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Chase Taylor: The Trap for the Fed to Overtighten has Been Set

Tom welcomes back Chase Taylor to the show. Chase is a macro strategist and editor of Pinecone Macro Research and head of research at Bulwark Capital Management.

Chase discusses the current economic situation and the potential for a longer and deeper recession than expected. He notes that lags in the economy appear to be longer than in the past, and consumer spending is flatlining, with delinquency data showing signs of struggle. He believes that the Fed’s policies of boosting liquidity and raising rates are at odds and could lead to further financial stress.

Chase also discusses the issue of debt among different demographics, highlighting the student loan forbearance coming due in October. He notes that student loan debt is twice as high as credit card debt and cannot be escaped through any type of bankruptcy. He then discusses the banking crisis that occurred in the past and how it was mainly based on liquidity, and how small businesses could be hit hard when smaller banks tighten standards.

Chase worries that the Fed may have misjudged the lag time with their demand destruction plan, leading to a monumental long trade in commodities due to destroyed supply. He discusses his approach to investing in this current environment. He urges investors to separate their feelings from their trading activities and to be aware of feedback loops, where thing can spiral out of control.

Time Stamp References:
0:00 – Introduction
1:15 – Lessons & Good Calls
4:38 – Thinking Clearly & Timing
9:48 – Summer of Discontent
15:03 – Expectations & Recession
19:09 – Gross Domestic Income
21:43 – Fed & Bad Models
27:42 – Recession Outlook
31:20 – Stimulus Factors
33:26 – Paycheck to Paycheck
39:27 – Bank Crises & Risks
44:43 – Depressions & Policies
47:35 – Financial Stress
50:32 – Rate Cuts & Markets
53:00 – Fed Lag Issues
55:13 – Commodities & Energy
57:46 – Uranium
59:15 – Metals Outlook & Cash
1:00:28 – Wrap Up

Talking Points From This Episode

  • The current economic situation appears to be worse than expected, with consumer spending flatlining and delinquency data showing signs of struggle.
  • Student loan debt is twice as high as credit card debt and cannot be escaped through any type of bankruptcy.
  • Investors should separate their feelings from their trading activities and be aware of feedback loops, where things can spiral out of control.

Guest Links:

Chase Taylor is a macro trader and the global macro strategist and editor at Pinecone Macro Research. He recently became Head of Research at Bullwark Capital Management. Chase launched PMR in 2018, where he provides unique macro insights and analysis in a weekly and monthly research product.

Chase does not come from Wall Street or business school, but the military. He prides himself on being a self-taught macro thinker and practitioner. Chase started in the Air Force working on B-1 Bombers, but spent most of his career as a geospatial intelligence analyst, working on strategic and tactical intelligence problem sets. He has also worked in acquisitions at a research laboratory focused on rocket propulsion.

Chase combines the analytical techniques he learned in the intelligence community with a unique focus on history and nature to create a distinctive macro framework. He combines technical analysis, fundamental changes, and the power of narratives and reflexivity to uncover asymmetric investments.

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