With the Fed tapering and both China “I don't think the markets are discounting what’s really happening in China,” and Japan’s currencies likely to weaken, the net impact on the U.S. will be deflationary,
Kyle Bass warned in a recent presentation. That trend will be
accelerated by the improvement in the balance of trade for the U.S.,
which had its current account deficit shrink due to increased
hydrocarbon production.
Bass warns, the crucial moment will come
when the U.S. reports a sub-6% unemployment rate, meeting the target it
has set for normalizing its monetary policy by ending QE and raising
rates. He predicted that will come in July. That will be the Fed’s “worst nightmare,” he
said. Raising rates would stifle growth and recreate unemployment
problems, which would be disastrous politically, according to Bass.
(more)
Please share this article
No comments:
Post a Comment