The past week has been quite eventful with significant shifts in the global economy, rising bond yields, a startling increase in U.S. debt, ongoing strikes impacting GDP growth rates, and cautious signals from the Federal Reserve. The stories that unfolded have implications that extend far beyond the Fed’s policy guidance. Let’s delve into the details of the top stories:
Mohamed El-Erian Highlights Global Economic Shift
Renowned economist Mohamed El-Erian recently pointed out a significant change in the global economic landscape. He emphasized the growing acknowledgment that the world economy is currently navigating a period with a less flexible supply side, contrasting the previous decade, which was dominated by insufficient aggregate demand. Read the full article here.
Bill Ackman’s Take on Bond Yields
Hedge fund manager Bill Ackman, founder of Pershing Square, expressed his views on the surging Treasury yields. Ackman’s firm remains short on bonds, especially 30-year bonds, through the ownership of “swaptions”. This stance is based on expectations that the Federal Reserve will continue to raise interest rates to combat persistently high inflation and robust economic data. Read the full article here.
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Elon Musk Alarmed by Soaring US Debt
Tesla Inc. CEO Elon Musk expressed shock over the rapid increase in US debt. The US debt surpassed $33 trillion recently and within just 48 hours, it grew by an additional $47 billion. This translates to $1 billion in new debt every hour. Read the full article here.
Jason Furman on the Impact of UAW Strike
Former Obama advisor Jason Furman warned that the ongoing United Auto Workers (UAW) strike could significantly impact GDP growth rates. He underscored that small changes could result in substantial shifts in annualized GDP growth rates. Read the full article here.
Jerome Powell Signals Caution on Interest Rate Hikes
At the September meeting, the Federal Reserve unanimously decided to maintain the federal funds rate within the 5.25% to 5.5% range. The Fed’s decision and future interest rate hikes will be determined based on economic data. Read the full article here.
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