Takeaway: This webcast originally aired on March 18 2021. Replay and transcript are available below.

Dear Hedgeye Nation,

We just hosted 10 of the sharpest investing minds on HedgeyeTV for a 3-day bonanza of world-class interviews. Batting cleanup on the final day of our semiannual Hedgeye Investing Summit, Hedgeye CEO Keith McCullough was joined by none other than Steph Pomboy, Founder of MacroMavens.

Below we have transcribed key excerpts from their conversation.

You can access the entire hour-long interview, as well as the 8 other financial market webcasts, here.

ICYMI | Steph Pomboy & Keith McCullough: How To Navigate Market Madness  - Pomboy 3.18 1PB

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Key Takeaways 

Pomboy on the US Dollar:

The Fed can either control interest rates or it can control the currency but not both. If they are forced to control interest rates, the dollar will be a battle. Foreigners already do not favor our fiscal policy. We will have to watch what happens with China. They are making a major shift in economic policy. Their currency has appreciated 10% in a short period of time and they just abided that.

They are clearly moving forward to in handing purchasing power to the consumer. They are decreasing their activity in buying US treasuries.

Anything at the margin that takes dollars out of the treasury recycle game causes an issue with the US. We continue to increase deficits spending with a decreasing amount of global financing. The Fed QE will have to be an endless policy. 

Pomboy on the Fed:

As inflation picks up and the Fed welcomes those hotter numbers with open arms, you will continue to see back up with interest rates. Financial crises occur when we have lower and lower levels of interest rates because we are so levered today. The Fed reported the flow of funds last week of $61 trillion. In 2007, we had half the amount of debt and the interest rate that caused that event was 4.5%. You could say that 2.5% of twice as much debt, we could be their quickly.

Pomboy on a potential slowdown in 2021:

Yes. It might not be that huge in absolute basis but that is because expectations are so high. Personal income is $2.5 trillion higher today than it was when the pandemic started, and household net worth is up $19 trillion while consumer spending is down $65 billion. That is a stunning divergence. Overall consumer spending with all this money coming in the door indicates that something is going on.

Much of the cares act went to saving and improving balance sheets within households. Why should the new stimulus package be any different? Maybe having a vaccine and being able to do things will change that but we must see that first before you invest in that way. The burden of proof is on the bulls.