The Silver Bullet | War Economy After a decade of monetary dominance and quantitative easing, are investors ready for fiscal dominance? A populist national fight means we are in war economy where recessions are not allowed, spending and inflation are persistent, the Fed put becomes softer, and dislocations are more frequent.

The US job market is healthy. Higher participation, lower unemployment, higher average hourly earnings, besides the NFP revision noise. This is no time for Fed cuts. Financial conditions are already very loose.

"I don't use the word stagflation" - Andrew Bailey, 6 February 2025

*BOE SAYS 7 VOTED FOR QUARTER-POINT CUT, 2 FOR HALF-POINT CUT *BOE SAYS DOMESTIC INFLATION PRESSURES 'SOMEWHAT ELEVATED' When it comes to choosing between growth and inflation, some central banks will do anything to prevent a recession. The UK's stagflation economy have put the @bankofengland in a lose-lose spot. The official narrative is "gradual" cuts, but in practice, the BoE is sacrificing the Pound and its own inflation target to keep its economy afloat. But the elephant is still in the room: without free movement of goods and people, the UK's economy will continue to underperform.

RT @gabriel_zucman: Longer-term perspective on the rise of US oligarchy

RT @donaldtusk: We still miss you😉

RT @LizWebsterSBF: Wow @lordsugar gives Brexit full reality check and fhe BBC broadcast it! 'The biggest disaster in my lifetime was us l…

The @ecb references long and variable lags and argues that past interest rate hikes are still transmitting through credit. Are they? Yield curves are inverted and pricing in several cuts, and sovereign/credit spreads are just an inch from all-time lows. Financial conditions are already loose, and they have been since last year's pivot.

"It became clear that the high inflation was not transitory." 8/23/2024 "Inflation remains somewhat elevated." 1/29/2025

“Most of the body of the genie is in the bottle, kind of getting stuck there,” the IMF managing director said. “But the legs are kind of hanging still out. We need to push it all the way down.” 🧞‍♂️

Buy Aston Martin bonds, drive Ferrari. Today's conversation with @tomkeene on the winners and losers from Trump 2.0 and the exciting opportunity set in credit markets (and how Europe's periphery has become safer than core Europe). Starts at 2:40:

There won't be a growth plan until the UK gov addresses the 🐘 in the room. Bond investors have cast their vote. And if the BoE is called to the rescue, £ will fall further, hurting ppl who already struggle w energy/food. Guess what will happen next.

RT @NickTimiraos: Inflation expectations in the NY Fed survey ticked up in December and are holding near levels seen in 2017-18 https://t.…

RT @NickTimiraos: The Fed's preferred gauge, the PCE price index, sources price data from the PPI and the CPI. While the PPI was below ex…

The US economy runs on long end rates. The Fed pulled the handbrake while pushing the accelerator at the same time. Hiking the front end, they kept the long end inverted with forward guidance. The result has been tighter rates for short-term borrowers only. Yield curve disinversion (QT), not just further rate hikes, will tighten FCI.

RT @NickTimiraos: On average, the US economy has added 165,000 jobs over the last six months, the highest since July.

The Fed's policy mistake is becoming more evident. Intra-election softness wasn't an emergency, and today the US labour market is back to full speed. Going ahead, supply bottlenecks and fiscal dominance will make inflation stickier. A U-turn in policy is coming.