In this episode of Bitcoin MagazineFor the “Fed Watch” podcast, host Christian Kerolis and I, Ansel Lindner, provide an update on the Federal Reserve, the energy crisis in Europe and Asia, and power outages in China. It’s a very pivotal time for the markets and things are moving fast. This episode was taped on September 28th and things are moving so fast that by the time of publication, we may have a completely different scenario. For this reason, we’ll go back to our shorter 24-hour schedule.
Our first news of the Fed is the resignations of Rosengren, president of the Boston Fed, and Kaplan, president of the Dallas Fed, over allegations of insider trading. This could cause a slight jolt to the Fed, as both voting members have been on the hawkish side of monetary policy, which means they favor less accommodative measures and faster tapering.
This leads us to talk about a tapering Federal Reserve. Powell said at the FOMC meeting in September that tapering will start “soon.” Critics claim that means they’ll announce it at the next meeting in November, and we agree unless major circumstances change (which is very possible).
Energy crisis in Europe and Asia
This was a large-scale discussion about the current state of energy crises in Europe and Asia at the time on September 28, and we speculated the reasons. Different places on the planet will be affected differently by this crisis, that’s for sure, but the repercussions could be tragic. The United Kingdom has fewer shortages and a greater distribution problem, but continental Europe faces real shortages, albeit one of their own making. Years of aggressive environmental politics have left it vulnerable to shortages like this.
Asia and Europe may seem like separate crises here, but they are very much interconnected. We traced an important causal factor back to the Chinese trade war with Australia. Starting in January, China stopped buying coal from Australia, a change that has been pervasive in energy markets. The US has taken some slack from China, while Australia has found other markets in India and elsewhere for its coal. China ran into a deficit, so it likely bought more natural gas from Russia and Iran, which had been facing low inventories until 2020.
Things are rolling down the hill. This supply shift was offset by a slowdown in supply chains to trigger a bidding war.