Powell Warns Removal Power Threatens Fed Independence
David Wilcox points out Powell, without being explicitly asked about, pointed to the governors' ability to remove regional Fed Presidents as a risk to independence in his latest press conference. @HooverInst https://t.co/J4Uy69mrei https://t.co/Q0ltpyO3sf
1970s Policy Errors Stemmed From More Than Fed Independence
"Monetary policy mistakes in the 1970s were not due to a lack of Fed independence" Edward Nelson, Senior Adviser Federal Reserve Monetary Affairs @HooverInst
Monetary Policy Nerd Live-Tweets Hoover Conference, Ditches Ballgames
I'm attending @HooverInst's annual monetary conference today. Caution: I'll be tweeting nerdy monetary policy details as someone who thinks monetary policy is far more exciting than a ballgame - I let my dogs chase balls, never quite understood why humans...
Governments Shift Tax Burden to Second Homes
When it's difficult to raise income taxes, but when there budget shortfalls... they'll tax you in other places... taxes on second homes are becoming more common... https://t.co/SOWgh37RzU
ChatGPT Misses Many
I asked ChatGPT to extract all quotes from Kevin Warsh from the transcripts when he was Fed Governor 2006-2011. It only gave me select quotes, here are those from 2007: https://t.co/Ivh7fpN0OA
Lagarde Says “Stagflation” No Longer Applies This Time
Lagarde (only slightly paraphrased): we don't use the term stagflation because this time is different
Lagarde Admits Uncertainty, Confirms Drift From Baseline
Lagarde: we don't know where exactly we are relative to the baseline scenario; we do know we are moving away.
Lagarde: Credit Tightening Signals Implicit Rate Rise
Lagarde emphasizes that credit conditions have tightened. It's important to note that rates have implicitly increased in face of the supply shock.
Buyers' Strike Leaves Thousands Seats Empty, Tickets Plummet
Good news on inflation: a buyers' strike --- "potentially thousands of seats empty six weeks before the tournament begins...cheapest option was..$1,120. A better seat would set him back more than $4,000. Those...were the numbers set by FIFA itself." ⚽️ https://t.co/H3s2NVDUpC
Fed Independence Persists: Powell, Warsh Impact Markets & Gold
Post FOMC analysis with @adamtaggart - Fed independence/ Powell staying on / Warsh Fed / implications for markets / gold https://t.co/V94nEWpvPn
Powell Says No Rush to Raise Rates Amid Iran Tensions
.@mckonomy: aren't there some that say we might need to hike even absent of the war in Iran? Powell: the dissents were on the downside. It's a form of forward guidance - you want to make it in a way that...
Powell Acknowledges Easing Bias Question, Calls It Good
Q by @NickTimiraos: why is the easing bias still right? What would need to happen? Powell: good question.
Dissenting Fed Voices Signal Future Policy Direction
Why do we listen to Powell when he'll be out after today? Why do we look at the statement? Because the dissents speak volumes, set the tone for what's ahead. Regional Fed Presidents say: we are independent.
Fed Likely Mirrors BoC, Holds Steady Amid Oil Shock
For clues on how Warsh Fed might deal with the oil shock, how looking North? That's because not only is Canada a net exporter of oil, Bank of Canada's Tiff Macklem's core philosophy on monetary policy has some overlap...
Iran War Pushes Fed Cuts Out Past 2027
Almost three Fed rate cuts have been priced out from July 2027 meeting since beginning of Iran war. The chart below shows the implied rate for July 2027; source: Bloomberg https://t.co/sZt0N3IHO2
10-Year Yield Rises After Powell Probe Dropped
10yr bond yield relative to CNBC's announcement at 10:17am ET that investigation into Powell has been dropped (clearing the way for Warsh) src for intra-day chart: BBG https://t.co/TpnqqO9bLw https://t.co/UOy5Qt22Dt
Rate‑cut Odds Tumble After Warsh Hearing, Retail Sales Drive Shift
What's priced in after Warsh's nomination hearing. Yesterday, here was a 54.5% chance of a rate cut in December; now it's 39.5%. Was it Warsh's testimony? Doubtful, as we had a strong retail sales report. (src: BBG) https://t.co/Xg7g7b7gXM
Inflation Trajectory Improves, but Work Remains Ahead
Warsh: the trajectory on inflation is improving, but there's more work to do This may well serve as a summary of his testimony as well.
Warsh: President only Suggested, Didn’t Demand Rate Cuts
Q: did the President ask you to lower rates? Warsh: he didn't require it, he didn't demand it. Question goes back and forth. Warsh is pretty clear - Warsh doesn't dispute that he may have been 'asked' to lower rates - he...
Fed Balance Sheet Cuts Must Be Gradual, No Fixed Target
What level should the balance sheet be at? Warsh: I haven't picked a number. The Fed should come to an agreement, it's taken 18 years to get to the balance sheet, it won't happen overnight. It should not hold long-term Treasuries....
Central Banks Must Act Differently in Crises, Leveraging Credibility
Warsh: central banks need to act differently in crisis versus other times. Those other times is when the credibility is built for the assertiveness during crises when they should be given the benefit of the doubt.
Digital Assets Already Woven Into US Financial System
Q: should digital assets be part of the fabric of the US financial system. Warsh: they already are.
Senate Banking Hearing Features Surprisingly Informed Questions
Listening to the various questions in Warsh's Senate Banking testimony, I'm impressed by the quality of the questions . Sure, there's political theater, but so far, questions are well informed. I can't say that about some other Committees.
Warsh Denies President Ever Pressured Him on Interest Rates
Warsh: the President never asked me to predetermine or fix any particular rate. The President never, once, asked me to any particular interest rate decision, period. Nor would I agree to it.
Fed Official Dodges Rate Question, Emphasizes Policy Lag
Warsh: I don't believe in forward guidance, I should not be previewing for you... VanHollen: I'm asking about your framework: what would happen if interest rates were lowered to 1% or less. Would that likely push up prices. Warsh: the Fed has...
Nominee Vows to Sell Undisclosed Assets Amid Ethics Probe
Warren: it's critical that the next Fed chair has no financial conflicts. Do any of your non-disclosed holdings invest in companies affiliated with Trump or his family businesses or Epstein. Warsh: I've worked with the government ethics office. Warren: are you refusing...
Rising Living Costs Reveal Fed’s Missed Inflation Target
Warsh on cost of living: when the cost of living has gone up for virtually all deciles of the American public, it's a sign that the Fed missed its mark. The fatal policy error is a legacy we still live...
Euro Slides as Hike Forecasts Drop to 1.6%
FWIW, intra-day euro off its highs. Not major moves, but it appears there was an overshooting on the Iran news. Also now only 1.6 hikes expected by year-end in the eurozone, down from 2.6 on Monday src: BBG https://t.co/BogH7m2BKY
Massive Property Tax Hikes Target Second Homes, Everyone Affected
Two WSJ cover page story on (massive) property tax hikes. They may well come to a house near you... - fixed property can't flee the state; and - the wealthy shall pay (NY's proposal is to tax second homes) https://t.co/1aVfRG9TR9
For Real Iran News, Follow Curated X Feeds
The one common denominator about most articles on Iran is that they are stale. To get current news, the only place to be is X, looking at posts of followers you've curated.
Gold’s Dip Tied to Rising Yields, Not Inflation Fears
A guest on @business questioned this morning why anyone would buy gold when you can buy inflation protected securities yielding 2.7%. Excellent question. A few answers: First, maybe I misheard him, but TIPS yields are currently just a tad under 2%...
Market Will Adjust to Iran’s Transit Fee Pressure
Let’s assume Iran will impose a hefty transit fee, creating incentive for others to build new pipelines. It also increases pressure for the world to diversify their energy supply. -> the market will "solve" this over medium term regardless...
Rising Yields, Stable Inflation Expectations Pressure Gold
The market priced as a short-term shock, not structural change: bond yields rose, but long-term inflation expectations did not -> real yields moved rose, a headwind to price of gold.
Early Ceasefire Needed
“5/15..the [oil] storage..deficit becomes mathematically irreversible for winter 26/27... rationing...” “On 4/28,..spring nitrogen application window closes. No ceasefire..after..can restore '26 crop yields.” “ceasefire by 4/14..constitutes cascade deceleration [not recovery].“
Ground Invasion of Kharg Island Likely After Deadline
If I were betting, I’d say that after today’s deadline, a ground invasion of Kharg Island is coming. That would align with today’s bombing of the island; a serious escalation without targeting civilian infrastructure. And Trump would have succeeded in...
Sanders' AI Moratorium Risks Talent Exodus Abroad
Bernie Sanders calls for a 6 month AI moratorium, suggesting it would be good for privacy, well-being, democracy, wealth distribution. IMHO, a moratorium would mostly mean that the technology is going to advance abroad, including an exodus of talent. https://t.co/N894mtXzOU
Dollar Weaponization Reshapes Finance, Gold, and Investment Flows
The “weaponization of the dollar” has profound implications for financial plumbing, the dollar itself, and investment flows—including gold. @edwardfishman’s Chokepoints is a must-read on history/key players/dynamics. Thanks @nfergus for the recommendation. https://t.co/4AcmzUniud
Billionaire Tax Threshold Drops to $50 Million—You Might Be Next
For those who think a billionaire’s tax doesn’t affect them, the threshold has just been lowered to $ 50mm. At this rate, you’re next?!
Europe Backs US Iran Strategy, Prefers Covert Support
Europe is supporting US efforts in Iran, they just don't want to be seen doing so publicly: https://t.co/wmNKRdls6g
Fed Rate Path Likely Unchanged Under New Chair
WSJ's @NickTimiraos discusses the awkward Fed Chair transition to come, pointing to, amongst others, the "break" and "lack of continuity". That's mostly right, subject to an important caveat: Powell last December talked up productivity gains - a core argument by...
WTI‑Brent Spread Reveals Iran Market Tension
one of the more useful ways to track market tension in Iran is the spread between WTI and Brent crude (nearest contract). Here a 1 yr chart, lower pane shows the spread. src: BBG https://t.co/o0tLpkaSdP
Weekend Read: Paul Krugman on the Hormuz Shock
As a first for me, I'm recommending @paulkrugman as a weekend read/listen. @robin_j_brooks makes it possible with a discussion on the Hormuz shock. https://t.co/aQ64hxAHxb
CFTC Data Shows USD as Preferred Iran Hedge
CFTC positioning: USD as Iran hedge Chart: dollar weighted exposure in million dollars versus number of non-commercial participants (speculators) large dot: most recent small dots: last year grey dots: last 10 years green: long red: short src: BBG, Merk https://t.co/LDLtec7oXv
Gas Prices Outpace 2022; Long‑term Real Rates Rise
3w into conflict, gas prices on higher trajectory than in 2022 (Ukraine invasion). WTI 1M/6M spread off peak inversion, so are implied vols for WTI. 2YR inflation expectations on similar trajectory as 2022. LT inflation exp not reacting much...
Germany Expands Intelligence, Creating Its Own NSA
Separately, Germany is building its own version of the NSA. Germany's intelligence service is vastly expanding what has to date been a small section. https://t.co/v3wcztzBqI
Germany Loosens Arms Export Rules for Six Months
Germany to ease weapons export restrictions for 6 months to support Gulf states & Ukraine, according to @BR24. Previously, every single transaction had to be approved, now focus on reporting requirements.
Quadruple Witching Ahead; Options Hedging Fuels Today's Volatility
just a reminder that tomorrow is "quadruple witching" volatility today may in part be attributed to the hedging of options traders
Predict Gold's Price One Year From Today
Perfect day to ask the question... the price of $gold a year from now will be
Lagarde Leans on “Propagation” Amid Inflation Uncertainty
ECB's Lagarde is asked to be specific on inflation in a bad case scenario. Instead of Powell's "I dunno", Lagarde says: be patient, I'll expand. Longer speech on "particularly attentive to..." -- uses the magic word "second round effect" --...
Powell Shrugs Diesel Prices, Prefers Not Driving Trucks
Q: the question is whether we are concerned about Diesel prices. Powell: shakes his head before answering. I gather Powell's preferred commuting vehicle ain't no truck.