Richard Berner
Richard Berner
downside fed inflation low makers policy risks seen statement sure
Fed policy makers made a statement that they want to really underpin the recovery. They've seen the downside risks and they want to make sure that low inflation and disinflation does not morph into deflation.
expect fed federal funds increase rate rather september stop
We now expect the Fed to increase the federal funds rate to 5.25% by September rather than stop at 5%.
believe contain fed further future inflation move
We believe the Fed will move further to contain future inflation risks.
ensure fed inflation move perhaps promptly require risks stay upside
Upside inflation risks may require that the Fed move promptly and perhaps a little more forcefully to ensure that inflation and inflation expectations stay low.
balance fed funds likely move rate reaches risks sidelines until
The balance of risks now suggests that the Fed is not likely to move to the sidelines until the funds rate reaches that level,
banks bond coming fed hard inflation market message pricing signals smoke stock thick
The U.S. stock market is pricing in a hard landing, an acceleration of inflation and a Fed that may or may not come to the rescue. Part of that message is emanating from the bond market and part of it is coming from some thick smoke signals that the banks are sending.
activity both carry corporate downside earnings economic equity fed pace premium recession risk time values
If we are right that both the pace of economic activity and corporate earnings are still fraught with near-term, downside risk, equity values and risk spreads will carry a recession uncertainty premium for some time -- a premium that the Fed will still want to counter.
comfort fed higher inflation somewhat truly wants zone
The Fed truly wants to get inflation somewhat higher -- back into the comfort zone. Why not say where that comfort zone is?
energy erase fall feeling growth improve mix prices
Energy prices will have to fall substantially and growth will have to improve to erase the feeling that the growth/inflation mix will be unpleasant.
bit economy-and-economics eliminate prices push quite slack until
There's still quite a bit of slack in the economy, and you can't push through prices until you eliminate that slack.
compared easy past reading year
Reading (the Fed) has been trivially easy over the past year and a half, compared to what's it's going to be.
companies costs cut effort eliminate excesses force hiring jobs million overboard work
I still see that companies went overboard in slashing their work force in an effort to cut costs and to eliminate the hiring excesses of the 1990s. I think we have a shortfall of about 1.8 million jobs to make up.
economy economy-and-economics housing prices sales surprise
I think the surprise will be that housing prices and housing sales will decelerate, but the economy will do just fine.
account budget current deficits expanding market pay
With the current account and the budget deficits now expanding together, market participants may pay more attention.