Gold, silver strength represents flight from currencies, says Sri-Kumar Global's Komal Sri Kumar

Steve Sedgwick (Anchor) 00:00.070

here for his take on rates and the fed and his outlook for the year ahead let's bring in kumar sri kumar president of sri kumar global strategies thanks for joining us

Komal Sri-Kumar (President) 00:08.590

good to be here with you and leslie thank you

Leslie Picker (Anchor) 00:11.190

good to be

Steve Sedgwick (Anchor) 00:11.870

i i think the thing that was most interesting this morning that we in the lead up here was what's happening with gold and silver how do you put all of that in context you seem to have stocks seem to be able to go up stocks in general but also you have this tremendous tremendous

Steve Sedgwick (Anchor) 00:26.190

bid in the precious metals

Komal Sri-Kumar (President) 00:28.080

you know i think there is a common element behind all of those steve i've been talking from the beginning of the year this is going to be a great year for gold and gold stocks that's how it's been happening that represents the flight from currencies in general meaning normally

Komal Sri-Kumar (President) 00:44.310

if you were in yen or euro or the british pound sterling you sought refuge in the US dollar for safe haven but the US dollar no longer gives you a safe haven where do you go you go to gold that's what has been happening on the equity side that you mentioned it is again a flight

Komal Sri-Kumar (President) 01:02.070

from inflation what is going to give you some protection commodities and equities are a way to put your cash rather than leave it just in a bank account and lose value with inflation so

Steve Sedgwick (Anchor) 01:14.830

all of that makes sense except for here's what doesn't make sense is that what we look at the five year five year forwards or the markets expression or the chips markets of their concern about inflation there's not a lot there why isn't the market expressing the inflation that

Steve Sedgwick (Anchor) 01:28.720

you suggest the

Komal Sri-Kumar (President) 01:29.480

market depends based on what measure you use if you look at consumer sentiment the conference board calculations they show the five year forward inflation rate to remain very high three point five to four percent and that is an average so that is telling you that there are some

Komal Sri-Kumar (President) 01:49.070

people who are expecting it not higher than that right

Steve Sedgwick (Anchor) 01:51.750

but i mean specifically i don't think we can get this chart up but there's a thing called thin five F I N five a daily chart guys if you have it in the background there it's an econ chart but anyway it has been relatively quiet in a two three two four let's move on sri let's

Steve Sedgwick (Anchor) 02:05.830

talk about the outlook for the federal reserve the market is priced in a essentially a pause in january pretty much continuing through march and then april june it starts especially in june when the new fed chair comes in the market seems to be suggesting the cutting will

Steve Sedgwick (Anchor) 02:23.070

continue

Komal Sri-Kumar (President) 02:24.070

i expect twenty twenty six on the rate side steve to be a very turbulent year and i'll tell you why because if there is a pause in january as you say and that's very likely then the president is not going to be happy with it he wants substantial reductions so he's again going to

Komal Sri-Kumar (President) 02:43.190

come out and load on powell and basically say that that is not the right thing to do meanwhile you have all the aspirants to the fed chairman position who irrespective of what happens to inflation or growth they want lower interest rate because it's almost like they are crying

Komal Sri-Kumar (President) 03:00.190

please make me the next chairman i will cut interest rates whatever you want me to do so you are going to have a federal reserve which lacks independence even more than normal usually i've said there is a problem with the federal reserve chairman as soon as you are nominated you

Komal Sri-Kumar (President) 03:19.630

are trying to get yourself renominated the next time my suggestion there has been a fed chairman should have a single seven year term and he or she

Steve Sedgwick (Anchor) 03:31.790

could not solution but it's not necessarily the the reality we have right now i think there's two questions raised by what you say the first is should the fed be cutting rates and the second is will the fed cut rates irrespective of the backdrop and on the second question what

Steve Sedgwick (Anchor) 03:49.190

people have come back and kind of debated that notion of the fed chair will be dovish is that there's a committee and the committee will restrain the the the fed chair what's your take on that i