Will Grand Theft Auto VI have a Taylor Swift effect on the economy? Judging by the headlines I think that maybe the most important macroeconomic question at present, despite the fact that the game won't even be released until 2025.
Yesterday yields rose with the curve bear flattening. Today, yields are starting the day lower by 3-4bps with the 2Y at 4.63% and the 10Y at 4.24%. News of Moody's lowering China's sovereign credit outlook to negative hasn't seemed to help risk sentiment this morning. Also overnight the RBA remained on pause as expected, keeping their policy rate at 4.35%. On the day ahead JOLTS will be in focus on the data front.
XTOD: The Fed has two levers to pull 1) hike until things break. They abandoned this when they downshifted to start the year and especially when SVB happened 2) hold at a level they think is restrictive and hope financial conditions tighten over time #2 is complicated because they don’t control FCI directly. If conditions loosen prematurely, they have to respond. Failure to respond is precisely what turns them into Arthur Burns 2.0 In 11 days we see what their response is.
XTOD: Out now - Dr. Barry @B_Eichengreen & @FedGuy12 on: - How governments can live with high-levels of debt - "Inflating away" the debt is a trick that doesn't work without financial repression tools that are now largely absent - The "dominance" of the U.S. Dollar will continue to erode very, very slowly, but Euro or the Chinese Yuan do not pose a material threat to dethrone the USD anytime soon
- Modern Monetary Theory (MMT) is "not consistent with basic economics" and been "discredited" by the surge in inflation & interest rates over past two years - Central banks are slowly diversifying out of the U.S. Dollar and into alternatives such as gold. Why gold and not, say, aluminum? Tradition
- The U.S. Dollar has been giving ground not to old-school alternatives (Euro, Yen, etc.) but to non-core currencies such as Australian Dollar, Canadian Dollar, and Swiss Franc
- In most instances where "inflating the debt away" worked successfully to reduce debt:GDP levels, financial repression tools such as interest rate caps and capital controls were used aggressively. Such tools are infeasible in today's open and sophisticated global financial
- This^ claim is from Dr. Eichengreen's paper, "Living with High Public Debt," which we discuss in detail in this interview and which he presented at the Fed's Jackson Hole Symposium this summer
XTOD: The New York Fed's measure of underlying inflation (the "multivariate core trend" rate) ticked down to 2.6% in October from 2.9% in September
This was the lowest reading since January 2021 https://newyorkfed.org/research/policy/mct#--:mct-inflation:trend-inflation
XTOD: If you think wealthy families stay wealthy forever, consider this: "When 120 of Cornelius Vanderbilt's descendants gathered at Vanderbilt University in 1973 for the first family reunion, there was not a millionaire among them."
XTOD: No one’s ever ready. That doesn’t mean you don’t start. Starting is the only thing that proves you’re ready.
https://x.com/DannyDayan5/status/1731010784644284436?s=20
https://x.com/JackFarley96/status/1731832366874673314?s=20
https://x.com/NickTimiraos/status/1731755884890525715?s=20
https://x.com/dollarsanddata/status/1731667425651753341?s=20
https://x.com/AlexHormozi/status/1731787406330737026?s=20
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