Jurrien Timmer's global macro view – April 8, 2024

Today on the show, we welcome back Director of Global Macro Jurrien Timmer for his weekly market perspectives. He discusses market trends, bond performance, and investment strategies. Timmer notes that the market has been driven by liquidity, with the Fed’s balance sheet and Treasury cash balances affecting the repo market and causing knock-on effects for the stock market.  He discusses the shift in power from monetary dominance to fiscal dominance, with bonds experiencing a regime change. Timmer suggests that investors should focus on diversification by investing in uncorrelated assets. He argues that Gold is a play in fiscal dominance, as a monetary base growth is rising despite the Fed tightening. He also predicts that debt service will become inflationary as real rates turn positive, which Gold is responding to. He also notes earnings growth is driving market optimism, reducing the need for Fed rate cuts. He also expresses that the Fed is aware of past policy mistakes and is currently leaning against fiscal dominance. So ,when they may cut rates is still up in the air as the optimism for several rate cuts diminishes.

Recorded on April 8, 2024.

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