FOMC Signals to Warsh, Not Powell Losing Control
The dumb take is that Powell has lost control. The smart take is that this is the FOMC telling Warsh he wont have control...
Fed Adopts BoE Playbook Before Warsh Chair Transition
The BoEfication of the Fed. Pretty smart move ahead of handing over the chair to Warsh... maybe Powell can walk now afterall
Unresolved Iran Crisis Makes Two-Year Market Calm Unlikely
The @johnauthers piece was good today. He asks whether surviving the Iran crisis would be like 1998 LTCM/Russia default, a market scare that triggers a subsequent two-year meltup in US tech stock. I guess there are two problems: 1. The Iran...
Analyzing Crisis Outlook,
The world's greatest macro podcast is back. This week: 1) Is the market right to look through this entire crisis? 2) What are the longer-term implications? 3) What do central banks do next?
Inflation Won’t Reach 2% Target, Be More Volatile
literally said that four years ago. Inflation would come down sharply, but not all the way to 2% - which was now the floor rather than the ceiling. And it would also become more volatile, due to various supply shocks
From Great Moderation to Chaos: Supply Shocks Return
If the Great Moderation was the result of fewer nasty supply shocks, more efficient supply chains, and better policymaking - as economists claim - then what we have now is the complete reversal of those trends. Nasty supply shocks, the...
Post‑crisis Outlook: Fed Likely to Raise Rates
If the crisis blows over in the way most investors expect, i think the next Fed move will be a hike
Inflation Surge, Market Risk Unmoved Without Economic Shock
We know we face months of physical disruption to energy and food markets. Inflation will keep getting worse. The question is whether risk assets will care, if the underlying conflict has been resolved. I suspect not...unless the economy deteriorates in...
Missed BoE Chief Economist's Speech—Another Insightful Cracker
sad I missed this speech from the BoE's chief economist. Looks like another cracker https://t.co/Gu7E2vcUmX
Post‑COVID Inflation Surge: More Prices Exceed 3%
New Fed paper showing that underlying inflation dynamics have shifted since COVID. Across countries, a greater share of prices are now rising >3% per year - partly because wage inflation has been persistently higher. https://t.co/1PELesrnc2
Iran Offers Ceasefire for Strait Access, US Demands Opening
The way out of this mess, according to our geopolitics guy: The TACO was trailed by yesterday's talk about leaving others to free up the strait. Trump's latest burp today hardens this somewhat when, in answer to his own claim that...
Oil Shock: Temporary Pain or Recession Trigger?
Ok, so here is the debate: Bull: higher oil price will raise inflation and reduce the LEVEL of disposable income/profits. But even if oil prices stay high, impact on GROWTH eventually wears off. Its a soft patch. And since we know...
Energy Markets Face Months of Disruption Despite Conflict Resolution
heated debate on our weekly analysts' call today. If the conflict ends but we still face months of physical disruption to energy markets - is anyone still going to care?
US Economy Set to Outperform Global Peers in Any War
"While the US will continue to outperform other advanced economies under almost any war scenario..." Bookmark that
Oil's Calm Surge Ends: Volatility Looms Ahead
why oil price rises have been so orderly so far, and why that is about to change.. https://t.co/TAIdkwIkdQ
Post‑WWII Worker Power Erased by 1979 Neoliberalism
This is one of my favourite charts. It shows how the economy emerged from WW2 with a lot more worker power.. and then post-1979 neoliberalism crushed it. sorry folks, we aint gonna get another wage-price spiral https://t.co/KydXL5zIer
1990 Crisis: Central Banks Opted for Inaction Amid Uncertainty
🧵Let me take you back to August 1990. Three weeks ago, Iraq invaded Kuwait, oil prices have surged, and the FOMC is meeting to decide how to respond. The economy looks wobbly. Payrolls just recorded a small decline. Greenspan talks...
Geopolitics, History, and Euro Rate Hikes Shape Markets
NEW PODCAST EPISODE. 1) How the Iran situation changes the outlook 2) Lessons from the 1990 recession 3) Are the Europeans seriously gonna hike (again..)
BoE's MPC Scenario Guidance Will Become a Chaotic Puzzle
Scenario guidance is going to take some getting used to. Especially when the BoE gets hold of it, and each member of the MPC sets out their own different scenarios (3 scenarios each, 9 members) 🤣
Oil Prices Slip Despite Months-Long Supply Recovery
By now, everyone knows it will take months for oil supplies to recover from this fiasco. And yet the oil price dropped pretty sharply on today's fake TACO. That seems significant to me...maybe, if we get a proper resolution, markets...
1990 Fed Warned of Dollar Risk After Kuwait Invasion
funny how things change. This is how Fed staff assessed the risks to dollar after Iraq invaded Kuwait in 1990 https://t.co/XydwiGbPI5
US Oil Use Hits Record Low Amid Global Supply Shock
its the "biggest ever shock to global oil supply", as people keep pointing out, but the US economy is also less oil-intensive than it has ever been.. https://t.co/zk9SxpcEA5
ECB's Caution Highlights BoE's Bold Move
its funny (to me) that the ECB obviously looked at the BoE statement today and thought "OK, lets not do anything THAT crazy". The BoE... making the ECB seem sensible
UK's Weak Economy Meets Hawkish Bank, Outlook Grim
The UK has managed to combine the weakest economy with the most hawkish central bank. Bound to end well
Powell’s Tepid Stance on Energy Prices Delays Rate Cuts
the significant part is Powell's relatively lukewarm support for looking through energy prices. 5 years of missing their target is clearly bothering them. They are gonna need to see genuine economic weakness to cut again
1990 Payroll Drop Preceded Oil Shock, Delayed Fed Cuts
Surprised more people arent talking about 1990. Payrolls contracted in the month before the surge in oil prices, which tipped the economy more forcefully into recession. Fed couldn't respond sufficiently, delaying its cutting cycle for 6 months, until energy prices...
Refinancing Wall: An Ever-Present Market Reality
Is there ever NOT a "refinancing wall"? Feel like I've been seeing charts like that for 20 years...
Worker Power Drives Inflation, Now Workers Lose Edge
inflation is about power. In the 70s, workers had the power to resist the oil squeeze. In 2022, there were acute labour shortages, which produced temporary pockets of worker "power". Today, workers are gonna get hosed
ECB Will Likely Misstep on Energy Price Policies
never bet against the ECB doing the wrong thing, particularly when energy prices are involved
Prolonged Hikes Risk Pushing Economy Into Recession
put it this way, if this situation last long enough for central banks to hike, they'll end up hiking into a recession
Labor Market Risk Outweighs Inflation Concerns This Cycle
There is a lot of chat about whether this will be "as bad" as 2022. From inflationary pov, unlikely. And CBs shouldn't be too worried about wage-price spirals, despite the endless overshoot. But my worry is that it tips labour...
Central Banks Miss Inflation Targets Five Years, War Delays Cuts
Central banks have overshot their inflation targets for FIVE YEARS. This war threatens to make that six. If you think they are just gonna cut rates anyway, I dunno what to tell you. Minimum - rate cuts are postponed.
Oil Spikes Signal Cycle End: Income Squeeze, Fed Reaction?
an old debate. Oil-price spikes have a nasty habit of marking the end of the cycle. But is that because of the income-squeeze, or the Fed's response? Or both? https://t.co/IE8tGIRy68
US Economy Stays Strong Amid Policy Chaos, Future Uncertain
The US economy has been surprisingly resilient in the face of so much policy chaos. But you have to wonder whether that can continue, if the f***wittery just never stops
Markets Price Rate Hikes as Cutting Cycle Ends
Cutting cycle is over, apparently - and markets starting to price hikes. Except for the Fed because, you know, he did *promise*...... https://t.co/rJQHqLdaJj
Europe Faces Inflation Shock Twice US Level
Right now, Europe is looking at an inflation shock roughly double that of the US ~ 2%pts
Wider Term Premia Needed to Hedge Bond‑equity Shocks
Term premia should reflect the hedging qualities of government bonds. If we are going to keep getting negative supply shocks - which reduce equities and raise yields, creating a positive return correlation - term premia need to be a lot...
IMF Confirms US Fiscal Boost Exceeds Estimates
People keep telling me I'm wrong about the US fiscal boost this year, but the IMF just published this.. thats bigger than our estimates btw https://t.co/HKAuw6DenI