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BofA’s Hartnett Sees Goldilocks Economy Morphing Into Stagflation
The macro narrative's taking an unfavorable turn.
So said BofA's Michael Hartnett in the latest installment of his popular weekly "Flow Show" series.
On the off chance you haven't noticed, recent inflation outcomes across the world's largest economy suggest the proverbial "last mile" down to 2% won't be easy for the Fed, and that's if they're actually trying. Some believe they aren't.
Both consumer and producer price growth overshot in the last two releases, and gauges of services sector infl
Many times, when I read a column of this tenor, I recall a headline (?) for a Harley Bassman reprint read here years ago,
“They’re Gonna Run It Hot”.
While that article was speaking of mismatch in contracts for a specific (under one year) time frame it seems to me it applies to a long time frame as well
The FOMC is not powerless here. A .25 bump in the Fed Funds rate in May might be needed to ensure a soft landing.
I believe Powell + may be realizing that continuing to raise rates won’t help at this point, considering cash on large cap balance sheets, MMF, etc, … as well as the associated risks to CRE which are likely extremely stressed at present…my guess is that FOMC removes a cut, Powell leans hawkish at presser and acknowledges the possibility of no cuts in 2024 if queried…
…otherwise he’s looking at the moniker Bitcoin Jay…
…we’ll find out soon enough…