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12 May, 4 tweets, 1 min read
*U.S. APRIL CONSUMER PRICES INCREASE 0.8% M/M; EST. 0.2%
TRANSITory

I'll see myself out.

To recap:

Headline CPI: 4.2% y/y (highest since 2008), 0.8% m/m (highest since 2009)

Core CPI: 3% y/y (highest since 1996!!!), 0.9% m/m (highest since 1982!!!!!)

It's worth parsing the data, but there's no denying these are some big numbers. Image
👀

Federal Reserve Vice Chair Richard Clarida says he was surprised by the rise in consumer prices reported earlier on Wednesday and “we would not hesitate to act” to bring inflation down to its goals if needed.

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More from @BChappatta

Brian Chappatta Profile picture
24 Mar
Yellen points to the drop in U.S. interest payments as a percentage of GDP as a reason that she still sees fiscal space, though notes "it certainly doesn't mean that anything goes."

"Longer-run, we do have to raise revenue to support permanent spending that we want to do."
Oh wow we just got a question on the significance of 2s10s hitting 160 basis points. Going mainstream!
Uh oh, Senator Elizabeth Warren is going after BlackRock.
Read 9 tweets
Brian Chappatta Profile picture
23 Mar
YELLEN: "In fact, I think we may see a return to full employment next year."
POWELL: "Our best view is that the effect on inflation will neither be particularly large nor persistent."
Janet Yellen getting her first round of combative questions from Republican congresswoman Ann Wagner.

Also asked Powell about "obvious inflationary pressures," citing lumber and gasoline prices.
Read 8 tweets
Brian Chappatta Profile picture
31 Dec 20
If 2020 has taught investors one thing, it’s that the Fed is all-powerful.

Except in fighting wealth inequality. A thread:

bloomberg.com/opinion/articl…
At its core, the Fed sets the level of interest rates in the economy.

Low rates (now) = higher prices for stocks and risky assets = the wealthiest profit

Higher rates (circa 2018) = higher U.S. Treasury yields = those who can afford to save the most (i.e. the wealthy) profit
In other words, as long as you have a sizable amount of money to begin with, monetary policy on its own is a win-win.

It’s tempting to paint the Fed as a villain always looking out for Wall Street. In reality, higher rates and tighter policy are hardly a great wealth equalizer.
Read 15 tweets
Brian Chappatta Profile picture
19 Nov 20
Wow. Major news coming out of the Treasury, as reported by @SalehaMohsin:

All emergency programs from the CARES Act will expire on Dec. 31. So that's:

Municipal Liquidity Facility
Main Street Lending Program
Primary and Secondary Market Corporate Credit Facilities
Oh also the Term Asset-Backed Securities Loan Facility.

There WILL be a 90-day extension of the Commercial Paper Funding Facility, Primary Dealer Credit Facility, Money Market Liquidity Facility and the Paycheck Protection Program Liquidity Facility.

Moreover, Mnuchin is asking the Fed to return unused stimulus funds to the Treasury.

As I understand it, this would make it more difficult for President-elect Biden's Treasury Secretary to just "turn back on" the muni/corporate/Main Street facilities.
Read 6 tweets
Brian Chappatta Profile picture
17 Nov 20
The U.S. housing market is 🔥🔥🔥

In particular, record-low mortgage rates have encouraged a ton of refinancing. That's freed up a lot of cash for Americans across the country in the past several months.

But what happens now?

bloomberg.com/opinion/articl…
Remember, the Fed is still adding $40 billion of MBS to its balance sheet each month. That's a ~net~ figure, so it's actually gobbling up closer to $100 billion each month and doing its best to suppress mortgage rates. Image
But long-term rates are (gradually) starting to rise.

If the refinancing wave is over, it's possible we'll start to see more subdued spending. Retail sales today increased by less than expected, for instance.

And Raphael Bostic has concerns too:

Read 4 tweets
Brian Chappatta Profile picture
3 Sep 20
With President Donald Trump ordering a review of funding of Democratic-run cities (or what a memo calls "anarchist jurisdictions"), now would be a good time to recall just how vital New York City is to the U.S. economy.

bloomberg.com/opinion/articl…
The nominal GDP of the NYC metro area is $1.8 trillion, or almost 10% of the overall output of America’s metropolises.

That's a greater share than 2009, even though other cities like Portland and Seattle (also targeted by the memo) grew faster during the expansion.
If you target New York City, you're aiming for Wall Street.

Finance still rules the Big Apple, even after the 2008 crisis.
Read 6 tweets

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