A Broader Lens on Economic and Market Trends
Speaker: Rick Santelli, on-air editor, CNBC
KEY TAKEAWAYS
- Rick Santelli expressed concerns about how the U.S. economy and markets will respond to rising inflation, which he does not consider to be transient. He said the Federal Reserve will not be able to raise interest rates until it tapers its economic stimulus program. Bond purchases have added $4 trillion to the Fed’s balance sheet, which now exceeds $8 trillion – “and this can’t end well.” Servicing the debt will approach what the government pays for Social Security and limit any action that can be taken during the next crisis.
- At the same time, “it’s raining liquidity” and “so much money sloshing around is fueling the stock market.” While he predicted strong continuing demand for corporate stocks, “don’t bite off too much risk” and be careful about investing in emerging markets and fixed income.
- Santelli said many companies pay “lip service” to ESG – “but if it’s a choice between ESG and returns, you know what investors will choose.” He said renewable energy “is not ready for prime time” and cited examples that included the environmental impact of electric vehicle (EV) battery disposal and the difficulty of finding EV recharging stations.
- He advised the audience to buy Christmas presents before Halloween due to continued supply chain constriction, “some” reversal of globalization and “some” onshoring. But “they will find a way to get chips in cars” and by spring 2022, you’ll see a better selection of products (but not normalized pricing).