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March 19, 2015

Dot-dot-dot, dash-dash-dash, dot-dot-dot

Filed under: Forex Strategies — Tags: , — admin @ 4:43 pm

Well, that was….intense.

The Fed dropped the word “patient” and explicitly left the door ajar for a move in June should circumstances warrant.   However, the real sting in the tail was in the SEP, where the infamous dot-plot ratcheted lower in response to downgrades to the growth and inflation forecasts.

The end-2015 median is now at its lowest level since before the Taper Tantrum.

Market reaction was swift, and Yellen’s press conference did little to dissuade the participants from buying securities and selling the dollar.  For today at least, score this one in favour of the monetary heroin addicts.

Probably unsurprisingly, the most vicious price action took place in the most-positioned market, EUR/USD.  Pre-Fed short covering evolved into post-Fed stop-lossing, which itself became a full-blown rout in the gray zone after 4 pm NY time.  Not since Bernanke pulled a volte-face in July 2013 have dollar longs been punished so swiftly, with so little liquidity.

From Macro Man’s perch, price action in eurodollars was disappointing but not altogether surprising given the magnitude of the dot-plot downgrades.   They key question here is whether the market chooses to maintain a 10-20 bp “easing risk premium” in the ED market versus the dot-plot, or whether it’s now happy to let the market price converge now that the Fed has apparently capitulated.

Macro Man has to confess that the dot-plot forecasts moved a bit lower than he had envisaged; such is life when ruled by a central bank that forecasts with a rearview mirror.  It’s just as well that he had a last-minute bout of jitters and sold a few dollars and cut a little bit of rates risk before the announcement.

From his perch, he still expects a handsome snap-back in the data for April and March; while he doesn’t think that will generate a hike in June, it could well be enough to swing the dot-plot pendulum the other way for 2016 and beyond.  Although he is tempted to add to some of his ED bets given this sharp rally, prudence suggests that it’s better to be a day late than a day early, particularly if the market decides that it wants to price perma-ZIRP to feed the jones of all the asset-market junkies.

As for the euro, meanwhile, let’s not forget that even at the peak of the gray zone squeeze, it was still down some 1.5% from February’s close.   Scant consolation if you were the poor bugger selling in the low 1.04’s last week, but less of a worry for more strategically-inclined investors such as your author.

Thus, from Macro Man’s perspective, the SOS that you heard after Wednesday’s trading was not a plea of “save our shorts” from underwater euro bears, but rather a weary, resigned “same old sh–” that we’ve had from the Fed (and BOE) over the last couple of years.

(As an aside, did anyone else find irony in Yellen’s response to the chap from American Banker magazine?   Y’know, the bit about getting rid of incentives for excessive risk-taking….)

March 18, 2015

Banishing the ghost of 1937

Filed under: Forex Strategies — Tags: , , — admin @ 4:45 pm

So the big day is finally here.   Will patience be a virtue, or won’t it?   Macro Man’s hunch is that the Fed will keep the door ajar for a midyear rate increase, but maintain a pretty high bar for doing so.  Judging by yesterday’s survey results, he has plenty of company.  Fully half of you opted for answer C, “Indicate that a June hike is possible but unlikely.”   Only a third of you thought that the market’s perceived probability of a rate hike in three months’ time will increase as a result of today’s Fedapalooza.

In terms of his portfolio, Macro Man has decided to more or less sit tight.  As discussed yesterday, he has a bit of a barbell on, with positions in those assets most and least priced for a hawkish outcome. Judging by both the poll result and yesterday’s little short-covering flurry in EUR/USD, a bit of a damp squib today would not come as any real surprise.  Macro Man’s positions are pretty modest at the moment, so he’s willing to wear a little bit of short term pain if it means getting better entry levels to reload.

Your author was intrigued to see the flurry of press attention paid to Ray Dalio’s warning on a 1937 repeat from the Fed.   Only a few miles separate Macro Man’s office from Mr. Dalio’s, though the distance between their respective places in the financial universe is obviously substantially greater.  Still, Mr. Dalio is a famous adherent of brutal honesty, so Macro Man can’t help but observe that he thinks Mr. Bridgewater, a man who’s been known to hold the odd bond or ten billion, is talking his book a bit.

Although Macro Man has not read the verbatim text of Dalio’s missive, based on press reports it seems to him that Dalio is falling prey to the fallacy of the false dichotomy discussed last week.   The Fed can raise rates modestly and still maintain easy financial conditions, even if the feedback loop between the policy rate and overall financial conditions is swifter and stronger than it was in the past.

Moreover, “we can’t raise rates because it might precipitate another crisis” is a counterfactual that can neither be proven or disproven  unless someone’s willing to give rate hikes a go.   What we can say, however, is that there is no room for orthodox policy easing should the need arise from current policy settings.   And of course, if unorthodox measures were all that effective, Mr. Dalio wouldn’t be sitting here in 2015 fretting about the economy’s ability to withstand any tightening whatsoever!

To be sure, some emerging markets with an excess of dollar funding may be vulnerable.   Of course, many of the countries moaning about potential Fed tightening since the taper tantrum were the very same ones that whinged when the Fed was doing QE!   There’s just no pleasing some people….

As for the state of the economy, summoning the ghost of 1937 really misrepresents where we are and where we have been.  It’s true that industrial production is roughly 5% above its pre-crisis peak, the same level as it was when the Fed started tightening in 1937.  However, the paths to that level were very different indeed….

While growth in the rest of the world has clearly been anemic since the onset of the crisis, it’s worth reminding ourselves that anemic is a damned far way from catastrophic.   In 1937, US exports of goods and services were only 2/3 of their pre crisis peak.  Last year they exceeded 2008’s levels by 26%.

Finally, let us note that the Fed tightened policy in 1937 as the unemployment rate tumbled from a Depression high….all the way down to 11%!    Lest you have forgotten, the peak unemployment rate during the Great Recession was 10%.   It’s true that U6 was as high as 17% a few years ago….but we also don’t know what the equivalent would have been in the 1930’s.  Regardless, in 1937 the unemployment rate had only retraced slightly more than 50% of its rise from the pre-crisis trough, substantially less than it has done over the past five years.

None of this is to say that tightening won’t have some negative repercussions- after all, you can’t make an omelet without breaking a few eggs.  On the other hand, Japan offers a salutary lesson that perma-ZIRP is no buffer against economic downturn or financial crisis.  Unlike Japan, the United States has returned to solidly positive nominal GDP growth (albeit lower than pre-crisis trends.)  Perhaps the question that Mr. Dalio really should be asking is what he’d like the Fed to do when the next downturn comes (and come it will, ZIRP or no ZIRP): cut rates from  2.50%, or push on a string?

March 14, 2015

Four thoughts after payrolls

Filed under: Forex Strategies — Tags: , , , — admin @ 4:44 pm

* It’s getting increasingly difficult for anyone to say that the US labour market (with the exception of that for friendly macro punters) is anything but robust.   Year on year growth in nonfarm payrolls is now 2.4%, the highest since Internet bubble was just past its zenith- and looks to be accelerating.  True, wage growth remains fairly tepid, but as Macro Man noted nearly a year ago, that looks to be as much of a global issue as a domestic one.

*  Macro Man believes that there is something of a false dichotomy being drawn in some of the will they/won’t they debates on Fed tightening.   By any reasonable measure, financial conditions are very, very easy in the United States and throughout much of the world.  It seems to your author that many of the arguments as to why the Fed shouldn’t or will not raise interest rates this year seem to involve hand-waving prophecies of doom about the fragility of the recovery, undesirably low inflation, etc.   Macro Man has covered inflation previously and has nothing to add on that front.

However, how fragile is the economy, really?  Economic growth is not being driven by the classic interest rate sensitive sectors, for the simple reason that non-security credit is not being allocated or demanded on the basis of price.  Rather, regulatory and balance sheet concerns are informing many of the lending and borrowing decisions of would-be creditors and debtors.  It stands to reason, therefore, that the deleterious impact of higher rates on the economy should be more modest than normal, insofar as the economy has not relied upon borrowing for growth.   (Yes, corporates have been borrowing in the bond market, and not always for good reasons.  But as observed previously, that appears to be less of a concern than previously thought.)

The only way that some of the hand-waving can reasonably be justified is if the hand-wavers believe that rates will go to neutral quite swiftly, taking financial conditions with them.  Frankly, Macro Man doesn’t know anyone who believes that.

Therein lies the false dichotomy: monetary policy is not a choice between stupid ZIRP-world and neutrality; it’s a choice between stupid ZIRP-world and still-accommodative policy for quite some time.  Given the state of the equity, bond, and labour markets, that looks like an easy choice from Macro Man’s perch.

* The DXY is the gift that keeps on giving.   Macro Man noted that the current policy settings in Europe represent the perfect mix for euro weakness, and the single currency duly obliged by falling out of bed on the strong NFP figure.  Amidst the popping of champagne corks (French, of course- these days it’s cheaper than California!) , your author thought it would be interesting to put the current dollar rally into context.   He took monthly data from the Fed’s broad TWI, which goes back to 1973, and plotted each winning or losing streak as a cumulative columns chart.  Imagine his surprise when he found that the current 8-month winning streak (including March) is the longest in history!

Obviously, there have been four different 8-month losing streaks, so we are not quite in uncharted territory here.  Macro Man had two reactions to seeing this result.   The first, visceral reaction was to conclude that we are indeed probably overdue for a little correction to take some of the steam out of the market.

His second reaction, on the other hand, was to observe that there looks to be quite a bit of clustering and serial correlation of streaks.  Long losing streaks seem to group together, as do long winning streaks.  The secular dollar rally from 1995 to 2002, for example, had 8 different streaks lasting at least 4 months.   If, as seems likely, we are embarking on a new secular dollar bull, then even the most ardent longs should hope for a pullback.    There’s a phrase that describes a correction after the onset of a strong rally.   That phrase is “buying opportunity.”

* It was great to see daylight savings roll around again.  The sunshine seemed to last forever today, and the weather even obliged by rising comfortably above freezing for the first time in recent memory.   The sun was shining, the kids were gamboling in the back garden, and you could almost taste the onset of spring:

OK, maybe not quite yet.  But with temperatures slated to rise further this week, perhaps our long national nightmare is finally over….

March 13, 2015

Why the DAX is outperforming

Filed under: Forex Strategies — Tags: — admin @ 4:43 pm

Macro Man was going to write a thousand-word post on the matter, but why bother when he can just show a picture (lifted from BAML’s excellent Flow Show missive) instead?

March 12, 2015

A case of big-figureitis

Filed under: Forex Strategies — Tags: , — admin @ 4:42 pm

Oh dear, looks like the DXY has a case of big-figureitis….

One can only imagine the thoughts of the guy who paid 100.  Must be something like this…

A cold winter night; Greece still in debt
The euro’s at its lowest yet
A rush of the blood to the head
Buy some dollars from my bed

Dollar, dollar, give me the news
I got a bad case of lovin’ you
No squeeze, please I’m on my knees
I got a bad case of lovin’ you

A pretty chart sends flutters to my heart
I learned that buddy from the start
Buying dollars is all I can do
‘Cause the ECB’s doin’ QE, too

Dollar, dollar, tell me the news
I got a bad case of lovin’ you
No squeeze, please I’m on my knees
I got a bad case of lovin’ you

I know you like it, the dollar’s on top
Tell me, Dixie, are you gonna stop?

Pay 100 on a tasty clip
Then I see Judas hangin’ on my tip
Shake my fist as it starts to fall
My stop’s been done, hear the broker call

Dollar, dollar, tell me the news
I got a bad case of lovin’ you
No squeeze, please I’m on my knees
I got a bad case of lovin’ you

With apologies to Robert Palmer.   Anyone too young to remember the original (released in 1978) has never seen a proper dollar bull move…..



 

March 11, 2015

Panic

Filed under: Forex Strategies — Tags: — admin @ 4:43 pm

With apologies to the Smiths…

Panic on the streets of London
Panic on the streets of Amsterdam
I wonder to myself
Could I ever be long again
The Bund rallies as yields slip down
I wonder to myself
Hopes may rise in the blogosphere
But Honey Pie, longs aren’t safe here
So you abort
To the safety of a short
But there’s panic on the streets of Moscow
Dublin, Beijing, Dusseldorf
I wonder to myself

Buy up the dollar
Sell the blessed euro
Because the QE they constantly play
It does nothing for me to shrink bond yields
Sell the blessed euro
Because the QE they constantly play

The Bund rallies as yields slip down
Voldemort nowhere to be found
Sell the euro, sell the euro, sell the euro
Sell the euro, sell the euro, sell the euro
SELL THE EURO, SELL THE EURO, SELL THE EURO
SELL THE EURO

Actually, Macro Man has covered a third of his short today, because it’s come a long way and prudence dictates banking a little.    If form holds, he’ll be selling it back out at lower prices.  It probably bears repeating that unless you’re in your mid-30’s or older, you have:

a) never seen a proper dollar bull market
b) never seen a free-floating EUR/USD  (i.e., absent the impact of FX reserve managers, who are currently dealing with their own issues instead of fannying about with other people’s currencies.)

Believe it or not, this is what markets used to be like.

March 10, 2015

Shhh! Don’t look now….

Filed under: Forex Strategies — Tags: , , , — admin @ 4:43 pm

….but USD/CHF is pretty much back to flat on the year and has almost entirely wiped out the SNB move…..

March 9, 2015

Four thoughts after payrools

Filed under: Forex Strategies — Tags: , , , — admin @ 4:44 pm

* It’s getting increasingly difficult for anyone to say that the US labour market (with the exception of that for friendly macro punters) is anything but robust.   Year on year growth in nonfarm payrolls is now 2.4%, the highest since Internet bubble was just past its zenith- and looks to be accelerating.  True, wage growth remains fairly tepid, but as Macro Man noted nearly a year ago, that looks to be as much of a global issue as a domestic one.

*  Macro Man believes that there is something of a false dichotomy being drawn in some of the will they/won’t they debates on Fed tightening.   By any reasonable measure, financial conditions are very, very easy in the United States and throughout much of the world.  It seems to your author that many of the arguments as to why the Fed shouldn’t or will not raise interest rates this year seem to involve hand-waving prophecies of doom about the fragility of the recovery, undesirably low inflation, etc.   Macro Man has covered inflation previously and has nothing to add on that front.

However, how fragile is the economy, really?  Economic growth is not being driven by the classic interest rate sensitive sectors, for the simple reason that non-security credit is not being allocated or demanded on the basis of price.  Rather, regulatory and balance sheet concerns are informing many of the lending and borrowing decisions of would-be creditors and debtors.  It stands to reason, therefore, that the deleterious impact of higher rates on the economy should be more modest than normal, insofar as the economy has not relied upon borrowing for growth.   (Yes, corporates have been borrowing in the bond market, and not always for good reasons.  But as observed previously, that appears to be less of a concern than previously thought.)

The only way that some of the hand-waving can reasonably be justified is if the hand-wavers believe that rates will go to neutral quite swiftly, taking financial conditions with them.  Frankly, Macro Man doesn’t know anyone who believes that.

Therein lies the false dichotomy: monetary policy is not a choice between stupid ZIRP-world and neutrality; it’s a choice between stupid ZIRP-world and still-accommodative policy for quite some time.  Given the state of the equity, bond, and labour markets, that looks like an easy choice from Macro Man’s perch.

* The DXY is the gift that keeps on giving.   Macro Man noted that the current policy settings in Europe represent the perfect mix for euro weakness, and the single currency duly obliged by falling out of bed on the strong NFP figure.  Amidst the popping of champagne corks (French, of course- these days it’s cheaper than California!) , your author thought it would be interesting to put the current dollar rally into context.   He took monthly data from the Fed’s broad TWI, which goes back to 1973, and plotted each winning or losing streak as a cumulative columns chart.  Imagine his surprise when he found that the current 8-month winning streak (including March) is the longest in history!

Obviously, there have been four different 8-month losing streaks, so we are not quite in uncharted territory here.  Macro Man had two reactions to seeing this result.   The first, visceral reaction was to conclude that we are indeed probably overdue for a little correction to take some of the steam out of the market.

His second reaction, on the other hand, was to observe that there looks to be quite a bit of clustering and serial correlation of streaks.  Long losing streaks seem to group together, as do long winning streaks.  The secular dollar rally from 1995 to 2002, for example, had 8 different streaks lasting at least 4 months.   If, as seems likely, we are embarking on a new secular dollar bull, then even the most ardent longs should hope for a pullback.    There’s a phrase that describes a correction after the onset of a strong rally.   That phrase is “buying opportunity.”

* It was great to see daylight savings roll around again.  The sunshine seemed to last forever today, and the weather even obliged by rising comfortably above freezing for the first time in recent memory.   The sun was shining, the kids were gamboling in the back garden, and you could almost taste the onset of spring:

OK, maybe not quite yet.  But with temperatures slated to rise further this week, perhaps our long national nightmare is finally over….

March 6, 2015

A perfect mix

Filed under: Forex Strategies — Tags: — admin @ 4:42 pm

Well, Super Mario looked happier and more relaxed yesterday than he had in quite some time, n’est-ce pas?  Obviously, there were no fresh policy initiatives to unveil given that the ECB has yet to commence the implementation of the QE purchase program previously announced.

Nevertheless, Mario had a twinkle in his eye, perhaps because he had some forecast upgrades to deliver on growth this year and next.  Indeed, in aggregate the ECB now expects the Eurozone economy to be nearly 1% larger by the end of  next year than they did just three months ago.  The evolution of the forecast profile is nicely sketched out in the table below, from Jefferies:

Of course, some of that upgrade is a function of the ECB itself, and the announcement of the QE policy.   The assumption of “we have done something, ergo it will work” is often a dangerous one that begets complacency, as we have seen all too often over the past few years.  In fairness, though, things do seem to be ticking over a little more.   As Draghi proudly noted, the credit impulse is sparking to life a wee bit, and basic measures of sentiment are now pointing higher.

From a currency punter’s perspective, meanwhile, the policy and economic mix appears to be a perfect one to engender currency weakness.   Tight fiscal policy?   Check.   Loose monetary policy, with a commitment to remain that way for a (ahem) considerable period?   Check.   The growth outlook improving, and with it the prospects for C/A surplus-dampening domestic demand?   Check.

Who knows, we might even see a reduced private sector demand for some segments of the EZ bond market.   After all, Draghi noted that the ECB would not buy bonds through the deposit rate (currently -0.20%, and likely to stay there if the forecast profile materializes.)  By a stunning coincidence, Schatz (i.e German 2 years) closed yesterday at…wait for it….-0.20%!

Of course, as Swiss franc traders will attest, just because a CB puts an implicit (or explicit!) floor under something doesn’t mean that the floor will hold ad infinitum.   That having been said, holding bonds offering negative yields is a position that costs money to carry, so the at the very least reducing the prospect of capital appreciation surely diminishes their allure for some holders.   Bobl (5 years) at -0.07% in many ways looks even worse!

Regardless, the chart of these things would appear to suggest that the party is over, for the time being at least.

While it would be nice to focus on the medium term prospects for the euro given the perfect policy mix for shorts, the realpolitik of modern macro for many punters is that today’s payroll figure is now more important, for the time being of course.   Given the intense focus on the Fed’s “patience”, a misstep on the data front could shift the market’s timetable presumptions, perhaps engendering the sort of short squeeze that we haven’t seen all year.

Macro Man has often scuffled in March, and he isn’t alone.   An analysis of the CS macro hedge fund index reveals that since 2000, March has been the worst month of them all for the industry.  Now, that in and of itself is not a reason to slash risk…but assuming that the market has not become exclusively populated by 30-year old “know-it-alls”, it might be reasonable to posit that punters with as much gray hair as your author might be somewhat sensitive to signs of a trend reversal at this time of the year.

For what it’s worth (admittedly not much, given the noise in the data), Macro Man’s model yet again looks for a somewhat lower than consensus reading for payrolls, forecasting a print of just over 200k.   In the unlikely event that his forecast were to prove to be spot on, it’s hard to envisage too strong of a market reaction, unless there was disturbing news on the unemployment rate or wage front.  To be sure, any sane central bank wouldn’t be troubled by a 200k print…..and most crazy ones wouldn’t, either.

In any event, Macro Man’s little PA portfolio has had a nice start to the year, so as noted previously he has trimmed some of his short euros.  He also took a little profit in fixed income as well, just enough to feel emboldened to add if there is a silly rally after tomorrow’s figures.

These are merely tactical adjustments, however.     After all, the perfect policy mix doesn’t come around too often….so when it does, you really don’t want to spend too much time on the sidelines.

March 5, 2015

TICC

Filed under: Forex Strategies — Tags: — admin @ 4:43 pm

Tomorrow sees the release of US nonfarm payrolls, financial markets’ monthly paean to the fetishization of statistical noise around a slow-moving signal.  Although Macro Man has not dug terribly deeply into this, on the surface there would appear to be some downside risk to the number, given the appalling weather that the country has “enjoyed” for the last six weeks.  Heck, even the diligent professionals of the Chicago construction industry have fallen behind in their renovation of Wrigley Field because of the weather.

Generally speaking, however, the labor market has improved so substantially that it would normally merit a tightening of policy.   Indeed, the degree of improvement is starkly illustrated by the scatter plot below, which shows unemployment and the corresponding Fed funds rate.  Other than the current ZIRP, the next-lowest level of Fed funds with unemployment at these levels was 0.8%, in the mid-1950’s.

Of course central banks, particularly those with dual mandates, do not make policy for unemployment alone.  Inflation is obviously a clear determinant of Fed policy and preferences, especially given that it has remained persistently low in the aftermath of the crisis.  Now, Macro Man has opined on this topic on a number of occasions, but hopes readers will excuse him if he addresses it once again.

As you know, the Fed has chosen a reference target of 2% for the PCE price index, excluding food and energy, for inflation.  This is all well and good, except that the target looks unattainable- and not just because of the lingering impact of the crisis.   If we take a 5 year moving average of the core PCE deflator to smooth out noise, we should get a decent idea of what trend levels of inflation (as defined by the Fed) look like.  And what we find is that with the exception of mid-2008 to mid-2009 (oh, the irony!), the long-run average for the deflator has been well below 2% for nearly 20 years. 

(It is at his juncture that the uncharitable reader might choose to regard the Fed’s long-term forecast for 2% inflation as the triumph of hope over expectation.)

Now, as your author observed a few months ago, a primary culprit for this shortfall in inflation has been the secular decline in the durable goods deflator.   Simply put, the price of manufactured durable goods started going down 20 years ago and has kept doing so, regardless of financial conditions, the economic cycle, sunspots, or any other variable that you might choose to measure.  For your convenience, the chart of the deflator index is reproduced below.

Unsurprisingly, Macro Man has not changed his view that there is nothing that the Federal Reserve (or any other central bank, really) can do to offset the secular decline in durable goods prices, nor should they try- the forces driving these declines are well beyond the sphere of monetary policy.  Attempting to do so, on the other hand, will impact the price of things that are responsive to central bank policy, such as many of the securities, futures, and exchange rates flickering on your screens.

Recently, it occurred to Macro Man that it might be interesting to craft an alternative measure of consumer inflation, something that Janet Yellen might think of as ‘TICC’ inflation, e.g. ‘things I can control.’  Such a measure would not only strip out food and energy, the prices of which are driven by idiosyncratic factors that do not necessarily respond to monetary policy, but also of durable goods, which don’t either.

To calculate this ‘TICC’ inflation measure, Macro Man calculated traditional core PCE inflation and that for durable goods.   Using the monthly weight of durable goods in total core PCE expenditures, he was then able to back out a figure for core PCE inflation, ex-durables.  Given that the weighting to durable goods in the overall basket is fairly modest  (12% currently, down from 15% a couple of decades ago, though these were nominal rather than real figures), the overall impact to the ‘controllable’ inflation measure is evolutionary, not revolutionary.  Nevertheless, the results are interesting, and set out below.

It is interesting to note that the average ‘TICC’ inflation rate since the announcement of QE2 has been 1.92%- more or less bang on the Fed’s ostensible target, though the current rate is very slightly lower.  If you believe that the shape of the line matters more than the level, then you can still ascribe a level of deflationary concern to the Fed, insofar as both measures (core and TICC) are not hugely off of their post-crisis lows.

On the other hand, if you believe the level does matter, well then there is more breathing space for the Fed between the price of things that they can influence and deflation.   By the same token, this measure would have picked up that monetary conditions were too easy in the middle of the last decade in a way that core PCE did not.

Naturally, none of this is to suggest that the Fed will take this type of analysis into account.   One could argue, furthermore, that the fallout from the secular decline in durable goods prices (lower wages in the manufacturing and related sectors, for example) is something that the Fed should try to counteract with monetary policy, futile though it may be.

Nevertheless, as the debate about lift-off intensifies over the coming weeks and months, some observers will no doubt wring their hands about the low level of inflation and claim that the Fed couldn’t possibly raise rates with core PCE so low, or the economy will tip into deflation.   Macro Man at least plans to keep tracking this TICC inflation so that he’ll have an idea of how low it really is in things that the Fed can actually control.

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