Counting Days While Waiting On Nothing

Counting Days While Waiting On Nothing

Traders were "unruffled" Tuesday, ahead of the Fed and key data. That was Bloomberg's adjective. This is the time of year when journalists have very nearly exhausted the thesaurus. They've made it all the way to the "u"s on the quest for synonyms to describe placid markets. Notably, the US and the EU were set to close the curtain on the previously intractable Boeing-Airbus dispute. After "just" 17 years, the subsidies spat will be resolved with a five-year accord, which Bloomberg's coverage des
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2 thoughts on “Counting Days While Waiting On Nothing

  1. It seems fair to assume that the Fed does NOT have a better model than everyone else but, rightly or wrongly, believe it has a good grasp of the macro situation and its likely forward path.

    Inflation is up b/c of base effects, COVID related bottlenecks, possible misalignment between supply and demand following changes in preferences post COVID, easy monetary policies and extra supportive fiscal policy.

    And really it seems only the last element matters/is truly variable – which means indeed that inflation is mostly about politics right now. If Biden cannot get outsized fiscal packages implemented on an ongoing basis, then there’s little reason to anticipate meaningful inflation going forward.

    That’s what I understand of macro orthodoxy at the moment.

    One potential caveat : wage inflation. If the situation somehow leads to rapid, sustained wage inflation then fair enough, the situation would change. But do we really expect Labor to be able to exercise pressure on Kapital for any length of time going forward?

  2. So much digital ink in comments and analysis spent on wage inflation. But for overall inflation the key number is not nominal wages but unit labor costs- which may not be rising that much. Given all the changes in the economic machine we are driving, statistics at this point can be hazardous to rely on. We will be in a better position to get a clean read on what is happening in the fall. At that point, the schools will be back, vaccination will be in stasis, we will have a clear idea on what legislation will get passed, extra unemployment benefits will have lapsed, and the supply chain will have had some time to partially reboot. Of course there is always the possibility of a breakthough variant- g-d help us.

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