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!
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?
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 :)
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?
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.
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.
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.
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.
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
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.
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.
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!
Yes, indeed!
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?
It would be really tricky, but I am here for that :)
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 :)
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,
Hey David! Not only inflation has to slow down, but to slow down faster than the Fed already projects
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.
Thanks for everything you put out. I hope those clowns up top are crapping their pants.
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.
Very kind!
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.
101% agreed
Grazie great episode as always
Thank you!
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.
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
Thanks, I’ll check him out! Have a nice day!
Thanks Alf!
Quick question: how do equity markets impact labour markets via second-round effects?
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
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
Hi! Gonna be releasing an ETF only portfolio soon
Yup! Nice one.
Thanks, Chris!
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
Hi Andy, I believe this time the bar is much higher when it comes to the Fed caring about risk assets
You may be right but as I have been saying, as much as they hate inflation, they will hate recession more
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.
Glad to have you onboard, Rich!
He's been on eurodollar University a couple times too. Amazing podcast.
Yep, Jeff and Emil do an amazing job
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.
I just listened to the latest one with Alf from market huddle. It was awesome
Thank you Alf, you're a star and very much appreciated. You make sense of these neurotic markets for me.
Glad to be able to do that, Hariod!
another superb analysis!!!
Thank you!