2021 Commentaries

Dump It

I will start today where I ended Monday’s note. Here is a quick excerpt from the final paragraph in order to refresh your memory: The real risk ahead for the market is just more Fed uncertainty. Who is coming next? How will a newly reconfigured FOMC interact with the market? And what kind of communication […]

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Puzzle solved: Jay knows his days are numbered

Last Wednesday during the FOMC press conference, Jay seemed a bit off. He hardly mentioned the word transitory. He barely spoke about the millions of jobs missing since Feb 2020. And he never once highlighted the long-term disinflationary forces still facing the US economy. By contrast, at Jackson Hole just a few weeks prior and […]

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Positioning for battle with some 1970s-inspired Jefferies swag

The current debate on inflation is far from over. Those in the transitory camp, like me, who believe long-term disinflationary trends will reassert themselves as the short-term COVID-induced supply disruptions dissipate, can certainly take comfort from the last two CPI prints. But it will take far more than an extended string of softer-than-expected inflation numbers to […]

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Housing valuations and inflation

As promised, here are a few thoughts on housing valuations and inflation. First up, have a look at the following chart: It shows the total value of the US housing stock relative to GDP versus PCE inflation. Think of this as the equivalent of the Buffett chart for the housing market — instead of total stock […]

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The irrelevance of economic forecasts

Today I want to spend some time reviewing last week’s massive payroll forecasting miss, and the market’s collective yawn in response. Among over 70 professional economists polled by Bloomberg, the lowest expectation for the August payroll number was +400k. Even if we add in the positive revisions from the past two of months of +134k, […]

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Just listen to Jay

Please take one minute from your day and read the following three excerpts from Jay’s JH speech today. They are pure unadulterated dovishness: “We have much ground to cover to reach maximum employment, and time will tell whether we have reached 2 percent inflation on a sustainable basis.” “The unemployment rate has declined to 5.4 percent, […]

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