Wtf am I watching

FOMC members haven't agreed on much in recent months, but they all agree that Miran is wrong about where interest rates should be. He managed to unite them 🤣

People seem confused by Jay Powell, but his message was a complicated one. Both demand and supply are deteriorating, which isnt *that* disinflationary, but there is a chance demand deteriorates FASTER than supply - esp. if the labour market cracks. That's what they are watching for

Arsonists blaming the fire brigade for turning up late

The irony of *that* FOMC dot is that it will only be correct if the administration's policies have tanked the economy

wishful thinking

1967....

so here is the debate, is it: - 1995. Fed cuts. soft landing & inflation is fine - 1967. Fed cuts. Inflation reaccelerates.. fine for a while but then the economy overheats & we get a recession - 2001. Fed cuts, but it is already too late & recession gains traction 🧵

cpi is hot the jobs market is about to stall whoever invented these tariffs is a bit of a fool

For those who are interested, here's my preview of the preliminary benchmark estimate we get from the BLS on Tuesday morning. substack.com/home/post/p-...

We're only just getting started in the UK......

Spend three months trying to capture the Fed and then hand the top job to Waller. Sorry, i can't see it... Let's not forget Trump regretted hiring Powell within WEEKS of giving him the position.

Imagine if the US had elected, say, a lettuce (😉)... i think you could make a counterfactual where the economy would be in a better position today. None of the uncertainty, and rates would be 100-150bps lower

If the US is sliding into recession, it will be one of the dumbest recessions in history

The executive threatening the Fed that it can only remain independent if it makes the choices it wants, is equivalent to eliminating Fed independence.

We are just the only country stupid enough to discuss "black holes" every time yields rise 10bps

Jobs market looks "stally" but In the end, this game is down to judgement. You have to figure out whether there is something fundamentally wrong with the economy, or whether the stupidity of Liberation Day was akin to a freak weather event/short-term shock to sentiment. I lean towards the latter

Perkins vs Beamish v good this week. @darioperkins.bsky.social overcast.fm/+ABKrk9orl0g

Every. Damn. Time.

Feel like "letters" from large groups of economists never ends well 🤣

The irony is that because the UK attempted austerity when the macro fundamentals didn't warrant it, it is politically impossible to do it today - when from a macro perspective, you could probably get away with. BoE has plenty of scope to cut rates, unlike in 2011-2018 #gilts

Its hard to have a lot of conviction, but I think CPi will come in hot and payrolls will rebound before September FOMC. Need BOTH of those things to prevent a cut though

honestly, nobody should be panicking about these data. The chaos of Liberation Day killed hiring. What did you think would happen? Maybe the effect is already wearing off with TACO, who knows... But the September cut clearly isnt just about the next CPI report anymore

the new payroll profile makes more sense tbh. An economy frozen by uncertainty. But not yet recessionary

Two dissents on the FOMC. I guess we can call that "vice signalling"...

PODCAST TIME AGAIN. Let me spell this one out, because there is still some confusion out there: IF TRUMP FIRES POWELL... THAT AINT BULLISH Apple: podcasts.apple.com/us/podcast/i... Spotify: open.spotify.com/episode/1pbj...

think we can call than an "escalation"

And with this I managed the feat of three bulletins in three consecutive days. A hat trick. So the law of the land dictates I should take the match ball with me.

Trump has yet to name his pick to replace Powell, but whomever he chooses will have to overcome doubts that they are setting interest rates free of influence from the White House or risk eroding the institution’s credibility www.nytimes.com/2025/07/10/b... @nytimes.com @darioperkins.bsky.social

If you just look at financial assets, you'd say rates are too low. If you just look at housing and durables, you'd say rates are too high. Looking across the whole US economy I'd say rates are MAYBE a little on the high side, but not egregiously so.

In the present climate, nowhere is an outcome I would take.

US policy reflexivity. Stock market goes up, they start doing dumb stuff again... market can ignore that but eventually it has to affect the economy. This is a path to nowhere

"Many" FOMC participants think the tariff effect on the CPI has merely been delayed

New BIS Bulletin out! “Retail investors in private credit”, with S Doerr & K Todorov, taking stock of the push pf PC towards retail, with a focus on BDCs & ETFs, & drawing implications www.bis.org/publ/bisbull...

Trump saying the Fed should cut rates now and hike them again if inflation comes back is just the perfect illustration of the "time inconsistency" problem in the debate about independent central banking..

TACO means you can rule out worst-case scenarios. It doesn't mean they won't keep doing dumb stuff that damages the economy

This new Fed study is quite interesting. It shows tariffs on final goods cause an immediate - but transitory - increase in inflation whereas the inflationary impact of tariffs on intermediate goods can linger and become persistent www.federalreserve.gov/econres/ifdp...

Op-eds and TV interviews from ex Fed officials are invariably wrong, and often look pretty silly within a few months. But yeah, I'm sure having a shadow Fed chair, pontificating on monetary policy 6 months before taking the job, will be totally fine....

Trump has already politicised his Powell replacement so much, I wouldn't trust anyone who still wants the job

I ordered and paid for something a couple months ago that’s supposed to come in early July… I think they had intentionally tried to push the delivery as far out as possible. Every day I keep expecting an email saying they are refunding me… they are going to have to eat a least a grand on tariffs.

interesting on the tariffs www.minneapolisfed.org/article/2025...

Neoliberalism, from the early 80s onwards, was all about crushing worker power. Independent central bankers were put there as guardians of that system. So yeah, that creates a conflict with populist politicians....

If Trump and co stopped bitching about interest rates, the current Fed would be more inclined to cut, and we wouldn't be questioning the credibility of whoever takes over from Powell before we even know who is going to get the job

So here's the debate we are having in global macro right now - sentiment has improved since Liberation Day but the impact of tariffs is yet to show up. Hard data are likely to deteriorate while soft data improve (worse case scenarios avoided). There are three competing views:

the signs of excess are everywhere again with low quality securities getting bid on hype, so first have to flush that out of the system. am curious whether an actual slowdown in the US more than elsewhere leads to meaningful insto flows exiting. Q3 is going to be 'interesting'.

So here's the debate we are having in global macro right now - sentiment has improved since Liberation Day but the impact of tariffs is yet to show up. Hard data are likely to deteriorate while soft data improve (worse case scenarios avoided). There are three competing views:

People dont get the BoE's quarterly path. But Charlie Bean once explained it to me in terms of the f'cast process. All the effort goes into that. A month later they are left asking "whats really changed?" and a month after that "well, we might as well wait for the next f'cast". Creates inertia.

The BIS says household inflation expectations have been sticky since the pandemic and, apparently, that's because central banks haven't spent enough time telling everyone how brilliant they are. Like they need the encouragement...

The World's greatest macro podcast is back. In this episode: WHY THE FED HATES DONALD TRUMP spotify: open.spotify.com/episode/6y4e... apple: podcasts.apple.com/us/podcast/w...