Some thoughts on the idea that a new Trump admin will try to “devalue” the dollar. (I put quotes around because that is a wrong usage of the word)

Dollar “devaluation” was a recurrent policy proposal in the first Trump administration, but the idea never took flight because, as I observed:

1) the economic context does not show a big misalignment in the currencies.

2) UST Secretary Manuchin was a closet traditionalist and ultimately was subsumed by the Treasury policy inertia of strong dollar mantra ( though there has been rethink in recent years)

3) there is no buyin from other G7 countries

But, I can *imagine* a scenario where all three of these factors could change a couple years down the line, building more support for a Plaza Accord II (1/n) On factor 1) the dollar appreciated against AFR currencies by 60% in the 5 years ahead of Plaza accord.

As of now it has appreciated by 16% since 21’. Supposed that the Fed hold rates constant or hike next year, while other G7 countries are cutting. Supposed US growth stay robust because of immigration surge and past fiscal stimulus. And supposed Trump did impose its 60% + 10% tariff. I can see it is not impossible for the dollar to be up another 30% in two years. (2/n)

How would the Fed view today’s CPI surprise? First, consider how they view the Jan and Feb surprise:

According to FOMC minutes, “Some” participants didn’t discount the strong inflation readings in January and February, though “a few” said residual seasonality contributed to those hot readings. (1/3) Those who had a hand in preparing would suggest that “a few” is two degrees less than “some.” That means the doves were outnumbered in March. (2/3)

Why I’m skeptical that the nonfarm payroll neutral pace is now well in the 200ks: that assumes the nonfarm payroll is able to well capture the migrants. Looking at the composition of the 3mil nonfarm payrolls added last year, almost 70% are in sectors that are high skills. (1/3) Don’t think the 2.4 mil “other” immigrants are becoming teachers, in health care, or taking government jobs…

Jobless claims are very low, whatever seasonal factors one uses. Our latest on @theterminal assesses what the low level means. Spoiler: less unemployed people are applying for claims, meaning that the low level doesn't mean it what it used to mean. (1/4) blinks.bloomberg.com/news/stories/S…
We highlight two reasons why unemployed aren't apply for claims: 1) eligibility is at all time low pre-recession. and 2) UI benefits not catching up with inflation, opportunity cost of collecting benefits higher than ever before.

A 🧵 to add to the debate on whether this time is different when it comes to recession. In a piece with Bill Dudley today, we looked into reasons why or why not recession rules will hold in this cycle. First, U-1, U-2, U-3, Uflows say recession trigger is either near or here. 1/5 All those rules are highly accurate. Since wwii, unemployment from trough to peak either rise by less than 0.5ppt, or more than 1.9 ppt (recessions). No intermediate values. Plausible argument for why this time is different next (2/5)