The Exchange

“Don’t foam the runway just yet,” warned J.P. Morgan’s chief U.S. economist, Michael Feroli, yesterday. “A ‘soft-ish’ landing in 2023 looks iffy.”  This is exactly what the growing “behind the curve” crowd (Larry Summers, John Taylor, Bill Dudley, Michael Darda, Greg Ip last week) has been arguing. The risk is not that the Fed is risking a recession right now...

Bondholders are going to be in for some nasty surprises when they check their first-quarter statements in a couple of weeks. Because the losses are piling up.   In aggregate, bonds are down about 7% over the past three months–one of the worst quarters they’ve experienced since the 1980s, using the “AGG” bond ETF as a proxy. And yields are...

Does anyone else feel like we suddenly have a new Fed chair?  Imagine if President Biden actually had picked a different person, who kicked off their tenure by giving impassioned remarks about Paul Volcker, talked in press conferences about “as I looked around the table at today’s meeting, I saw a committee…determined to use our tools” to return to price...

The main–dare I say, the only–weapon in the macro bears’ arsenal right now is the flattening yield curve. When the Fed hiked rates yesterday, the five-year Treasury yield rose to a higher level than the 10-year, so that portion of the curve inverted. The spread between two-year and 10-year yields also flattened, to as low as 0.19 points this morning,...

I get that we’d all rather talk about anything than Covid at this point, but it’s still surprising how little coverage the spike in cases in Asia is getting at the moment.   China right now is experiencing its worst outbreak since March of 2020. And unlike the U.S., which has more or less adopted a “coexistence” strategy, China is still pursuing...

The consumer-price index hitting a forty-year high would seem like a pretty straightforward headline, but of course there’s already tons of debate about which components saw deceleration, which ones are now picking up, whether it would have peaked already absent the Ukraine invasion, and so on.    But the core issue for the real staying power of inflation in the...

I chuckled at Tony Fratto’s tweet this morning in response to the surprising stall in wage gains that the February jobs report just revealed: “wages were flat…but how are people going to deal with inflation…but I thought wages were adding to inflation and making it permanent…but wages are rising everywhere…but the report said they’re flat…”   Here’s what we know....

I tweeted the other day, when markets were plunging and the odds of Fed rate hikes were falling and commentators were warning there’s no way they can hike seven times this year now, that “I don’t see the dovishness everyone else.”   “I see real yields PLUNGING–when we already have [a] historic labor shortage and core PCE [expected to be]...

There has not been a lot of great news on the inflation front lately.   Oil prices? Don’t look there. The national average for a gallon of gas hit $3.62 today, as oil tops $100 a barrel again–the highest pump price since the summer of 2014. Russia’s invasion of Ukraine could easily push prices 20% to 30% higher from here, analysts…

The knee-jerk assumption all weekend was that a Russian invasion of Ukraine–a breakout of war, basically–would have to keep the Fed from tightening as much as expected. Certainly it rules out a half-point hike next month, right?   But here is another example of how this time is different from 2010-2019.  Back then, growth was so weak that any adverse shock...

Everyone was braced for a terrible jobs report this morning, and then it came out gobsmackingly strong.  The U.S. not only added more than 450,000 jobs last month–while some economists were concerned we could see losses of that magnitude–but the slow gains reported in the prior two months were revised massively higher. So now, we have job gains of 647,000...

Heads are reeling these days as we’ve suddenly heard more and more and more hawkish forecasts from the economic community. First, Goldman came out a few weeks ago with a bold call for four rate hikes this year. Speaking on our show the next day, Jamie Dimon said he personally wouldn’t be surprised if it were more than that!  Then Fed...

Let’s talk about three data points since that nerve-wracking Fed meeting yesterday that help explain why the central bank is doing what it’s doing.   (1) GDP. It just surged nearly 7% last quarter, versus the 5.5% estimate. For the year, the economy grew at 5.7%. And that’s in “real,” ex-inflation terms. Add in the price gains, which were 4% for…

I am not feeling that productive right now, as evidenced by the fact that this is my first newsletter in a month. The first couple weeks went haywire thanks to Covid; the last couple thanks to onerous new testing and prep rules at work. I have to imagine lots of you feel the same way.  Or maybe not! The productivity…

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With all due respect to Joe Manchin, his political power stems from the simple fact that America elected Joe Biden as president last year while at the same time preferring Republicans in Congress. “Biden enjoyed an edge of 7.1 million votes (4.5%) over President Trump, while the Democrats suffered a loss of 13 seats in the House, reducing their margin…

By now, you’ve probably heard about “I” bonds. 7% yield from the Treasury! Guaranteed!! Everyone is talking about them. “The secret is out,” read one headline a few weeks ago. Demand is soaring–the Treasury issued $1.3 billion of them last month, the most since monthly records began eight years ago.   On Wednesday, the legendary Burton Malkiel–author of the investing classic A Random...

This may seem like a comical thing to say when Apple is about to potentially sell 40 million iPhones this holiday season, according to Wedbush. But the iPhone is in its sunset years. It has maybe the rest of this decade left before it’s put out to pasture. And all the buzz now is over Apple’s upcoming goggles.   This...

I’m trying to get into a DAO, because that’s what all the cool kids are doing these days. The main criteria for this particular one are a personal questionnaire, some basic familiarity with Discord and crypto, and a startlingly high entry fee. I highly doubt I’ll get in.   Not all DAOs are similarly gated; ConstitutionDAO, which just narrowly missed...

Up until now, Visa and Mastercard could kind of fly under the radar while society went after more obvious Big Tech “villains” like Google and Facebook. Part of that is their age; they aren’t new players that raise new problems, but rather decades-old businesses in what used to be a rather boring corner of tech known as “payments.” And...