Has inflation peaked in the US? – Bitcoin Magazine
“Fed Watch” is a macro podcast, true to bitcoin’s insurgent nature. In each episode, we question mainstream and Bitcoin narratives by examining macro current events from around the world, with an emphasis on central banks and currencies.
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In this episode, CK and I had the privilege of sitting down with Andreas Steno, who is an editor at Real Vision, co-host of the “Macro Trading Floor” podcast and author of the “Steno Signals” blog on Substack. Our discussion revolves around the energy situation in Europe, but we start by talking about the Federal Reserve’s Federal Open Market Committee (FOMC) interest rate hike. Steno has extensive knowledge of Bitcoin and his “Macro Trading Floor” podcast is hosted by Blockworks, meaning we also got to pick his brain about his thoughts on the bitcoin market.
The Federal Reserve raises Fed funds by 75 basis points
Our timing for this interview was fortuitous, because we were able to speak with Steno immediately after the Fed released their policy decision — even before he made his own closing on “Real Vision.”
We start by getting Steno’s broad reaction to the Fed’s policy decision. He states that Chairman Jerome Powell was crystal clear that they do not want the market to bet on a pivot. The dot plot showed that the average of FOMC members expect the Fed to hike all the way to 4.5% in early 2023. The intent was also very clear, they want to bring down asset prices to crush demand.
Interpretation of the consumer price index
The Fed is trying to be very clear about their goals and their methods, and also very clear about the reason for their hawkish policy path, which is above target CPI. I asked Steno for his thoughts on the US CPI figures.
His thinking is in line with my own, that it appears as if the CPI has peaked, with the largest contributing component to the August CPI taking shelter, which is well known as the most sagging part of the curve. Therefore, if the lagging part of the curve is the only component still rising, it must mean that the price impulse is reversing.
Steno also says he expects the drop in the CPI to catch most people off guard, and offers plenty of reasons that you need to see or listen to hear.
European energy crisis exaggerated?
The topic I was most looking forward to talking about was the European energy crisis. Steno lives in Europe and has done a lot of research on energy flow. In the interview, he gives the figures for natural gas storage and flows from around the world. It was also amazing to hear that perhaps the biggest contributing factor to the crazy price increases was the fact that European leaders ordered countries to rush to replenish their reserves. This resulted in everyone buying extra natural gas at once. Now that the reserves are almost full, and it is before the high season for the use of natural gas, there could be a reverse effect where prices crash.
Overall, listening to Steno, I got the impression that the situation is less dire than the mainstream financial press would have us believe. There will be some pain this winter, the economy has already experienced some fallout in the chemical industry and so on, but it is not a civilization ending event as many believe.
In this episode, of course, we talk about bitcoin and the possibility of a break in the euro currency. Steno has some strong opinions about the structure of the euro and the likelihood of bitcoin stepping in and making a difference in a breakup, but you’ll have to watch and listen to hear it.
This is a guest post by Ansel Lindner. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.
