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David Salem is one of Wall Streets finest… extremely cerebral and well thought out! He knows the industry like the back of his hand Coupling his expertise with Hedgeye Risk Management, LLC intermediate market signals, was a no brainer When he’s speaking, it’s most often timely and important!
This excerpt is from a recent Bloomberg interview featuring Hedgeye's Director of Capital Allocation David Salem with Tom Keene. FEDERAL RESERVE/MONETARY POLICY "I don't think the Fed's mandate is sufficiently clear. With the utmost respect, they are just making it up as they go. They are making up not only the mandate, but the means that they employ to pursue however they define the mandate. That's because their mandate from Congress is insufficiently clear. So, you asked me 'what should the Fed do?' I don't think anyone can honestly answer that question. ...I think the Fed ought to be very, very careful about cutting rates too quickly. ...It's going to be very difficult for the Fed to move this gigantic supertanker called the 'U.S. Economy' towards inflation anything close to the target over the next year. And that suggests that they ought to be very measured and patient in further reductions of the policy rate. INVESTING IN CHINA "My strong views on China are limited exclusively to the perspective of a Chief Investment Officer, someone stewarding a large pile of money. I've held these views for a very long time. When you're allocating capital and taking risk, you obviously want to be cognizant of what it the worst case for the risk taking, and what's the best case for the upside. When you do that with publicly traded companies in China, as distinct from private equity in China, I don't see an upside that is even remotely close or commensurate with the downside. And the downside we saw obviously with Russia's invasion of Ukraine, where either through fiat regulation or law, or just by market movement, basically your wealth gets taken away or at least confiscated for a time period. You get wiped out. So the expected return has to be very high, and I don't think you see that in publicly traded Chinese companies." IRRATIONAL EXUBERANCE ? "I actually think in important respects it's what we might call 'rational exuberance.' The market is starting to discount policy changes. I think probably the single most important policy change that might affect the trajectory of the U.S. economy and in turn the global economy over the next few years--doesn't emanate from the White House or Congress--it emanates from the Supreme Court with the recent Chevron Doctrine decision that basically said to the independent agencies: 'You don't have as much power as you've had in recent decades, you need to go to greater lengths to justify anything that you're doing... That could be very productive of stimulus to growth. That's why I say some things that are going on in the markets today strike me as rational, rather than irrational, exuberance." *****If you'd like to learn more about David's research offering email Emma Vlasic [email protected]