Executive Summary:
Dr Ed is sticking to his guns: He has contended since early last year that the US economy is too resilient and inflation is not close enough to 2.0% for Fed officials to muck around with easing. The widespread expectation that they will ease anyway in September is lifting stocks, and the actual event may cause a stock market meltup. The bond market’s reaction to unwarranted easing is tougher to gauge. If it causes the Bond Vigilantes to drive up yields, the Fed’s reputation as inflation fighters could be shot. Recent inflation data suggest inflation could use some fighting, as Trump’s tariffs may be keeping it elevated above the Fed’s target 2.0% and services inflation remains hot.
The Fed I: The Short List
I am disappointed: I am not on the list of candidates being considered to replace Fed Chair Jerome Powell when his term ends as Fed chair in May of next year. I have often in the past offered to do the job for half the current cost of operating the entire organization. For starters, I would halt construction on the Fed’s $2.5 billion headquarters renovation. I would continue to work from my home office on Long Island. Yardeni Research has been virtual since the start of our business in 2007. I would maintain that business model at the Fed. So the Fed’s headquarters can be reconfigured as luxury condos to be
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