Do rate cuts or QE have a larger impact on inflation expectations?

Of course the answer depends on both levels and magnitudes. Let’s begin with magnitudes – that’s easy. I think it would be reasonably safe to say that $2 trillion in QE causes inflation expectations to rise more than a 25bps rate cut; and alternatively, 200bps of rate...

Overheating to Underheating, Dumb to Dumber

First up, a bit of housekeeping. On May 8th in NYC my good friend David Rosenberg of Gluskin Sheff and I will be discussing our “Global Macroeconomic Outlooks.” Another good friend, Julia LaRoche from Yahoo Finance, will be moderating. Over the years David and I have...

Are you ready for the Big Crash???

That’s probably not a subject header you expected to see float across your inbox beside my name. But longtime readers probably recall when I used this exact tongue-in-cheek title for a commentary way back in January 2014. And today I want to argue that the basic...

Is it time to release the blue seagulls?

Have a quick read of this excerpt from a note I penned back in June 2017, entitled The Terminal Funds Rate: [G]rowth should surprise on the upside; inflation should surprise to the downside; and relative investment decisions should begin to favor the US. And to be...

This pivot is much more about inflation than growth

There is no need to spend much time on all the nuanced changes within the March FOMC statement and projections. It suffices to say that every alteration was dovish. But keep in mind that none of the SEP estimates for GDP, inflation, or unemployment over the course of...

A Flo Rida market structure

I decided to channel a little Flo Rida today by presenting the 8 “lows” which best describe the current US macroeconomic and financial market landscape: Low inflation Low unemployment Low rates Low curve Low vol Low issuance Low spreads Low volumes That pretty much...

Release the Seagulls

With an epic first two months of 2019 trading in the books, it’s probably time for a little reflection. Spoos went out just above +12% ytd with blues unchanged!! Last year’s loss of a little less than 5% on our long-standing risk parity strategy now feels like a minor...

New Swag For 2019

March 2019 will mark two full years with the US unemployment rate below the CBO estimate of the NAIRU. And it hasn’t been just a minor dip through this 4.6% “equilibrium” level. For the last 12 months the unemployment rate has averaged 3.9%, and for the last 24 months...

Monetary Malpractice

On Dec 19th the Fed’s measure of 5-year forward, 5-year inflation expectations was at 1.83%. It had fallen steadily since the early autumn peaks of 2.20%; however, in the December FOMC statement there was no mention of this substantial drop. Instead, Jay was busy...

Where are all the 3.5–4% peeps now??

So far, 2019 has not been kind to those with bearish proclivities. In the first four weeks of 2019 spoos are up about 6%, while spoos & blues (under my standard weightings) gained about 5.5%. These moves more than reverse all the 2018 losses for both straight...
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