With a wobbly economy and too much household wealth tied up in equities, the markets have less to fear from a hawkish Fed, said Ronald-Peter Stoeferle, responsible for fund management and research at Incrementum AG. Stoeferle spoke to Kitco on Tuesday. He said there may be a once-a-done rate hike instead of several rate increases some were expecting as the Federal Reserve tries to tamp down inflation. "Inflation numbers are coming down, so we can actually take a little bit more time with our rate hike campaign. I cannot emphasize it enough: I think the market is expecting [too] much hawkishness from the Federal Reserve. It's ridiculous," said Stoeferle.
A big market correction last week pulled down a goal to its worst drop since November friend of Kitco Ronald theater, Stefana fund manager and research at increment them AIG and also author of the annual in bold. We trust. He's going to guide us, Ronald. Great to have you back, Michael. Good to see you.
Happy new year. Thank you very much. I was the last time we saw you. I saw you in Frankfort, uh, that was in November and a lot has happened since that time. Uh, Rhonda, we're going to get into metals, uh, but first give us a snapshot of what's happening with the fed and the general. Well, uh, from my point of view, we we've seen peak hawkish notice.
Uh, somebody tweeted out today that I think bank of America now expect seven rate hikes this year. And, uh, I replied, uh, well, I I'll be happy to bet against that from my point of view. Uh, and I'm really quite vocal about it. It will be the shortest and the shallowest RateIt cycle in the history of the fair reserve.
Now, why do we, why do I believe that first of all, household ownership of equities at the moment is 45 trillion. That's higher than ever. That's actually twice the size of the U S economy. And we already see, um, How, how angry the stock market and how nervous the stock market is regain re regarding this new hawkishness that Jay Powell found.
So, uh, from my point of view, it is truly the stock market that, that dictates us monetary policy. And therefore, I don't believe that we will see so many rate hikes. I don't believe that we will see a significant amount of quantitative tightening. And I think. Michael, to be honest, that gold is already sniffing out the policy arrows.
So gold already, um, kind of tells us that at some point at this point, we'll be probably quite soon and sooner than the market expects that the federal reserve will have to make a U-turn. We want to get to gold, uh, and your gold call, which is quite bullish, but, uh, how many rate hikes do you think we're going to be in for this year?
Perhaps it might be a one and done. Um, Y um, I think, uh, we saw it in 1997 and also in 2016, uh, when the market expected, uh, a big, uh, big hiking cycle. And, and then it turned out to be a very, very slow. From my point of view, um, inflation numbers, um, due to the base effect and so on, they will start to come down, uh, over the next couple of months.
Uh, and I think this will give the federal reserve some, some leeway to say, well, okay, we, we don't have to become that aggressive, um, inflation numbers are coming down. So, so we can actually take a little bit more time, uh, with our retail campaign. And then I think if you have. The, um, the yield curve, which is obviously the most reliable recession indicator out there.
It's already telling us well, um, you know, uh, the economy's not doing so well. We're seeing the GDP now indicator by the Atlanta fed, uh, expecting basically Ciero growth for the first quarter. We were at some sort of a. Borderline recession already. So the federal reserve wants to hike into a weakening economy.
It wants to hike, um, into a weakening stock market. Uh, and I, I just don't think that this is going to happen. Uh, as I've said, household ownership of equities, 45 trillion. Uh, we will see, um, if the, uh, if equities go down, uh, even more. I think we will see an immediate effect on, uh, consumer sentiment on, on, on investments.
So, um, therefore I cannot emphasize it enough. I think the market, uh, is expecting so much hawkishness from the, from the federal reserve. It is. A couple of weeks ago, uh, there was a lot of people that were predicting that inflation was just going to Gallop. Um, I was surprised when you called there, Ronald, that you see that it could actually be a coming back down.
Why the change? Well, from my point of view, First of all, uh, I think, uh, Jay Powell now also realize that, uh, that inflation is not transitory, but that doesn't mean that it will keep rising, uh, all the time into, into, into hyperinflation. Um, from my point of view, it is. Also to, to a large degree, uh, psychological profile process.
Um, and I think, you know, if you talk to people over here in Europe, and I think it's, it's pretty similar in north American, all over all over the globe. Inflation is a topic again, we're seeing it with our heating bills. We're seeing it with every restaurant visit. We're seeing it. Of course, when it comes to real estate, um, building prices, we're seeing it all over.
And, and I think, and this, this has always been our, our, uh, our case, um, uh, wage price spiral will really start spinning. So, so this will be the next stage of, of, of this, um, uh, inflation story. And therefore, I, I don't think it's, it's, it's, it's going to be a transitory, but that doesn't necessarily mean that, uh, inflation numbers cannot come down.
I think this will happen over the next couple of months. And I think what's, what's really crucial for, uh, for the market. And especially for gold investors is, um, obviously inflation expectations, uh, one year out from now and perhaps two years out from that. Inflation is being seen as some sort of a concern, but inflation expectations over the longterm.
Um, they're still, still pretty much anchored. And I think. As soon as also the long-term inflation expectations realized that we will have to accommodate to higher inflation numbers over the longterm. I think this will be the big moment for gold, uh, but we are not there yet. And I think over the next couple of months, Uh, I think, um, uh, inflation numbers will come down, but then at some point, probably in the second half of the year, they will start rising again.
And then this will put the central banks in an even more peculiar situation, probably in your recent note, you had some bold contrarion predictions for the year ahead. I want to go through them. Gold marks, a new all-time high in 2022, Ronald. Yeah, well, I mean, um, we, I, I think that, uh, everybody hates gold at the moment.
I had to look at the, um, uh, the, the price forecasts, uh, from, from most of the big banks and, and the. Pretty bearish. Then we're seeing that, um, you know, the, the, the many market participants were quite frustrated with the performance of gold last year, 2021, where, when inflation really became a topic. Uh, and so I think many threw in the towel, um, in our recent piece, which was called, uh, why gold has lost its mojo.
We, we explained what the reasons were, um, for this, um, disappointing performance, uh, of Gordon. I think it's, first of all, it was the fact that gold did so well in 20, 20, 19 and 2020. Um, then of course, uh, it was to strengthen the U S dollar. It was the fact that, uh, equity markets last year, I mean the S and P made, I think, 17 new all-time highs with very, very low volatility.
So we've, we saw major opportunity costs coming from the equity market. Then of course, uh, Bitcoin kind of, uh, kind of stole the show. And most importantly, from my point of view, long-term inflation expectations, as I said before. So, so, so that was the main reason. I think this is slowly changing now and you know, let's face it.
We're now trading at 1800. So 250 bucks below the all-time high. We're seeing lots of pessimism, um, uh, I would say peak bearishness when it comes to goals and that's, that's a pretty good setup. And I think what, what most people fear in the market is, well, you know, now we're seeing the, the big rate hike cycle, and this is real.
This will be the, the, the end for, for gold. Okay. If we, if we look back, uh, into the history books, uh, 2016, when Janet Yellen raised interest rates, this was exactly the day of the first rate tech. This was exactly the day of the low in gold, pretty similar in 1999, when Ellen Greenspan started hiking again, three weeks after gold made it slow.
So, so I think this is really, uh, you know, sell the rumor by the effect. So I don't really fear. Um, the rate tanks, because gold is already anticipating, um, this policy error that has happened basically already before. Um, so, uh, therefore I think once we see the first rate tag in any it's going to happen in March, uh, there's no doubt about it.
Um, then I think, uh, that should be, um, uh, the point in time when gold really, um, uh, starts, starts going up. It's an odd, it's an odd sector, a Ronald a, you talked to the gold speculators and as you said, it's bearish, but if you talk to producers, you know, That's a pretty good gold price right now. Um, you emphasize also like your note regarding predictions, and then that's getting back to your, uh, inflation story.
And, uh, that's, uh, looking at the old energy commodities. You have oil at one 10 and you have uranium over 60. Yeah. I mean, uh, I think when it comes to oil, having looked having a look at the CPF function on, on, on Bloomberg, for example, which shows the consensus view on, on, on, on, on, on y'all market. Well, everybody is still kind of expecting, uh, significantly lower prices or, or, or a sideways move.
And nobody's really expecting a big spike in oil. Having a look at the supply demand picture, having a look at the CapEx cycle, having a loop, look at the geopolitical situation, uh, uh, at the moment, um, from my point of view, uh, oil is, is, is, is, is, is still showing a very, very interesting risk rewards, um, uh, ratio at the moment.
So we can easily go to, to, to new all time highs and, you know, the inflation adjusted all time high. Be significantly higher. So, so I think there's still quite a lot of leeway, of course. Um, that will probably go hand in hand with, uh, with the recession. There's, there's no doubt about that. Um, but I think, you know, uh, spare capacity is significantly lower than, uh, than, than, than the market, uh, sees.
So, so, um, I think oil is a, is a pretty, um, that's, that's a pretty much of a high conviction. Call for me. And, you know, just to give you an example, uh, I think in, in the third quarter of 2021, there was only one stock that Warren buffet bought and it was Chevron. And, um, I think the fact that so many institutional investors are simply.
April are not allowed anymore to buy into fossil fuels. Um, that also prepares a pretty interesting investment case, um, for, for, for us. And the second story uranium. From my point of view of Barry, very simple supply demand case. We are running one of the very, very few uranium funds out there. It was actually the best performing, uh, resource, uh, fund, uh, last year.
And actually we're seeing some sort of a Renaissance of, uh, of nuclear power, um, worldwide, especially, uh, over here in Europe. Um, I think if, if you have a look at the supply demand picture of uranium, Uh, it's, it's a very, very easy call. Uh, it's still a tiny, uh, industry. We know what's, uh, what's being planned in, um, in China, but also in India and now even, uh, overhearing Europe.
So, so, so I think uranium is a pretty interesting, uh, set up at the moment. Yeah. So it's also a high conviction call it. Uh, lastly, uh, Ronald you're one of those households that is in the equity market. Uh, you're probably a loaded up with tech, uh, and, uh, w what would be your warning, uh, to those. Well, actually, we were not loaded up with tech, uh, in our world, generally that we're talking about out there.
Sorry. No, uh, um, but, but, but I think, you know, w when it comes to the tech sector, obviously we all know that, uh, basically the majority of, of all the performance for, for us equities came from, from only a handful of, of names. We, we all know that, um, We went into, um, 20, 22 with the largest forward PE discount for emerging markets relative to, uh, to us equities ever.
And it's mainly driven by the tech space. Of course we saw some, um, some, some term aisles, um, uh, uh, uh, some volatility in this space, but it's, it's still not, uh, N not cheap at all. Um, so. I would be, I'm very cautious in the tech space. Um, from my point of view, uh, we are seeing Tesla, uh, um, uh, pre pretty bearish.
And that doesn't necessarily mean that it's, uh, that it will go bankrupt or whatever, but, but we saw correction of, of 50%. Uh, I think that, that, uh, Elon Musk might step down, um, this year because of some, uh, some, some legal issues. That's one of our bolts, um, uh, predictions that we made. Uh, so every year we make those 10 predictions, but there's an 11th one this year, as you perhaps have seen.
Uh, and this call was pretty easy because we are forecasting that Austria will not win. The world cup. So if I'm wrong on all the other 10, at least I've got one, right. Also look up for Canada, who I believe is a been tearing it up right now with the recent win over us. Ronald theater. Thank you very much for talking with me.
Thank you very much. It's always a pleasure. All the best to care. He's running low. Peter Stephan, a fund manager, and a research at increments AIG, and look for his annual in gold. We trust report. My name is Michael McCrae and you are watching Kiko.