Thought Experiment: Suppose BlackRock’s Ric Reider is right. His idea is that Boomers have more free cashflow due to the trillions in Treasuries that are throwing off high coupon - more than ever. His argument is that higher rates might be hurting CRE, but may be supporting the US Consumer (boomer) spending on services. Rates are higher for longer. The Fed said today they are kicking out the timing of various rate cuts to next year… So Boomers keep spending… That keeps inflation on a slow glide path. Now, the Fed believes they are ‘restrictive’. The Fed does not believe high rates drive spending. (Meanwhile, cruise stocks and restaurants are near ATHs…) The Fed doesn’t believe Ric’s argument. Play it out. Rates are higher for longer. So Boomers keep spending their Treasury bill coupon. So inflation stays higher for longer. So policy stays ‘restrictive’ for longer… So Boomers keep spending their Treasury bill coupon… Consider the following. This cycle is unlike any we have seen. The leading indicators are down , yield curve inverted, bank credit stalled, loan officers are tight. All these once reliable predictors of recession failed. The conventional models may not be helpful. We have an income led boom rather than a credit boom. Stay mentally flexible. We may need new mental models.