The Sunday Drive - 04/14/2024 Edition [#106]

Musings and Meanderings of a Financial Provocateur

Apr 14, 2024

👋🏼 Hello friends,

Let’s enjoy a leisurely Sunday Drive around the Internet.

🎶 Vibin'

The Federal Reserve and its Chairman, Jay Powell, increasingly find themselves between a rock and a hard place. See the Chart of the Week below.

So in keeping with recent developments in the economy, this week I’m vibin’ to The Mavericks’ Damned (If You Do) from their 2017 album Brand New Day.

You’re damned if you do
and damned if you don’t
You’re damned if you will
and damned if you won’t

Very apropos at the moment.

💭 Quote of the Week‌

“Don’t worry about people stealing an idea. If it’s original, you will have to ram it down their throats”
– Howard Aiken

📈 Chart of the Week

This week, we got news of another increase in the rate of inflation that was above market expectations, a slight increase true, but the second month in a row of a slight increase.

Market expectations of when and how much the Federal Reserve Bank will lower interest rates now seem to fly in the face of the reality of essentially full employment, continued rampant federal fiscal spending, and a creeping return of inflationary pressures.

This is in spite of the Fed’s unprecedented pace of interest hikes beginning in early 2022.

If you were in Fed Chairman Jay Powell’s shoes, what would you do?

If you keep rates at their current high levels, or God forbid, increase them further to ward off these renewed inflationary pressures, you risk seeing interest payments on U.S. federal debt crowd out other government spending. You also run the risk of endangering the status of the U.S. Dollar as the world’s reserve currency.

If you lower rates given the employment and fiscal spending situations mentioned above, you risk the return of 1970’s style inflation.

What’s a Fed Chairman to do? 🤷🏼‍♂️

My cynical take is that political expediency and reputation management will win out over the prudent long term course of action that should be taken.

I believe this to not only be true of the Congress in terms of fiscal spending, but also of the members of the Federal Reserve, with how they deal, or don’t deal, with monetary policy.

There’s an old Wall Street saying… “Don’t fight the Fed.” This has historically been sage advice.

But what do we do when the Fed is fighting with itself? These are indeed interesting times (in the Chinese Proverb sense of the word).

🚙 Interesting Drive-By's

🤔 Why Have Rate Hikes Not Done Anything? - from Matthew Klein [Link]

📈 The One-person Billion-dollar Company - from Evan Armstrong [Link]

💡 “Ageless” Marketing to Older Consumers - from Brian Clark [Link]

🤓 The Data Center is the New Compute Unit - from Dan O’Laughlin [Link]

📉 Stability AI reportedly ran out of cash to pay its bills for rented cloudy GPUs - from Tobias Mann [Link]

💯 The AI Revolution: Still no reason to fear a ‘jobpocalypse’ - from James Pethokoukis [Link]

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

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