Friday, March 3, 2023

Economic Update (video)

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  1. Thanks Marty! Have a great weekend!

  2. Questions:
    1. What is the Taylor rule?
    2. Why does the Fed use it from time to time?

    1. Thanks Sam! You too!

      "The Taylor Rule" refers to a formula that determines where Fed funds "should be," developed by economist John Taylor... I don't believe that the Fed has ever actually used it, as it generally calls for a higher rate (when necessary) than what sitting Fed officials are comfortable with... I also believe that the "rule" precluded Taylor from ever getting nominated to the Fed board.

    2. Thanks for explaining Marty.
      I don't like the current set up of US 2Yr/10Yr Spread. It is currently sitting at -90. It is good for the bankers that can lend money to the government on a short term basis and make some great profit. The bond market yield curve is currently so inverted to the point basing on history that a recession is inevitable. I think the equity market will then pull back significantly. If that were to happen, when do you think our base case will bottom out?