Category: Business

2022 Week 48

Notes, thoughts and observations - Compiled weekly

Recession fears, the Fed Rate and resetting energy expectations


Fed Rate

To understand Modern Monetary Theory, understand why the banker in Monopoly can never run out of money. - MMT aphorism

OBSERVATION :: A tale of two recessions; some see an end in sight and others think it’s just beginning

  • (Keith Fitz-Gerald) :: Most investors are NOT prepared for what happens next

    • Keith’s prediction = The markets will take off like a rocket if there is even a hint of a pause
  • (Mish) :: 2-10 Yield Curve Inversion Recession Signal is the Strongest in Over 40 Years

    • The 10-year to 3-month inversion is 64 basis points, the deepest since January of 2001.
  • (Mark Zandi) :: The US Treasury yield curve has inverted to its deepest level since the early 1980s. Is this a recession red flag or is this time different? Tune in to the latest Inside Economics so I can persuade you that this time IS different.

  • (DiMartinoBooth :: “The only time you see the curve invert when we’re already in recession…I think to jay Powell’s point he is watching the right thing f he continues pressing forward with tightening he is tightening into recession. Another fed official said as much today.”


The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil. - Sheikh Ahmed Zaki Yamani

OPINION :: High energy prices will drive inflation and cause global recession

  • (Over My Shoulder) :: Gasoline in Perspective
    • Electric vehicle owners have traded gasoline price exposure for grid power exposure
    • Distant Wind - Most of the wind production is located a long way from major population centers.
  • (Ken Fisher) :: Fathom Perking Positives Pessimists Can’t See
  • (Liz Ann Sonders) :: Record spread between average diesel and gasoline prices in U.S.
  • (Peter Zeihan) ::
    • Europe paying spot prices to avoid long term contracts
      • Seeing higher inflation
    • Germany shutting down industry to reduce demand
      • Seeing a de-industrialization (cars, fertilizer, etc.)
      • Can’t purchase from to US b/c we need it
      • Natural gas is our only flexible fuel that can spin up/down to match demand
      • Next winter will be tougher on Europe


It’s a recession when your neighbor loses his job; it’s a depression when you lose yours. - Harry S Truman

OPINION :: Recession will be shallow in US, it will suck for a year but US will snap back; not sure about Europe and parts of Asia

  • (LizAnnSonders) :: Global shipping rates still in free-fall … only route not participating in drop is from Rotterdam to New York
  • (Lyn Alden) :: Us manufacturing PMI is now in a contraction.