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Nomura’s McElligott Rolls Eyes At Powell’s ‘Transitory’ Inflation Message, Says Bar For Cut ‘Infinitely’ Lower Than Bar For Hike
What happened yesterday during Jerome Powell's press conference?
What accounts for the outsized market response to the Fed chair's "transient" characterization of the factors weighing on inflation?
If you ask Nomura's Charlie McElligott, the action "was certainly more a function of taking profits in recent 'winners' than a view that the Fed is actually pivoting, especially as STIRs continue to see scope for a Fed rate cut looking out 1 year."
McElligott - who talked at length on Wednesday mor
The Fed needs the cover of another “transitory” 20+% dive lower in risk assets to justify the 50 bps rate cut. The current market structure seems very willing to accommodate said dive. The question is when do we get to the last marginal buyer? Probably about the same time the Q4 hockey stick save (as H puts it) in earnings growth vanishes as Q4 guidance gets revised over the next 2-5 months.