Danielle DiMartino Booth: A Steady Controlled Demolition of U.S. Credit Markets

Tom Bodrovics welcomes back Danielle DiMartino Booth to discuss the looming problems of the US credit markets. Booth notes that the US is in the midst of a controlled demolition, and that the deliberate nature of Powell's higher for longer rate hike schedule is having a negative effect in the form of bankruptcies. Despite this, there has not been a major financial meltdown due to the amount of credit card spending and the amount of fiscal stimulus from the pandemic. Booth discussed the tightening of banking standards and lending standards, which she noted have been imposed by credit unions and regional banks. She noted that as long as Jay Powell succeeds in maintaining a higher for longer stance on monetary policy, there will be a continued bleed into the money market fund industry. She discussed the magnitude of fiscal relief and fiscal stimulus that is still being pumped into the economy, and how this is helping the Fed to regain some of their credibility. Danielle also discussed student loan forbearance, which was part of the debt ceiling law and explained that there was little room for an extension. She then discussed commercial real estate, noting that demand had declined and companies and businesses were turning in their keys. DiMartino Booth then discussed the goal of Federal Reserve Chairman Jay Powell, which is to raise interest rates and rewrite modern monetary policy history. To do this, he must get rid of the zero bound, stop at two percent, get rid of quantitative easing, and get out of the credit easing business. Finally, DiMartino Booth discussed the global implications of the US keeping their rates higher for longer. She also notes that major fiscal relief should not be expected until the second quarter of 2025 at the earliest. Time Stamp References:0:00 - Introduction0:52 - Fed Pauses & Bankruptcies2:27 - Stimulus & Credit4:46 - Consumer Debt & Spending7:02 - Lending Tightening8:27 - Powell Approach10:23 - Soft Landing & Jobs14:12 - Impacts & Stimulus16:08 - Student Loans18:17 - Commercial Real Estate19:44 - Easing & Timelines22:05 - Monetary History26:41 - U.S. & C.B. Stress28:22 - Wrap Up Talking Points: The US is in the midst of a controlled demolition, with the deliberate nature of Powell's higher for longer rate hike schedule having a negative effect in the form of bankruptcies.Federal Reserve Chairman Jay Powell is aiming to raise interest rates and rewrite modern monetary policy history.The US dictates global monetary policy, and domestically major fiscal relief should not be expected until the second quarter of 2025 at the earliest. Guest Links:Twitter: https://twitter.com/DiMartinoBoothSubstack: https://dimartinobooth.substack.com/Website: https://quillintelligence.com/YouTube: https://www.youtube.com/c/DanielleDiMartinoBoothQI Danielle DiMartino Booth is CEO and Chief Strategist for Quill Intelligence LLC, a research and analytics firm. DiMartino Booth set out to launch a #ResearchRevolution, redefining how market intelligence is conceived and delivered, with the goal of not only guiding portfolio managers but promoting financial literacy. To build QI, she brought together a core team of investing veterans in analyzing the trends and providing critical analysis of what drives the markets. Since its inception, commentary and data from DiMartino Booth's The Daily Feather have appeared in other financial sources such as Bloomberg, CNBC, Fox Business, Institutional Investor, Yahoo Finance, The Wall Street Journal, MarketWatch, Seeking Alpha, TD Ameritrade, TheStreet.com, and more. A global thought leader on monetary policy, economics, and finance, DiMartino Booth founded Quill Intelligence in 2018. She is the author of FED UP: An Insider's Take on Why the Federal Reserve is Bad for America (Portfolio, Feb 2017), a full-time columnist for Bloomberg View, a business speaker, and a commentator frequently featured on CNBC, Bloomberg, Fox News, Fox Business News,