Part 2 of the Fed and ECB Playbooks discussion is here with Albert Marko and Nick Glinsman. In this second part, the housing and rent market in the US, UK, Australia, etc. was tackled. Also, do we really need a market collapse or correction right now? And discover the “sweet spot” for the Fed to “ping pong” the market. When can we see 95 again? What is the Fed trying to do with the dollar? And what currencies in the world will run pretty well in a time like this?

Go here for Part 1 of the discussion.

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Show Notes

TN: Can you walk us through a little bit of your kind of reasoning and what you’re thinking about with regard to the Fed and housing?

NG: Well, I actually think, it was, I was watching Bloomberg TV as they ask after the Fed comments from me, well, you know, maybe the Fed’s right because the lumber has collapsed. Right. Lumber’s in an illiquid market, takes one player and you can move that price 5 to 10 percent.

I think there’s a couple of things that lead the Fed in the wrong direction. First of all, the mortgage backed securities QE, that really isn’t necessary.

I think they focused on cost of new housing. My view is the slowdown that we will get on new homes is purely a function of supply of goods used to make homes, where essential supply.

AM: Rent is a problem. The other thing I want to point out is there’s a disconnect because it’s not just one housing market in the United States. Because of Covid, the migration from north to southern states has really jumbled up some of the figures.

NG: People have been incentivized effectively to be in related markets to the collective real hard assets in this environment. I mean, I would argue that part of Bitcoin’s rise is because, in fact, it’s a collectible. Limited supply.

TN: So what can the Fed do about it?

NG: Become a commercial banker in terms of policy. In the U.K., there was certain lending criteria for corporates that were imposed during the crisis that actually did help.

AM: They can also raise rates if they want to be cheeky.

TN: Yeah, but then it’s not just real estate that collapses. It’s everything, right?

AM: Maybe it needs to be collapsed. Because, what are we buying here? We’re buying stuff, we’re buying equities that are 30, 40 percent above what they were pre-Covid. It’s just silly at this point.

TN: We’ve seen a lot of interesting things happening with the dollar, with the euro, with the Chinese yen. And so I’d really like to understand the interplay of how you see the Fed and the ECB with the value of the dollar and the euro. Albert, you said, you know, the ECB really has no control or very little control over the euro because of what the Fed does. So what is the Fed trying to do with the dollar?

AM: Nick and I had wrote a two-page piece on the dollar’s range of ninety one to ninety three. And that seems to be the sweet spot for them, where they can ping pong the markets and drop the Russel a little bit, promote the Nasdaq and then vice versa and go back and forth like that.