Jeff Snider: We're Still On The Same Path To Recession

Jeff Snider, host of the Eurodollar University podcast, returns to The Julia La Roche Show to discuss the current macroeconomic picture, characterized by confusion and ambiguity.
In this episode, Jeff explains the Fed's focus on consumer prices and the risks associated with this approach. Jeff also highlights the lurking risks in the commercial real estate market and the Chinese real estate bubble. He provides insights on asset allocation and portfolio construction in this uncertain environment.
Jeff is an expert on the global monetary system, specifically the Eurodollar money system, and all aspects of its misunderstood inner workings and how they impact global markets, commerce, and the economy. His podcast Eurodollar University (⁠www.eurodollar.university/⁠) aims to educate the public on the evolution, nature, and nuances of the Eurodollar system and true monetary principles.
Timestamps:
00:00 Introduction
01:05 Welcome Jeff and the macro view
03:08 Confusion and ambiguity in the economy
07:24 The Fed's focus on consumer prices
08:43 Market pricing and signaling
11:57 What the Fed should be focused on
14:30 Ambiguity in economic data
23:51 Fiscal support and the economy
26:39 Lurking risks: Commercial real estate and China
31:10 Asset allocation and portfolio construction
33:47 Eurodollar University and parting thoughts
#economy #recession #investing

[@TheJuliaLaRocheShow]

Hey everyone! I hope you enjoy my conversation with Jeff Snider for his second appearance on the pod. Please let me know what you think in the comments section. And if you haven't done so, please be sure to subscribe to the channel. This will help me grow and bring on some more amazing guests. I appreciate you all! 💙Julia

[@issenvan1050]

A lot of things he says sound like Hanke’s words (e.g. inflation being a monetary phenomenon, monetary policy acting with lags, employers hanging in there & not firing employees, etc.), much to my surprise, yet he endorses those unclear Eurodollarist views at the same time. Perhaps you should organize a debate between them.

[@michaels4255]

@@issenvan1050I once heard Jeff debate a former member of the FOMC. Jeff was very impressive. Also, "those unclear eurodollarist views" is just an explanation of how the banking system works, both at home and abroad. The only difference between a dollar and a eurodollar is where the lending bank is located.

[@issenvan1050]

@@michaels4255 OK, but he offers no metrics or accounting records whatsoever. Do you know who Steve Hanke is?

[@issenvan1050]

@@michaels4255 & inflation is always a local phenomenon. A lot of those mavens appear to miss that…

[@gregorysagegreene]

Gordon Long on Adam Taggart elucidated that Yellen is pumping a lot of stimulus out via the IRA in targeted dumps into the economy, which is where all the artificial distortions, and hence 'ambiguity', are coming from. You've got a Central Banker now, on the inside, massively propping this whole thing up till the election. 🔥🤷‍♂️

[@junkscience6397]

Nice job, Ms. LaRoche. Jeff is often tough for me to understand, so thanks for asking great, clear questions! Much appreciated.

[@wymandyer6261]

Jeff is way ahead of his years in market research and analysis,,,,seniors love you out here in Wy Jeff,,,keep up the great work!

[@Yetified_Mayhem]

I agree with him. Very Brite dude. Regardless, I'm a trend trader and I stick to my system. That said, I like these opinions because it's just fun speculation and learning .

[@wymandyer6261]

i like to check in on the health of the banks and hes all over it@@Yetified_Mayhem

[@fubarbrandon1345]

Excellent guest and great interview...thank you.

[@Yetified_Mayhem]

As a trader I tune out 99% of financial media. But this is a great channel. Very well done

[@TheJuliaLaRocheShow]

Aww! Thank you so much. 🙏

[@pete7674]

Yet another informative interview. I respect his pragmatic way of thinking.

[@joshisidro]

Great interview! Like this new 30min format. Hopefully we can have 10-15min format. So i can check when i have mini breaks to check news.

[@TheJuliaLaRocheShow]

Thanks, Josh. We do a mix of 30 + 60 minute formats.

[@electrocademyofficial893]

Thanks both

[@frankarena838]

I always enjoy listening to Jeff Snider, especially as a balance to the inflationistas out there. However I was very disappointed that you didn't pull him up on his view that the CPI increases of the last several years was ONLY due to supply issues. What about the massive increase of money supply, handouts, boondoggle, pork barreling and stimulus cheques to the masses? Otherwise, great interview, thank you very much to both.

[@michaels4255]

Agreed, Uncle Sam kept demand up even though supply was down. Classic recipe for inflation.

[@TheJuliaLaRocheShow]

Thank you for your feedback, Frank. I'll try to be better.

[@frankarena838]

@@TheJuliaLaRocheShow wow, you are a most humble and truly a very nice person. You do a perfect job as it is, I really enjoy your interviewing style and how you extract explanations from your guests about their comments. No-one can catch every little quibbble or off remark, and at the end of the day, we all have different belief sytems and experiences. Refreshing to have an unhurried, expanded discussion on important topics. I apologize if I seemed harsh; didn't mean to. Best wishes from sunny Sydney, Australia.

[@TheJuliaLaRocheShow]

Thank you,@@frankarena838 . I swear I have the nicest people on the internet who watch this channel. I really appreciate your kind words of encouragement. 😊

[@DissonantCat]

​@@TheJuliaLaRocheShowyou are just too sweet to be mean to 😊

[@bradleyqueen3879]

He'll be right eventually. No one knows when the next recession will start.

[@Zanzan8]

🤣🤣🤣

[@TheMasterhomaster]

Dr. Doom here has been wrong for the last 2 years and this anyone who took his advice missed out on huge gains. That said, he’ll eventually be right just as a broken analogue clock is right twice a day.

[@michaels4255]

"anyone who took his advice missed out on huge gains" - wrong! He doesn't give advice! He's an analyst, not an advisor. All he has said is that a recession is on the way - and when he first started saying it, he was criticized by people like you for not saying it sooner. Further, I would not waste my time listening to anyone who cannot see a recession coming well in advance. That would make him like a weather forecaster who only tells you rain is on the way after the skies have turned black.

[@fsaldan1]

He gave advice. Buy Treasury bills or Treasury bonds. Although not explicitly, he implied one should avoid investing in stocks. He was wrong in two out of three. If Julia had not pushed him to talk about fiscal deficits he would not even have mentioned them. He did only to say they *might* have an impact. 3.5 trillion *might* have an impact! He wasn't being sarcastic. He keeps talking about business cycles, but does not realize the era of business cycles has ended. In the era of business cycles the Fed and the Treasury could end recessions, but they can no longer do that because government debt/GDP is too high and the US is in the condition called fiscal dominance in the economic literature.

[@neil5872]

it was transitory, indeed. jeff, good guest.

[@michaelstock9351]

Great interview! Jeff is next level knowledge

[@michaels4255]

Employment, stock market averages, and the GDP will continue to turn in good numbers until the first Wednesday after the first Monday in November.

[@luiscancino5275]

Very good show, thanks. I would like to ask you to cover FED Balance Sheet and the currently role and impact on the monetary policy, liquidity and markets. Thanks a lot

[@fred9315]

I would like to see a debate between Jeff Snider and George Robertson.

[@apothe6]

Jeff has been hypothetically right, but practically wrong for a very long time.

[@BatmanBoss]

Thanks

[@TheTraderGuy]

Best combover in the biz.

[@DissonantCat]

I never noticed and now I can't unsee it 🫣

[@DeFi-Macrodosing]

Our beloved financial education Jesus.

[@issenvan1050]

FED’s bias is being afraid of deflation rather than inflation, Jeff!

[@sleepersix]

Jeff has never been right about anything

[@azph4105]

jeff sounds like a poet on his channel

[@deseosuho]

I think a lot of the particular weirdness of the business cycle ties to back to the shear size of the COVID era stimulus. Increasing the money supply by ~35% in 18 months and running wartime/recessionary government deficits created an unprecedented set of conditions. Then, the fed funds rate hiking cycle which begin in response to the resulting inflation was the fastest in history, if you measure on a relative basis (25-50 bps to 525 bps in 20 months is an increase in borrowing costs by a factor of 14). Those wartime deficit spending policies are continuing unabated. Right now we're red-lining a V12 engine uphill with the brakes half pumped and sleet and freezing rain pouring down around us. All of those unprecedented events take several years to have their full effects play out and so there are dozens of strange effects that are already baked in but haven't arrived yet. There's definitely more headwinds than tailwinds right now, but I fully expect unprecedented numbers and asset price actions to continue for at least another 18 months.

[@gregorysagegreene]

You omitted that with the woke lockdowns and free mortgages we 'moved' a huge portion of the economy and the wealth cross-country. Greatest dystortion since Subprime.

[@fluffyclucks7320]

Prices in Japan are not coming down as Jeff Snider stated, albeit the rate of inflation is slowing now--but the bank rate is negative--a rate that is for extreme economic crises (not bubble economies). Low interest rates in Japan have contributed to creating a bubble in stocks there, (both on a CAPE basis and Buffett Indicator basis) and long term have made it that Japanese cannot get a return on their savings in bonds (and now on stocks too unless they want to gamble) , making them double down on saving for years, and propping up zombie companies so they compete on price--forcing prices down. Also, it is widely believe that raising rates does combat inflation for a variety of reasons as follows: Cost of Borrowing: When interest rates rise, it becomes more expensive for businesses and individuals to borrow money. This can lead to reduced borrowing and spending, which may result in lower overall demand for goods and services. Reduced demand can put downward pressure on prices and dampen inflationary pressures. Monetary Policy: Central banks often adjust interest rates as part of their monetary policy to manage inflation. If inflation is rising above the central bank's target, it may choose to increase interest rates to cool down the economy and reduce inflationary pressures. By raising borrowing costs, the central bank aims to slow down spending and investment, which can help moderate inflation. Exchange Rates: Higher interest rates can attract foreign investors seeking higher returns on their investments. This increased demand for a country's currency can strengthen its exchange rate. A stronger currency can lower the cost of imported goods and services, contributing to lower inflationary pressures. Expectations and Confidence: Expectations play a crucial role in shaping inflationary dynamics. If businesses and consumers anticipate higher future inflation, they may adjust their behavior accordingly. Higher interest rates can signal tighter monetary conditions and may help anchor inflation expectations, thereby influencing inflationary pressures. Lagged Effects: The impact of interest rate changes on inflation may not be immediate. It can take time for changes in borrowing costs to affect spending and investment decisions, and subsequently, inflation. Therefore, the effects of interest rate changes on inflation can be observed with a delay.

[@robertwalker-gc1ds]

Why don't you have a discussion on the basil 3 endgame

[@issenvan1050]

Finally, Jeff describes inflation as the monetary phenomenon that it is. He should also add that it is a local phenomenon. Hence, how are these compatible with his unstructured & unclear Eurodollarist views? How come is he not a monetarist after all?

[@michaels4255]

Jeff has ALWAYS insisted that inflation is a monetary phenomenon. If anything, he is a hardliner on this point. Also, his "eurodollarist views" are only unclear if you don't understand how the banking system works. And inflation is NOT a reliably local phenomenon because MONEY is not a local phenomenon (UNLESS you have an inconvertible currency or strict and effective currency controls). Any bank in any country can make loans in any currency (thereby creating more of that currency), and popular currencies such as the US dollar (and eurodollars are also US dollars) fly across international borders in massive amounts every day at the speed of lightning (electricity).

[@issenvan1050]

@@michaels4255 Why have the CPIs of Switzerland, UK, US, China, Turkey, Argentina been significantly different, then, unless inflation were a local phenomenon? Also, had Jeff been able to predict 9% peak CPI 1.5 years in advance as Hanke & Greenwood had?.. For US, for instance, if you take the FED’s balance sheet as well as the consolidated balance sheets of the commercial banks, you will be able to calculate where CPI is going to be (give or take) about 18 months from now. & I see nothing global or universal about this.

[@Dandy852]

Love Jeff but he is obviously wrong when he says we don’t have inflation but supply problems. We had both. Seems so obvious.

[@bob.love.hope1969]

Jeff is delusional. People always spend more than they have, look at credit card debt. People don't care about the prices, they still buy

[@DreamWarden-nb2uq]

Jeff was early like a lot of other folks due to central banks vast resources; however, that doesn't mean that he's wrong. Based on the US debt/gdp level, a decade of pain is coming, but the question is when? I like commodities regardless. The stocks in those sectors are cheap (

[@jeffm8423]

👍💯

[@fsaldan1]

Could you provide a list of stocks with a 4 P/E?

[@issenvan1050]

Should DXY go down during the next recession, as Gundlach suggests.

[@victorsperandeo3609]

Sorry but Jeff is 100+% wrong . The money supply was goosed almost 30 % ???? Please Jeff read some Milton Friedman

[@zilver90000]

QE is not money

[@michaels4255]

@@zilver90000 Agreed, but is victor talking about QE or the spurt in M2 in 2020?

[@mountainpatriot7673]

When the govt prints lots of money like happened during covid, the value of all money goes down. That is what inflation is.

[@Weetorp]

I like Jeff but he is a doomer who missed the massive impact of RRP. How can a montary expert do that?

[@michaels4255]

Since RRP only affects how the banks move collateral around inside the banking system, please explain this alleged "massive impact" that you claim occurred.

[@jameslu680]

Eurodollar Jesus

[@johannel8104]

Did Jeff say the US Federal deficit was $3.4T in 2023???????

[@goldspan5666]

someone should debunk this guy,....oh wait i have

[@togoni]

There is no good news for Jeff ever. He has been wrong for last 5 years. Doomsday King 😁😁🤦🏻‍♂️

[@canadianrepublican1185]

I'm still confused by the low view count.

[@TheJuliaLaRocheShow]

Slowly but surely we'll grow. I am confident that we're building a sustainable audience that's super engaged. 🙏

[@doolittlegeorge]

Adjusted for inflation and taxes the USA has been in a recession going on 20 Years now ("boom bust cycle.")

[@manuelmarin5258]

The probabilities are calculated not feel it

[@gregorysagegreene]

How can you say the [high] prices are never going to go back to what they were, and on the other retort that the cure for 'high prices' is high prices? If we're all broke, the only outcome is collapse.

[@amandagreen8898]

The last time he was right - he had short hair 🤡🥱🤦‍♂️

[@jmwSeattle]

Laughing about the $1.6T deficit. Yeah, real funny alright.

[@sbain844]

Be careful people, Jeff would have you buy govt. bonds, a truly awful investment. He doesn't understand inflation, and is totally blind to what is coming (stagflation on steroids).

[@issenvan1050]

Inflation is dead. Less than 2% CPI with a recession by the year end.

[@sbain844]

@@issenvan1050 Lol, we'll see how well that prediction holds up!

[@issenvan1050]

@@sbain844 Do you follow Steve Hanke?

[@deseosuho]

I think 3 and 6mo treasuries are a fantastic investment right now. Any massive government default/ monetizing of debt into hyper inflation is going to take years to play out. Plenty of time to react. But yeah, if you plan to hold a 30yr Treasury at 4.2% to maturity, that's unlikely to preserve any value for you.

[@issenvan1050]

@@deseosuho I am in gold mining equities. Druckenmiller has bought them, too.

[@thegiggler2]

Extra federal spending = artificial juicing

[@lakeguy65616]

Did he really say "we don't know where inflation comes from...."?

[@issenvan1050]

His Eurodollar tales don’t explain it away, that’s why…

[@michaelfelli7661]

Define inflation, first. We've been "inflating" the money supply since 2009. Or, are you speaking of rising prices (e.g., milk price)?

[@cogito2883]

I believe he said " They ( Fed) doesnt know where inflation comes from", do you think fed knows where inflation comes from ? if so why did we see it in 2021/22?

[@issenvan1050]

@@michaelfelli7661 Inflation is a function of an increase in the money supply.

[@issenvan1050]

@@cogito2883 They don’t follow the quantity of money. They are rather obsessed with the price of it, i.e., rates!

[@moviehipster]

You have girl hair jeff, man up

[@dextercube1822]

Get a haircut , Jeff

[@edreeves121]

More ads please. Good bye

[@TheJuliaLaRocheShow]

I know. I'm sorry. I would really like to find a sponsor for the show. If you know someone who'd like to get in front of the best audience ever, please send them my way. That way we can reduce the ads.

[@donniemoder1466]

Get a haircut, if you want to raise your perceived credibility. And maybe wear a shirt with a collar.

[@ptupy]

The crash in the US will be worse than elsewhere, contrary to the “cleanest dirty shirt” cliche floating around. The economy has been kept afloat by massive deficit spending (about 7.5% of gdp, compared with about 3% in China and the EU). Moreover, the US gdp print is about 70% consumer spending (about 50% in most other industrialized countries), and that spending sits on record-high credit card debt and record-low savings. It’s only a matter of time until those hit a wall. The less frugal you are, the bigger bubbles you create, and the bigger the bang when they pop.

[@michaels4255]

First, China has a lot of "off the books" deficit spending, so that 3% number is way too low. Second, debt is a bigger risk than deficit (total debt, with consumer debt being the single biggest risk factor), and the US is not the only one in that boat. And if the US takes a hit, countries that depend heavily on selling to the US market are likely to take an even bigger hit.

[@ptupy]

Actually, the deficit figure for China is even lower than 3% according to IMF data. Of course the quality of data is suspect for every country, including the US, but this is what we have. Everything else is speculation. As for debt, the US has a debt-to-gdp ratio of about 125%, compared with about 82% for China (IMF data) and an average of about 83% for the EU (Eurostat data). Credit card usage in the US is also significantly higher (about 80%) than in other countries (about 30% in the EU, for example). The debt-fueled profligate spending by US government and consumers creates an illusion of a stronger economy, but in reality it only inflates the bubble and makes the problem worse. The greater the economic distortion, the more severe the economic shock when it comes.

[@fsaldan1]

​@@ptupyThe average déficit/GDP in the Eurozone cannot be 83% since no country in the Eurozone has debt/GDP at or below 83%.

[@Dan-lu8qu]

For me it's a no-brainer. Sit back and relax. Get FOMO out of your mind. Making decent, no risk, money is another no-brainer. Daily keep up with everything. FOMO snuck back in your mind, kick it back out. After the drop, wait for the dust to settle. Wait a little more. Because you've been religiously keeping up with everything, you'll know what to do without even thinking. Did that in the Dot-Com bust and 2008. The difference this time - I'll have a lot of dry gunpowder. 81