timevalueofbtc on Nostr: In the spirit of doing right by our TBL readers, I went back to check on how I ...

In the spirit of doing right by our TBL readers, I went back to check on how I thought the year would play out from a rates perspective. I also wanted to see just how soon I thought cuts would be here (because I was clearly early to that call).

Here is what I wrote in January:

"Our big [2022] claim was “don’t assume that the Fed will pivot at the first sign of equity weakness”—this ended up being correct. Our next claim was that hikes would slow to a pause by the end of the year—this did not happen, but slowing inflation makes us confident we are merely early to the call."

Postmortem: The pause happened after July's hike, and yes we were quite early to the disinflation party. It's for you to judge if we were correct and just early, or wrong.

Next forecast:

"This year, the debate will center around rate cuts during a recession. For that, we’ll need to understand when the recession has actually arrived (it hasn’t yet, especially with a relatively strong fourth quarter of GDP), how serious it is, and how much the housing market physically requires lower rates to carry on. The Fed’s job, in its own eyes, is not to rush to pivot its policy rate lower, but rather to maintain a restrictive rate for as long as it can to assure inflation has come back down. The Fed’s battle then becomes whether to protect its reputation as a two-way institution or succumb to the critiques that it is simply a money-printing whale with no long-term ability to stop. Currently, the Fed has been in tightening mode coming up to a year, but with the vast majority of the past decade and a half in easing mode, the onus is on the Fed to prove it can remain restrictive. Just as many believe them as those who don’t, which should sustain the lively debate for months to come."

Postmortem: Without a doubt, I was wrong to suggest that a recession would arrive and that a debate around cuts would involve a recession. The US did not come close to a recession in 2023, but rate cut debates have begun with a few weeks to go in the year. I suggested that the debate on how restrictive they could be would remain lively for months to come, and I think this will mark the big difference between my 2023 and 2024 outlooks.

My 2024 outlook will unabashedly predict a cutting cycle (we've already suggested cuts by March in Europe and by June in the US). I really don't have any problem being 6-12 months early to a call, because my investment framework is cyclically driven, so I am simply attempting to find where we are instead of running around like a chicken with its head cut off.

My suggestion is to follow what we are doing at TBL, both the written and video/audio product, for intellectual honestly, macro analysis (with some predictions) without any trade ideas or commission-based or profit-based motivation, and the opinion of two dudes (Joe Consorti and I) who love and live and breathe and sleep markets.