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Yelian Garcia's avatar

Awesome read as always Alf! For those interested in translating "Fed speak", I strongly advise studying the policy of forward guidance under a game theoretical framework. The policy of forward guidance is nothing but the game of strategic interdependence central bankers deliberately set up between their institutions and what they view as the 'market missionaries' in the system (central bankers are themselves missionaries as well). Review the work of Dr. Ben Hunt and central bank reaction functions become much more clearer and easier to define quantitatively. Happy speculating!

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Alfonso Peccatiello (Alf)'s avatar

Yes, indeed!

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Will Kayzed's avatar

Always learn a lot from your blogs Alfonso. I was wondering if a layman wanted to make a poor man's version of your macro compass, without a bloomberg terminal or a sophisticated background in economics or finance, do you think it could be done with publicly available resources or am I better off just letting experts like yourself deal with it and not risk getting myself into trouble?

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Alfonso Peccatiello (Alf)'s avatar

It would be really tricky, but I am here for that :)

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Will Kayzed's avatar

I appreciate that, just strive for more self-reliance when I can. I'm about to listen to your podcast with Mike Green, grateful for all the free info you give us, grazie :)

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David's avatar

Alf, Great Piece, really tied things together. Do you think when we have peak inflation in Apr/May, then perhaps The FED will begin to rethink their process and change course? or We will have to wait until enough damage is done, so to speak, the FC tightened dramatically, then we will see some changes?

Best,

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Alfonso Peccatiello (Alf)'s avatar

Hey David! Not only inflation has to slow down, but to slow down faster than the Fed already projects

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James's avatar

Somebody tweeted the other day that all of the Fed governors, save one, joined the Fed after university and have never worked anywhere else. Rare inbreeding experiment.

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James's avatar

Thanks for everything you put out. I hope those clowns up top are crapping their pants.

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Rafael's avatar

Again, a great podpast simplifying and making sense the complex financial markets interactions for the common man. This is a rare quality, thank you for sharing it with us.

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Alfonso Peccatiello (Alf)'s avatar

Very kind!

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Peppe's avatar

So true. Pawell maybe attempted to support their multiple purposes mandate keeping a more neutral stance “Un colpo al cerchio ed uno alla botte” But time is against him and the more it goes by the more he will have to pick among price stability and unemployment. After all, Mr. Market is not the guy who gets well with procrastinators.

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Alfonso Peccatiello (Alf)'s avatar

101% agreed

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Winter's avatar

Grazie great episode as always

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Alfonso Peccatiello (Alf)'s avatar

Thank you!

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ogc's avatar

First time reader. Enjoyed the article!

Wanted to bring up a thought I’ve had, but you seem like you could have an answer.

For all the talk about full employment, nothing much is ever said about total income. The pandemic really screwed up a lot of people’s income levels. They lost their job and had to find something that pays less because they need income to live. Is there a way to gauge overall income as well as median and average?

On top of that are the 2M people who dropped off the unemployment rolls for some reason.

So even though many are employed, it does not mean that things are good for potentially millions of people, who gave up or had to accept lower wages.

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Alfonso Peccatiello (Alf)'s avatar

You are perfectly right.

Looking at unemployment rates is misleading as people forget to include the 2MM Americans who left the labor force in the first place!

Looking at real incomes ex fiscal transfers is a good way to grasp what you said: Eric Basmaijan does a great job at that

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ogc's avatar

Thanks, I’ll check him out! Have a nice day!

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Kel's avatar

Thanks Alf!

Quick question: how do equity markets impact labour markets via second-round effects?

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Alfonso Peccatiello (Alf)'s avatar

Companies have higher cost of capital when spreads widen and equity prices drop. That means they have to reassess their business model and in most cases slow down hiring

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pdx's avatar

Alf,

Love your blog and your new podcast. Making any adjustments to your portfolio or sticking strong to the secular portion? Tons of red today..Thanks

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Alfonso Peccatiello (Alf)'s avatar

Hi! Gonna be releasing an ETF only portfolio soon

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Chris's avatar

Yup! Nice one.

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Alfonso Peccatiello (Alf)'s avatar

Thanks, Chris!

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Andy Fately's avatar

Thanks for this. I don't think Powell can tolerate too much asset weakness and will blink on inflation. that's the Fed's history, anyway

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Alfonso Peccatiello (Alf)'s avatar

Hi Andy, I believe this time the bar is much higher when it comes to the Fed caring about risk assets

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Andy Fately's avatar

You may be right but as I have been saying, as much as they hate inflation, they will hate recession more

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Rich C's avatar

Just discovered this after hearing you on the Market Huddle podcast, thank you for your insights, really interesting piece & will look forward to the next one.

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Alfonso Peccatiello (Alf)'s avatar

Glad to have you onboard, Rich!

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James's avatar

He's been on eurodollar University a couple times too. Amazing podcast.

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Alfonso Peccatiello (Alf)'s avatar

Yep, Jeff and Emil do an amazing job

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James's avatar

Because they tell the truth and dumb it down. I feel bad saying it but I'm really glad u quit ur job and started this too. I paint bath tubs so I need a lot of dumbing down haha.

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James's avatar

I just listened to the latest one with Alf from market huddle. It was awesome

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Hariod Brawn's avatar

Thank you Alf, you're a star and very much appreciated. You make sense of these neurotic markets for me.

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Alfonso Peccatiello (Alf)'s avatar

Glad to be able to do that, Hariod!

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ali hobballah's avatar

another superb analysis!!!

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Alfonso Peccatiello (Alf)'s avatar

Thank you!

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