Fed Policy Shift

If you told me last year we’d do a 3rd $2T stimulus before reopening & pivot to a $3T infra package, I would have laughed. Yet here we are.

Given the policy creep in congress & Biden’s ability to replace Fed leadership, what are the odds we see it at the Fed?
More explicitly...

There is a very reasonable shot Powell isn’t leading the Fed in another year or so. Brainard (likely replacement) has been very clear about her view (which matches Biden admin) that more qualitative labor market metrics (such as minority UE) matter for policy
Yellen has echoed as much in her own tweets (@SecYellen)... what this means is that we likely see much lower for much longer. If they follow through it provides an excuse to both “run hot” and ignore mounting inflationary pressures that may emerge.
What do you guys think?

@AndreasSteno @ctorresreporter @TimDuy

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More from @HayekAndKeynes

17 Feb
The Fed will follow OPEC

OPEC is always first to notice weakness (oil moves faster) & they respond in real time to supply/demand changes. We are reopening & they are reducing support. The Fed will be no different with a lag. Real rates probably creep up from here, BEI stays flat
Already seeing this a bit Image
Image
Read 4 tweets
7 Feb
Inflation outlook

I assume stimulus is cut to around $1T (even Bernie is talking about $1400 checks). This means a one time spending package of around 5% of GDP. UE will fall (& perhaps the dollar) assuming checks hit after reopening (or at least near it). Savings rates fall
Assuming the new variant doesn’t pose any risks on our path to herd immunity I think we start reopening this spring. Only 15% of the population (80% of deaths) are over 65. We are near 10% vaccinations and running at 2mn per day. Once the vulnerable are vaccinated it’s the flu
Especially since we already have Chicago and Cuomo and others calling for reopening. Economic self sabotage for the sake of political gain is over. As long as stimulus hits once we are reopen we see it flow into services & into jobs. With base effects & oil, we see some inflation
Read 6 tweets
6 Jan
Trump is right about one thing. Without mail in voting, election results are 100% different. They represented the margin of victory in every swing state.

Expect liberalization of voting laws to be a key strategy for Democrats in upcoming election cycles (state by state changes).
Interesting to see Peter Navarro‘s report which basically echoes this sentiment in detail. He refers to it as the “Art of the Steal”, but it’s really just successfully gaming all of the various angles to increase turnout for your party

img1.wsimg.com/blobby/go/be36…
Key points are here. He even notes most are legal. Conclusion is simple: they got out maneuvered. McConnell would be disappointed Image
Read 4 tweets
5 Jan
Shale is slowly coming back
Permian production has been even more resilient
Overall shale production is down about 1.5mbd
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24 Nov 20
Retail is going full retard again. Several brokers sites are down again.
Interesting to see tech/utilities get a bid this afternoon as the value names sputter. Feels like catch up rather than.a selloff.
Yep Image
Read 4 tweets
7 Nov 20
Wisconsin came down to a big turnout from new voters (at least newly registered) in a few blue counties (mostly Dane, the home of @UWMadison).

Trump lost by 30k. Dane county alone was the margin of victory.
There are a few truly remarkable data points like Waukesha which, despite no population growth, had a an almost 10% increase in voter. Trump surged, but so did Democratic voters. Without this, the election could have gone the other way.
Big tech played a role awarding several million dollars to help register new voters in these same areas (Madison, Milwauke), help with mail in votes and help fill out forms.

techandciviclife.org/wisconsin-safe…
Read 4 tweets

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