US Monetary Policy Outlook: Fed Faces Challenges from Regulatory-Induced Inflation

US Markets Playing Along to Fed Tune…for Now

Biden Stimulus+ Will Be Inflationary; Policy Stability Is Enabling a More Leftward Tilt

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Thematic (Sector/Industry)

United states Financials / Thematic (Sector/Industry)

*Inflation Figures Are Wrong: The daily information be reported on inflation is simply wrong. There is actually an awful lot of inflation, and because central banks are controlling the narrative, we find the that the numbers are not being reported correctly. If energy, food, and housing costs are excluded from inflation reports, then inflation measurements are just wrong to begin with. Certainly, as consumers, we’d like to not be responsible for paying for food, energy, and housing; and*Stimulus Keeps Coming: 1Q21 GDP amounted to 6.4%, and 2Q21 GDP will be further boosted by the third round of stimulus checks. 1H21 should be boosted further by an expanded child tax care credit - becoming the fourth stimulus check of USD 110 bn - arguably even more effective if these monthly payments become a permanent source of income under President Biden’s tax plan. Infrastructure plan discussions are ongoing, and our belief is that nearly USD 2 tn in spending will be approved by Congress in late 1H21. The risk of a zero-to-negative GDP quarter for 1Q22 now becomes significant.

*Inflation Figures Are Wrong: The daily information be reported on inflation is simply wrong. There is actually an awful lot of inflation, and because central banks are controlling the narrative, we find the that the numbers are not being reported correctly. If energy, food, and housing costs are excluded from inflation reports, then inflation measurements are just wrong to begin with. Certainly, as consumers, we’d like to not be responsible for paying for food, energy, and housing; and*Stimulus Keeps Coming: 1Q21 GDP amounted to 6.4%, and 2Q21 GDP will be further boosted by the third round of stimulus checks. 1H21 should be boosted further by an expanded child tax care credit - becoming the fourth stimulus check of USD 110 bn - arguably even more effective if these monthly payments become a permanent source of income under President Biden’s tax plan. Infrastructure plan discussions are ongoing, and our belief is that nearly USD 2 tn in spending will be approved by Congress in late 1H21. The risk of a zero-to-negative GDP quarter for 1Q22 now becomes significant.

The Fix Is In