Thoughts From The Divide

“I think the monetary policy is doing exactly what we like to see over time” It’s natural to feel ill at ease when the status quo begins to shift. Is it too quiet out there? Is there a hint of smoke mixed in with the smell of baking cookies? Is it a coincidence that several […]

“Recent data had not increased their confidence” One can’t take a metaphorical step through economic and financial news this week without stubbing one’s toe on something inflation related. Whether it was CPI, the Fed minutes (which contained the above quote) or PPI, inflation and its corollary effects on markets were seemingly unavoidable, as noted in […]

“the actual path… will depend on how the economy actually evolves” If the Fed can “only know” the neutral rate (and hence whether policy is restrictive) “by its works”… there may be reason to think that the music is still playing. Whether it’s the price surges of misspelled celebrity memecoins ICOs such as “Joram Poowel” […]

“An operating environment that is particularly fluid” Now a week out from the Fed making it clear that the squeeze of lower growth isn’t worth the juice of bringing inflation back to (not toward, Jerry!) 2%, Mohamed El-Erian summed up the state of play nicely in a recent article for the FT. The Queens’ College […]

“We will get aggregate inflation down to two percent over time” All the way back in December of 2022, with inflation coming in at a zesty 6.45%, we highlighted Powell’s rather defensive comments on the potential for a move away from the 2% target. Feathers ruffled, Powell, perhaps inadvertently making a mockery of himself, responded […]

“I regret saying it was transitory” With the Fed in blackout, the market has been left to its own devices to digest this week’s onslaught of economic data. The inflation data was particularly indigestible. CPI numbers came in hotter than expectations, with both Core and Headline higher than forecasts on a YoY basis at 3.8% […]

“Expectant Optimism” The dog-and-pony show in front of Congress this week has given Jerome Powell the opportunity to showcase his latest mantras. “Message discipline” was masterfully maintained (atypically?). The Fed chair reiterated (“om mani padme hum”) that cuts will likely be appropriate “at some point this year”, with the usual caveat that such a move […]

“A lack of consumer discipline” In April of last year, Huw Pill caught flack for saying that Brits “need to accept that they’re worse off”. This was followed by John Authers coming to the defense of the pilloried BoE chief economist. As we wrote, Authers noted that the comments were taken out of context and […]

“The possibility that past relationships in the economy no longer hold” Along with the release of the January Fed minutes this week, there was a deluge of Fed Speak, with Jefferson, Harker, Waller, and Cook all opining on the outlook for cuts. Most of the refrain was along the lines of Powell’s need for “confidence”, […]