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In a fantasy episode of "The Simpsons," Homer Simpson gets up from the breakfast table, raises his hands and pretends to yawn. He said aloud, "Well, it's time to go to work." The camera zooms in on his forehead, thinking, "They do not know I'm going around Duff Brewery." . "Ride at nine, punch at five. This is the plan. In his head again, "Hey, hey, hey. They do not suspect anything. The camera comes back to his mouth and rises quickly on his forehead thinking, "Well, back to the plant. Back to his mouth aloud, "Then to the Duff Brewery. "Back on his forehead," Uh oh. Did I say that or just think about it? Back to his mouth, "I have to think of a quick lie. His wife Marge then asks, "Homer are you going to the Duff Brewery?" her forehead and screams "Aaaaaaah !!!!!" and walks out of the room.
In the past, we wrote about "Did I say that or just think about it?" Moments. An example was in our May 2014 newsletter. We quoted these quotes from a press conference by Fed President Janet Yellen at the time. "Monetary policy is uncertain" "To the extent that low levels of volatility can induce risk-taking behavior … that bothers me and the committee." on the path of interest rates. This is due to uncertainty about the trajectory of the economy. "You see a whole range of disagreements among the participants. So by the time you arrive in 2016, there is a wide range of opinions … that reflect uncertainty. This environment of low volatility is very present on our radar screen and concerns me. "
At the time, we were amazed at his refreshing, honest, but clearly confusing assessment of the current and future state of the economy. Clearly, she was very uncertain about a lot of things. She was also clearly concerned about much of the residual effects of their policies at the time: in particular, low volatility, risk-taking and the trajectory of interest rates and the economy.
Federal Reserve Chairman Jerome Powell's press conference yesterday, during which he brought President Yellen's uncertainty to a whole new level with several memorable moments of the type "Have I said or thought?" . Moments so incredibly honest and homely have smiled on us.
The first moment was the productivity forecast error. Productivity is everything. It creates economic growth and is directly related to wage growth. Wage growth inevitably leads to inflationary pressures. He enlightened us: "We are so bad at predicting productivity, it's very hard to know when productivity will come in and how much …. So, I think we have to be humble about the few things we really know about the nature of these variables or their evolution. Refreshing … and entertaining.
The second moment and clearly our favorite related to inflation. He said, "And here you have to choose an inflation measure. Some people choose the CPI. We choose of course personal consumption expenditure because we think it's a bit better, a little bit broader and that it also tends to go down a bit, but it's not for that that we choose that. does he think?!? !!? "moment !!!
Take a look at some objective comparative calculations done between May 2014 and August 2018. We get snapshots, but we think that a fairly clear mosaic can be created without much effort.
SPY Close | Headline CPI | Non-financial corporate debt (millions of dollars) | Total US public debt (millions of dollars) | PCE Title | Average price at home | Total household debt in the United States (billions of dollars) | VIX Close | |
May 2014 or Q2 2014 (debt number) | 1924 | 2.1% | $ 4,975,220 | $ 17,516,958 | 1.8% | $ 323,500 | $ 11.64 | 11.4 |
August 2018 or Q2 2018 (number of debts) | 2902 | 2.7% | $ 6,213,619 | $ 21,458,450 | 2.2% | $ 388,400 | $ 13.29 | 12.86 |
% Change | 51% | 29% | 25% | 23% | 22% | 20% | 14% | 13% |
As you can see, President Yellen's concerns in 2014 are even more present today: significantly higher share prices, persistent volatility and higher debt levels. Unfortunately, "accommodating" remained within the framework of the Fed until yesterday despite the concerns of five years ago: without a doubt, the overall process of standardization has been slow.
We understand that the counterfactual is clearly not available for the standardization process starting in 2014. However, the unconventional reaction of the Fed in 2008 is undeniable and respect for its effects for ten years should have been considered like and concerns about risk, just like their self-promotion aimed at finally reducing unemployment and now inflation at 2%.
Going forward if you are concerned about "accommodative" measures or not, or what conspiracies say, just look at their recent inflation estimates.
2018 | 2019 | 2020 | 2021 | Long term | |
Inflation Forecast | 2.1% | 2.0% | 2.1% | 2.1% | 2.0% |
Are you kidding?!?!?! The new Fed Powell, while refreshing, is more like Homer's. Their inability to predict productivity is now so obvious that anyone who still discusses these forward-looking indicators remains a pure comedy … inflation included. We have heard the story too long. Everything changes; We can hardly predict, except of course the only data point about our global economy in debt … US inflation.
"Jesus! Did I say that? Or just think it? Did I speak? Did they hear? I took a look at my lawyer, but he seemed unconscious … "- Hunter S. Thompson, fear and disgust in Las Vegas
We are not unconscious. At one point, "In Fed We Trust" will have the stress that President Yellen warned five years ago. When that happens, we will probably write about another moment "Did I just say that out loud?".
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In a fantasy episode of "The Simpsons," Homer Simpson gets up from the breakfast table, raises his hands and pretends to yawn. He said aloud, "Well, it's time to go to work." The camera zooms in on his forehead, thinking, "They do not know I'm going around Duff Brewery." . "Ride at nine, punch at five. This is the plan. In his head again, "Hey, hey, hey. They do not suspect anything. The camera comes back to his mouth and rises quickly on his forehead thinking, "Well, back to the plant. Back to his mouth aloud, "Then to the Duff Brewery. "Back on his forehead," Uh oh. Did I say that or just think about it? Back to his mouth, "I have to think of a quick lie. His wife Marge then asks, "Homer are you going to the Duff Brewery?" her forehead and screams "Aaaaaaah !!!!!" and walks out of the room.
In the past, we wrote about "Did I say that or just think about it?" Moments. An example was in our May 2014 newsletter. We quoted these quotes from a press conference by Fed President Janet Yellen at the time. "Monetary policy is uncertain" "To the extent that low levels of volatility can induce risk-taking behavior … that bothers me and the committee." on the path of interest rates. This is due to uncertainty about the trajectory of the economy. "You see a whole range of disagreements among the participants. So by the time you arrive in 2016, there is a wide range of opinions … that reflect uncertainty. This environment of low volatility is very present on our radar screen and concerns me. "
At the time, we were surprised at his honest but clearly confused assessment of the current and future state of the economy. Clearly, she was very uncertain about a lot of things. She was also clearly concerned about much of the residual effects of their policies at the time: in particular, low volatility, risk-taking and the trajectory of interest rates and the economy.
Federal Reserve Chairman Jerome Powell's press conference yesterday, during which he brought President Yellen's uncertainty to a whole new level with several memorable moments of the type "Have I said or thought?" . Moments so incredibly honest and homely have smiled on us.
The first moment was the productivity forecast error. Productivity is everything. It creates economic growth and is directly related to wage growth. Wage growth inevitably leads to inflationary pressures. He enlightened us: "We are so bad at predicting productivity, it's very hard to know when productivity will come in and how much …. So, I think we have to be humble about the few things we really know about the nature of these variables or their evolution. Refreshing … and entertaining.
The second moment and clearly our favorite related to inflation. He said, "And here you have to choose an inflation measure. Some people choose the CPI. We choose of course personal consumption expenditure because we think it's a bit better, a little bit broader and that it also tends to go down a bit, but it's not for that that we choose that. does he think?!? !!? "moment !!!
Take a look at some objective comparative calculations done between May 2014 and August 2018. We get snapshots, but we think that a fairly clear mosaic can be created without much effort.
SPION Close | Headline CPI | Non-financial corporate debt (millions of dollars) | Total US public debt (millions of dollars) | PCE Title | Average price at home | Total household debt in the United States (billions of dollars) | VIX Close | |
May 2014 or Q2 2014 (indebtedness) | 1924 | 2.1% | $ 4,975,220 | $ 17,516,958 | 1.8% | $ 323,500 | $ 11.64 | 11.4 |
August 2018 or Q2 2018 (debt number) | 2902 | 2.7% | $ 6,213,619 | $ 21,458,450 | 2.2% | $ 388,400 | $ 13.29 | 12.86 |
% Change | 51% | 29% | 25% | 23% | 22% | 20% | 14% | 13% |
As you can see, President Yellen's concerns in 2014 are even more present today: significantly higher share prices, persistent volatility and higher debt levels. Unfortunately, "accommodating" remained within the framework of the Fed until yesterday despite the concerns of five years ago: without a doubt, the overall process of standardization has been slow.
We understand that the counterfactual is clearly not available for the standardization process starting in 2014. However, the unconventional reaction of the Fed in 2008 is undeniable and respect for its effects for ten years should have been considered like and fear problems, as well as their promise to finally reduce unemployment and now 2% inflation.
Going forward if you are concerned about "accommodative" measures or not, or what conspiracies say, just look at their recent inflation estimates.
2018 | 2019 | 2020 | 2021 | Long term | |
Inflation Forecast | 2.1% | 2.0% | 2.1% | 2.1% | 2.0% |
Are you kidding?!?!?! The new Powell Fed, while refreshing, remains a reality. Their inability to predict productivity is now so obvious that anyone who is still discussing these forward-looking indicators remains purely comical … inflation included. We have heard the story too long. Everything changes; We can hardly predict, except of course the only data point about our global economy in debt … US inflation.
"Jesus! Did I say that? Or just think it? Did I speak? Did they hear me? I threw a shot look at my lawyer, but he seemed unconscious … "- Hunter S. Thompson, fear and disgust in Las Vegas
We are not unconscious. At one point, "In Fed We Trust" will have the stress that President Yellen warned five years ago. When that happens, we will probably write about another moment "Did I just say that out loud?".