AI Summary
5 min readIn 2022, the bond market was the source of volatility. Since then, it has been "relatively stable," according to Alex Morris of FM Investments, who joined the Animal Spirits podcast to discuss the Federal Reserve, the bond market, and the mechanics of fixed-income investing. The conversation ranged from whether we even need a central bank to how the government's borrowing habits are shaping the market, and what the bond market is actually telling us about inflation and the economy.
Do We Need the Federal Reserve?
Morris opened with a historical perspective: the United States is on its fourth central bank. The first two failed, and the current one, the Federal Reserve, was deliberately unnamed with a number to avoid that legacy. The core argument for an independent central bank, he explained, is that "if you let politicians make central banking level decisions, they'll just make money free because free money gets votes." The Fed exists to be "the adult in the room to say it's time to take your medicine."
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What you'll learn
- 1 (00:03) **Introduction & Guest Welcome** - Michael and Ben introduce Alex Morris of FM Investments, a five-time guest, to discuss the Fed, bond markets, and more.
- 2 (02:14) **Do We Need the Federal Reserve?** - Alex argues for an independent central bank to prevent politicians from making money free for votes.
- 3 (05:18) **What Really Governs Financial Markets?** - Alex argues the path of interest rates is less important than the rule of law and faith in the system.
- 4 (06:05) **The "Debasement Trade" and Kevin Warsh** - Discussing the Bloomberg article linking Kevin Warsh to the unraveling of the debasement trade (gold, Bitcoin falling).
- 5 (07:52) **Government Debt and Auction Mechanics** - Alex explains how Treasury auctions work and what a "weak" auction looks like.
- 6 (09:43) **The Shift to Short-Term Borrowing** - Discussing the government's move to borrow mostly on the short end of the curve (approaching two-thirds in T-bills).
- 7 (13:16) **What the Yield Curve Tells Us Today** - Alex shares his view that inflation is worse than headline numbers suggest (4.2% is not 2%).
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Guests on this episode
Show Notes
On this episode of Animal Spirits: Talk Your Book, Michael Batnick and Ben Carlson are joined by Alex Morris from F/m Investments to discuss: the Fed, what the bond market is telling us, the debasement trade, Kevin Warsh and more.
To learn more about F/m Investments and our ETFs visit: www.fminvest.com/etfs
To check out F/m Labs visit: https://www.fminvest.com/labs
Find complete show notes on our blogs...
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Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. See our disclosures here:
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