Thoughts from the Divide

Our free, weekly newsletter that shares what our Research Team is reading to refine their views on current, influential macroeconomic topics. The newsletter offers brief synopses on articles of interest from a wide range of media outlets, accompanied by charts.

Thoughts From The Divide – Anchored Expectations?

“The importance of having well-anchored expectations” While most of the headlines following this week’s FOMC meeting were about tapering (the phrases “a moderation in the pace of asset purchases may soon be warranted” and “could come as soon as the next meeting” leapt out of the transcript), the debate about the anchoring of inflation expectations […]

Read More »

Thoughts From The Divide – Additional Evidence

“Expectations of future inflation hit a record high” A few weeks ago, we went point-by-point through part of Jerome Powell’s Jackson Hole speech, addressing why the Fed may be overly optimistic in its belief that inflation will be “transitory”. Yes, CPI YoY retreated slightly, and high-flying used car prices “fell 1.5% in August”(“but are still […]

Read More »

Thoughts From The Divide – Checking on the Dual Mandate

“Pervasive resource shortages” Wednesday saw the release of the Fed’s Beige Book, and though “growth downshifted slightly”, the deceleration was chalked up to either “concerns due to the rise of the Delta variant” (which, if cases are any indication, may be spreading less rapidly) or growth being hindered by “supply disruptions and labor shortages, as opposed to softening […]

Read More »

Thoughts From The Divide – China Shifts

“Profound transformation” While US-China relations may not be splashed across headlines quite as much as they were during the heyday of Trump’s tariffs and trade restrictions, there has been a recent uptick in coverage of the Middle Kingdom. A few news items, such as this one on the “fabrication” of Chinese economic data, come as no surprise (see […]

Read More »

Thoughts From The Divide – Powell Counterpoints

“Time will tell” Today, at the Jackson Hole conference, Jerome Powell gave a speech on “Monetary Policy in the Time of COVID”. In addition to his evaluation of the employment outlook, Powell offered his assessment on “the path ahead” for inflation, citing five different “factors” as reasons to believe that the “elevated readings are likely […]

Read More »

Thoughts From The Divide – Paying the Price

The release of the FOMC minutes this week introduced a little bit of chaos as headlines trumpeted that a taper would likely begin this year, only to be followed by backtracking and caveats. The minutes themselves show that the Fed is wary of the price it will pay should there be a misstep, admitting that […]

Read More »

Thoughts From The Divide – Confidence Check

“A stunning loss of confidence” Many of the headlines going into the end of this week focused on the horrendous results coming out of the University of Michigan Survey of Consumers. The headline Index of Consumer Sentiment saw a precipitous drop, one whose magnitude has only been surpassed “in six other surveys, all connected to […]

Read More »

Thoughts From The Divide – Substantial Further Progress?

While unintentional, the Fed has made itself the source of a number of amusing market “memes”, including “thinking about thinking about ______” and the idea of “substantial further progress”. Joking aside, there remains some confusion about what exactly “substantial further progress” is. This was demonstrated by Steve Liesman, who asked a question on the subject […]

Read More »

Thoughts From The Divide – The Driver’s Seat

Compared to some of the wilder FOMC meetings we’ve seen in the recent past, this week’s was relatively tame. Yes, Powell admitted that inflation was running “well above” the two percent target but said, “we have some ground to cover on the labor market side”. Additionally, while there were “questions around MBS” amid the hot […]

Read More »

Thoughts From The Divide – Surveying Surveys

“Activity surged” The latest Regional Fed surveys have continued the recent “business as usual” of elevated activity, price pressures, and strong employment readings. The Philadelphia Fed’s Manufacturing Business Outlook Survey showed strong but less aggressive growth. Respondents’ feedback “continued to suggest ongoing growth in the region’s manufacturing sector”, and “general activity, new orders, and shipments […]

Read More »