The mainstream economics profession, through their Phillips Curve based Keynesian models, brought you the failed forecasts of recession and sharply higher unemployment in 2023/24. They also brought you the flawed stagflationary trade policy predictions during Trump 1.0. And yet somehow today, many investors are following these same folks as they push a simple repeat of […]
Like most folks, the first time I heard of DeepSeek was around 48 hours ago. I quickly tried to read all the “expert” analysis I could find on what they purportedly accomplished for a fraction of the cost their US peers incurred. After a few hours, I found credible sources that said it was all […]
To start 2025, I want to harken back to Q2 2013, when both spoos and gold were trading around 1500. It was a time when folks were still hurting from the GFC, and plenty of skeptics still thought the US was heading for a Japanese- or Zimbabwean-style economic outcome. Like many of my pieces from […]
Prior to the election, I wrote a few notes suggesting that we are headed towards a neutral monetary policy stance that is similar to that which prevailed at the end of 2019, before all the craziness of COVID. Specifically, I argued that the eventual equilibrium resting place for the combination of interest rates and balance […]
This month’s “From the Vault” is a little more recent than usual, but I thought it would be an enjoyable reprint before year end. We don’t need rate cuts to get risk assets to go higher – April 10, 2024. The CNBC video below from one month ago, after the hotter CPI prints to start the year…
It’s been three weeks since Trump’s win, and so far spoos have rallied around 3.5%, while EURUSD has depreciated around 3.5%. I suspect most macro traders would have predicted moves exactly like these in the equity and currency markets, even if 17 Nobel laureates were forecasting global economic Armageddon. That said, the area where market […]
Before kicking off today’s missive I want to remind those in the NYC area about our “Macro & Margaritas” event at 5pm on Tuesday, Oct 8th at one of my favorite Mexican spots — Tacombi Flatiron. Please reach out to your Jefferies salesperson if you would like to enjoy some Mexican fare and debate/discuss the […]
Given yesterday’s note, I thought this would be a good piece to bring back from the vault for the month of October. _________________ A balance sheet above neutral creates a higher neutral real interest rate (4-Oct-23) Today I’m going to continue focusing on the Fed balance sheet, picking up where I left off on Sept. […]
Since the beginning of 2023, I have argued that monetary policy was never as restrictive as interest rate levels might suggest. Specifically, in the brave new post-GFC world of QE, the Fed balance sheet affects the overall stance of monetary policy long after purchases cease. Recall that back in March 2022, just as rates were […]
Wednesday’s FOMC was highly unusual. A 50bps cut, an optimistic economic outlook, and hawkish forward guidance have never combined at an FOMC meeting that I can recall. Historically, 50 was always a bazooka, reserved for highly stressful times when recession risks metrics were flashing red and/or financial markets were in the process of dislocating. Clearly, […]