Tom welcomes back Lyn Alden, Founder of Lyn Alden Investment Strategy, to the show. Lyn discusses abundant and scarce things in investing, focusing on the era of fiscal dominance that has led to bonds becoming abundant. This is due to large budget d…
Tom welcomes back Lyn Alden, Founder of Lyn Alden Investment Strategy, to the show. Lyn discusses abundant and scarce things in investing, focusing on the era of fiscal dominance that has led to bonds becoming abundant. This is due to large budget deficits and private debt being transferred to the public sector. The implications include higher average fiscal-driven inflation and potential impact on asset prices and tax receipts.
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The Federal Reserve's ability to perfectly tune the economy to avoid recession for the next decade is questioned. In emerging markets, stocks may rise in local currency but decrease in hard money terms during recessions. The U.S., however, is experiencing fiscal dominance where public debt exceeds GDP, making it harder to fight inflation and slow down borrowing. While interest rates can help make a country's currency attractive or reduce borrowing demand, raising interest rates results in ballooning expenses, offsetting disinflationary forces. The commercial real estate sector is heavily impacted, but travel companies, seniors, and wealthy individuals may benefit from higher interest rates.
Lyn discusses the SVB bank crisis in 2023, suggesting that the Fed might prioritize saving banks or the Treasury market over controlling inflation, limiting monetary policy flexibility. The potential outcomes of interest rate cuts include growth and demand for commodities but less effectiveness due to fiscal dominance. She emphasizes energy exposure as a hedge against inflationary pressures.
Investment strategies include owning assets related to dense forms of energy in the energy sector, focusing on demographics, aging workforces, and understanding China's labor supply and demand. Alternative investment portfolios like the perm..
