Welcome to Macro Voices

Erik:    Joining me now is Whalen Global Advisors founder Chris Whalen. Chris, it's been I think five or six years since I last had you on the program. So needless to say, long time, no talk. Let's get right into the grit of what's happening. We're speaking just after the FOMC statement on Wednesday afternoon. It was widely expected that they would hike 25 basis points and that's what they did. Is there anything unexpected that happened this week that people need to understand?

Chris:   Now the Fed is sticking to the original script, the narrative is about fighting inflation. They don't want to talk about banks at all. And also, there's a big chunk of investors out there pension funds, everybody else who were also suffering as a result of the price change that occurred when they raised interest rates, you know, its bond market 101, that we're learning it all over again. It's like the 1980s. If I were to compare today with a past period, it's really similar to what Paul Volcker did when he raised short-term benchmark rates, you know, the government rates way above the banking system and left them all underwater. So we have a modern day version of that.

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Erik:   Joining me now is Izabella Kaminska who many of you know as the Managing Director of Financial Times Alphaville blog. Izzy actually just left FT Alphaville and she is now heading up her own media enterprise, the-blindspot.com, that's the-blindspot.com which is Izzy's new media venture. Izzy, it's great to get you on the show as a first time guest, I haven't talked to you in years and years but I've loved following your work on FT Alphaville.  Let's talk about where we stand in the recovery from this massive Coronavirus, COVID experience that we've had. My view is that although I'm not a virologist, and don't know these things, all the smartest people seem to be telling us that it's very likely that this Omicron strain is going to be what gets us from the pandemic phase to the endemic phase of this crisis, leading to reopening of the economy. First question is do you agree with that general view? And if so, what do you think this recovery is going to look like compared to others?

Izabella:   Hi, thank you so much for having me on. Yes, I tend to agree with you that this is us moving into the endemic phase. Certainly, we can't go on suspending our lives as we have. We have to find different coping mechanisms and luckily Omicron has come along and proved itself a milder form of the disease. So that is great news for us. But at the same time, I think in Europe, we are still... they are many countries that are still very fearful and quite, you know, the Netherlands is one of the countries that has been very late to drop restrictions. Denmark has recently dropped restrictions, but compared to the UK, they were locking down even over Christmas, so we stayed open pretty much so there's still a very different approach like within Europe itself, different countries are still taking highly diverse approaches to dealing with Omicron. So yes, I agree generally that we are in the endemic phase, but I also think there is a risk that at any moment a new variant can come along and sort of bombard any intent to properly open up and if and when it does, my personal view is that we have to really consider whether lockdowns are the best way forward, given the fragility of the economy, given the scale of the hit we've already taken, it might not necessarily make sense to do what we've done before.

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