Submitted by Taps Coogan on the 21st 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 economic advisors in the world, spoke with Bloomberg after the recent Fed meeting. Mr. Hyman notes that the Fed is getting dovish because there are “disturbing” signs emerging in the global economy. Despite this, he does not see most of the signs of an imminent recession and warns against ‘fighting the Fed.’
Some excerpts from Ed Hyman:
“First, we have to level (that) something is bad. The Fed doesn’t do this if everything is great… There are some very disturbing things going on… This is a global affair. The message I would have for us this evening is ‘Don’t fight the Fed.’ But we just heard the Bank of India is at it (cutting rates). Russia is at it. The People’s Bank of China is at it… I’d say we are in the third or fourth inning of a global easing cycle and, right now, it is more talk… My guess is they end up cutting rates three times this year. So, we will end up at 1.75%.”
“We don’t know what rates should be. The policy rate in Australia right now is 1.25% and their economy is not much different than ours. The bond market is a market and it puts the rate at 2% today and Fed Funds are 2.5%. So, Mr. Market is saying the Fed Funds rate is too high… The last three cycles we’ve had an inverted yield curve… for about a year and then we always had a recession. Right now it’s been a month. So, I am counting and I hope as the months unfold we’ll end up with… a positive yield curve again.”
“When we are approaching a recession, we will see clearer signs than we are now. You’ll see an inverted yield curve, which unfortunately we have now but I don’t think it is going to stay that way. You’ll see a Fed that is tightening, not easing and you see inflation moving up, and you will also see a bubble…”
“I don’t think there is a recession coming, so this is like 2016 when we had a dip… 2011 we had the Eurozone Crisis, but they weren’t recessions. But central banks eased around the world.”
There is more to the interview, so enjoy it above.
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