Submitted by Taps Coogan on the 16th of June 2019 to The Sounding Line.
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Evercore ISI Chairman Ed Hyman, one of the fathers of modern market research and perennially ranked as one of the most respected institutional economics advisors in the world, recently spoke with CNBC about his outlook on the economy and markets. Mr. Hyman says the economy is performing well, albeit with a negative outlook, and that low inflation means the Fed Funds rate is too high.
Some excerpts from Ed Hyman:
“The yield curve would be number one (among risks). Trade would be number two, but I also think there are a lot of positives out there, but those are the biggest risks… Every time in the past (the yield curve) has worked… When oil doubles, that’s a precursor to a recession. What happens is inflation goes way up, the Fed tightens aggressively, and then long rates go below the Fed Funds rate. That’s where we are right now. So, it makes me quite uncomfortable… but it has to stay this way for another couple of months before it gives a real signal.”
“…I think they (the Fed) are going to ease in July and then ease a couple more times to try and get the yield curve positive again but also to put some insurance in the system for the trade issue.”
“I travel around constantly… and every place I go is booming. Retail sales…, they’re strong and Man Power Inc., which is another way to look at employment, that came out this week. It’s going straight up… The economy right now is doing well in real contrast to what’s going on in China and Europe which are still slowing.”
“(Meanwhile) inflation is really coming in low… Core CPI, it was low. Import prices declined 1.5%. We have eight core measures around the world. They’ve all slowed in the past year. Oil is down now.”
“My general advice to people is don’t fight the Fed and now you have a pretty clear easing bias by the Fed and the same is true for the ECB. China’s central bank is going to cut another couple of RRRs and they’re going to have some fiscal stimulus. So, you have about as clear a global easing cycle as you a going to get and I think that biases financial assets up, actually all asset prices up.”
There is more to the interview, so enjoy it above.
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