mammoth task undertaken by skilled government professionals in compiling and analyzing a complex data set for the US population. As noted in the last episode, the latest numbers offer a conflicting account of the labor force when compared with a separate survey of US households. BOVE notes an uptrend in jobless claims as well as a decline in the number of hours worked per week. The real key is a reliable and consistent set of data that does not have components that can be "fudged" by statisticians, says MAT VAN ALSTYNE, ODEON co-founder and managing partner. Based on his reading of labor market and other data, BOVE expects a recession "of some meaningful magnitude" in the coming months.  

This is another topic-packed Conversation. From the prospects of the next interest rate increase as the Fed keeps the pedal to the mettle to tame inflation, to a potential funding disaster for the home mortgage sector, the Conversation offers some fresh perspective. BOVE says the US is headed for a real crisis in mortgage finance as the Fed steps back from supporting the mortgage sector with its past rounds of massive purchases of securities. At the same time, Wells Fargo and other banks are scaling back in home finance. The Conversation also turns philosophical on the existential problems of our time with JOHN AIDAN BYRNE arguing that our democracies and our autocracies are both battling their own internal crisis, and BOVE lamenting the lack of an ideology that could propel humanity to greater heights.

E-Mail Questions & Comments: [email protected]

The latest report from the US Labor Department says national job growth in July surged a whopping 528,000, a massive number that defied expectations, with the unemployment rate dipping to a 50 year low. The Conversation takes a look at the numbers. “There are conflicts here that are really deep and significant,” says DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, referring to the stark differences between two government labor market surveys, one reporting massive job gains, the other massive job losses. “If you dive deep into the data, you will see lots of the jobs created are second and part time jobs,” says MAT VAN ALSTYNE, ODEON co-founder and managing partner. “People are stretching to make ends meet.”

Joined by journalist, JOHN AIDAN BYRNE, the CONVERSATION offers a new perspective on the state of the labor markets. “More than half of the new jobs reported as created were in the low-wage sector,” says BYRNE. With analysis and research by BOVE, the CONVERSATION unpacks the data to see where growth is slowing and rising in the US economy, examining durable goods and other sectors. BOVE has a grim assessment on productivity and how this could impact the labor markets in the coming months. The CONVERSATION reports on changes at the top of Bank Supervision at the Federal Reserve. Also, BOVE reports that the Fed has finally started to taper, as he gives us some numbers and analysis on this as well as on inflation and global currency instability. Reshoring, bringing back jobs to America is a hot topic in boardrooms. Listen to the CONVERSATION and find out more on this and our other topics.

E-Mail Comments & Questions: [email protected]

The CONVERSATION examines the "fundamentals" driving the market. These fundamentals in the US have not been positive lately, according to DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. BOVE cites the recent 75 basis points hike by the Federal Reserve, bringing its benchmark rate to a range of 1.5% to 1.75%; two consecutive quarters of declining GDP, tensions over Taiwan, and more. Still, the stock market rallied in July, the S&P 500 up 9.1%, its best month since November 2022.  BOVE explains what is behind this bear market rally. MAT VAN ALSTYNE, ODEON co-founder and managing partner, said much of the market sentiment changed after last week's Fed Press Conference explaining the Fed's thinking in the wake of the rate increase.

With inflation ravaging US households and the Fed in hot pursuit, the CONVERSATION debates whether some companies are extracting higher margins and price gouging in the face of escalating prices for goods and services. Journalist JOHN AIDAN BYRNE notes how soaring prices for food have fueled higher spending on grocery and household products at discount dollar chains, at the expense of more traditional stores. Is this a recession? Listen to the Conversation.

The Conversation looks at the implications of a seemingly newly-emboldened BRICS group of nations—Brazil, Russia, India, China and South Africa—which last month convened and announced the launch of the New Development Bank, taking aim at American-leadership of the global economic order. "I do think it does represent a threat," said BOVE, noting how members have pledged to engage in more business and trade with each other.

E-Mail Questions & Comments: [email protected]

With all eyes on the US Federal Reserve and on the consequences of their action on interest rates this week, the Conversation is packed with timely topics—from the Fed's campaign to tame inflation to the new world of investing after a period of easy money. "The pressure now on the Fed to ease off is enormous," says DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP, referring to the Fed's interest rate campaign to tamp down white-hot inflation. This pressure is coming from many sides. From Wall Street to Congress, the Fed is taking it on the chin, as a chorus of pundits and investors conclude the Fed may soon end its interest rate rise campaign—and then start trimming!  "When the Fed will cut is now being speculated upon," says BOVE.

On Wednesday, June 27, the Fed raised its key short-term rate by three-quarters of a percentage point for a second month in row. That now puts the federal funds rate at a range of 2.25% to 2.5%, near the Fed’s 2.5% long-run, or so-called neutral rate.

On another front—this time, the shrinking of its enormous balance sheet—MAT VAN ALSTYNE, ODEON co-founder and managing partner, suggests the Fed might be "playing games" to give the appearance the financial system is in better shape that it is in reality. The CONVERSATION travels the globe, taking a look at Ukraine and the manifestations of war. Journalist, JOHN AIDAN BYRNE, notes the hammer blow inflicted on Europe with Russia expected to reduce the Nord Stream flow of gas to Europe to about 20 percent of the pipe's capacity. As the CONVERSATION picks up on the war in Ukraine, BYRNE says that war by nature is brutal, tragic, never exactly predictable in outcome nor comparable to a game of chess. BOVE makes his case for why he sees Russia in the vanguard today in Ukraine. Wrapping up the Conversation, the episode looks back at forecasts by BOVE in the past 48 months and for his outlook on his same announcements.

E-Mail Questions or Comments for ODEON CAPITAL CONVERSATIONS: [email protected] 

With economic storm clouds gathering, many US banks are remarkably “ecstatic” about their prospects, according to DICK BOVE, chief financial strategist at ODEON CAPITAL GROUP. These banks, on the traditional lending and deposit side, unlike peers tied to capital markets, are upbeat. “I have never heard so many banks so positive on the US economy as I have heard in the last couple of days,” BOVE say. But bank industry analysts are pushing back on signs of a coming recession. On the housing front, for example, funding and lending are trouble spots while independent mortgage brokers are scaling back originations and firing staff.  This episode will also take a look at why Jamie Dimon of JP Morgan is hot under the collar at the US Fed because of its new capital regulations. Banks’ strategies for growth are also examined. 

The CONVERSATION turns to the multiple woes in Europe, from the cluster of EU nations collectively referred to as the PIIGS at the height of the 2008 financial crisis, to the recent sharp decline in the euro. These same “peripheral” economies, Portugal, Ireland, Italy, Greece, and Spain, are today also racking up a huge debt mountain. Recent reports show euro zone bond yields plunging amidst economic fears. Peripheral bonds, in particular, have underperformed. The euro has gotten “crushed” since the invasion of Ukraine by Russia, says Mat Van Alstyne, ODEON co-founder and managing partner. European governments have been “punishing themselves” because of policies they’ve adopted to ostensibly “punish Russia.” What is the future for the euro and the EU. Journalist JOHN AIDAN BYRNE noted the view of the late Milton Friedman who said, in effect, the euro was ultimately a failed experiment. The CONVERSATION also examines the prospects for stability in Northern Ireland as politicians in London grapple with the fallout from Brexit.

If you have questions or comments for ODEON CAPITAL CONVERSATIONS, please email: [email protected]

The CONVERSATION examines the immense historical significance of the Plaza Accord in 1985. DICK BOVE, chief financial strategist at Odeon Capital Group, draws upon the lessons of this international agreement signed on September 22, 1985 at New York City's Plaza Hotel as America faces, once again, an almighty and surging dollar in 2022. "The US dollar is simply too strong [today]," says BOVE, noting how the surging dollar—on parity with the euro as of publication—is siphoning huge flows of money out of overseas economies into the US. For that and other crucial reasons, such as the inflationary impact of a strong dollar overseas, a new Plaza Accord is required to lower the value of the dollar, he says. BOVE notes the social anarchy that can follow a soaring dollar in debt-ridden and weak economies overseas, citing Sri Lanka as a recent example.  

With the invasion of Ukraine by Russia constantly in the headlines, BOVE rips Western media coverage as questionable and misleading, and missing the big picture: Russia reportedly builds hypersonic missiles, redefines how nuclear weapons can be used and utilizes its natural advantages in energy and agriculture. MAT VAN ALSTYNE, Odeon co-founder and managing partner, argues that Russia should not be underestimated as a small nation as measured by GDP, given Russia's decades of military experience and its productive capacity and as an economy which seemingly is functioning well despite sanctions. JOHN AIDAN BYRNE lays out the case for why Russia may not be on the right side of history in its latest bloody adventure in Ukraine. The CONVERSATION also looks at the markets, inflation, upcoming earnings season and much more.

If you have questions or comments for ODEON CAPITAL CONVERSATIONS, please email: [email protected]