The way it's been for the last 50 years. These bums are basically clueless about economics. "Engineered ambigity"...lot of that going around in the DC Cesspool these days. Must be a contagion.
Lots of disappointed/fussy financial markets commentary now that the Fed has (somewhat) stepped out of the game of telling markets what rates should be - but maybe that is exactly Warsh's goal? He's only said as much every possible way...
As a thought experiment, what if there were no Fed to "control" inflation/employment rate? Whatever would markets do - beyond looking at a (freely floating) yield curve, supply/demand dynamics, economic stats, etc.?
I believe (hope) there is still an economic strain of thinking that believes the cure for inflation (including assets, btw) is a higher cost of money. Most of that price of money has historically been set by the market - NOT the fed.
And what do you know - the price of money IS going up. Even without the legacy Eccles magicians waving their wands.
And while not perhaps as widely popular as CPI/PCE dis-inflation, when asset inflation has been by far the largest outlet for the massive post-GFC monetary supply/demand imbalance, using equity market rallies as a gauge of Warsh's success seems to get things exactly backwards. If true, it will be interesting to see how the WH takes this.
Still very early days, but it just might be possible that Warsh understands these dynamics (along with potential internal-FOMC political limitations) and is happy to let markets do the lifting he likely believes should be their job and return the Fed to its better-suited role as lender of last resort.
I’m very happy with Warsh. He’s doing exactly what he said he would do, no guidance. I don’t want “guidance”. It would be fine with me if the Fed never spoke at all. My strategies will adapt to ANY interest rate policy. That’s just one thing the market will throw at you. There are many others. Play the hand you’re dealt, ffs…
I'm surprised at you Chris, I would think this is exactly what you want, a Fed that doesn't tell you anything so you can simply do your analysis and make your bets. the added benefit is without the Fed's views, we are likely to see significantly less leverage in markets because now there is risk out there. again, this is praiseworthy. if the Fed never said another word, we would all be better off.
Yes! I don't understand why literally non-stop critics of the Old Regime are suddenly apopletic that there is now a "New Regime" that is doing EXACTLY the thing they were calling for...
These sites are endlessly full of shit. And "Chris" is laughing all the way to the bank...
Warsh is just acknowledging that the fedres has only "bad" choices at this point: save the Bond Market by tanking the dollar and unleashing massive inflation or save the Dollar by crushing the Bond Market (and the entirety of the remainder of the wildly over-leveraged financial system along with it). Three guesses which option he's going to choose (first two don't count). Hint - for whom does he work?
If nothing else, the ongoing collapse in commercial real estate and private credit is going to drive short term events. And, with the government’s need to finance $13-14 trillion a year in the bond markets the Fed is not in the driver’s seat. And, the ongoing retreat of overseas buyers from treasuries will only make the pressure worse.
I was impressed with Warsh's first press conference, but maybe that was just because he was something different at the time. I've watched many of Powell's carefully scripted press conferences as well, and they were quite predictably ambiguous and two-sided. More philosophical than informative.
This one was not impressive. I got the feeling that Warsh is trying to thread the needle of coddling the market while talking tough about inflation. He's resting on his honeymoon period to get some leeway, while doing nothing yet talking tough.
I believe that it may be because he doesn't want to make any changes until his task forces are done, and the new paradigm of the Fed arrives. I think he believes that raising and lowering short-term rates is an unnecessarily destructive tool, and that there are other ways of letting the market work to reduce inflationary pressures on its own. There are also ways of using liquidity to achieve objectives. I'm supportive of that, but he should probably work with the tools he has now, because this could otherwise get out of hand.
One reporter at the press conference asked him "what are you doing about inflation...other than talking about it?" It was kind of a blunt question, but it hit the mark. He was a little taken aback by it, but because he's smooth, he immediately replied that he "assured" us that he's "done more than just this press conference" today. She reiterated to him in follow-up, "what are you waiting for?" I don't remember his answer, but it was an unremarkable stumble of the same theme of talking both sides.
You misinterpreted it. As usual, the reporter had it wrong. Warsh is now in charge. He owes you nothing. He owes the good of the country everything--and he is aware of his responsibility.
This is the same thing that many don't get about the Treasury. Bessent is a GIANT. Just STFU, already--Let him work!!
Could be Warsh sees the writing on the wall with the superbubbles sloshing around the top of his latte and doesn't want to be the one to prick it. Or he could be another nothing-burger.
The GENIUS act only applies to stable coins right? Not sure what he's saying here that all transactions must be backed by short term treasuries starting next year.
Perhaps Warsh listened to you & Andy yesterday and figured out that the Fed is no longer in charge of interest - the Bond Market is.
Exactly…
Interest rates.
Those bond vigilantes, are they in the room with us right now?
The way it's been for the last 50 years. These bums are basically clueless about economics. "Engineered ambigity"...lot of that going around in the DC Cesspool these days. Must be a contagion.
Lots of disappointed/fussy financial markets commentary now that the Fed has (somewhat) stepped out of the game of telling markets what rates should be - but maybe that is exactly Warsh's goal? He's only said as much every possible way...
As a thought experiment, what if there were no Fed to "control" inflation/employment rate? Whatever would markets do - beyond looking at a (freely floating) yield curve, supply/demand dynamics, economic stats, etc.?
I believe (hope) there is still an economic strain of thinking that believes the cure for inflation (including assets, btw) is a higher cost of money. Most of that price of money has historically been set by the market - NOT the fed.
And what do you know - the price of money IS going up. Even without the legacy Eccles magicians waving their wands.
And while not perhaps as widely popular as CPI/PCE dis-inflation, when asset inflation has been by far the largest outlet for the massive post-GFC monetary supply/demand imbalance, using equity market rallies as a gauge of Warsh's success seems to get things exactly backwards. If true, it will be interesting to see how the WH takes this.
Still very early days, but it just might be possible that Warsh understands these dynamics (along with potential internal-FOMC political limitations) and is happy to let markets do the lifting he likely believes should be their job and return the Fed to its better-suited role as lender of last resort.
That's my point...
I think you are exactly correct.
I’m very happy with Warsh. He’s doing exactly what he said he would do, no guidance. I don’t want “guidance”. It would be fine with me if the Fed never spoke at all. My strategies will adapt to ANY interest rate policy. That’s just one thing the market will throw at you. There are many others. Play the hand you’re dealt, ffs…
I'm surprised at you Chris, I would think this is exactly what you want, a Fed that doesn't tell you anything so you can simply do your analysis and make your bets. the added benefit is without the Fed's views, we are likely to see significantly less leverage in markets because now there is risk out there. again, this is praiseworthy. if the Fed never said another word, we would all be better off.
Yes! I don't understand why literally non-stop critics of the Old Regime are suddenly apopletic that there is now a "New Regime" that is doing EXACTLY the thing they were calling for...
These sites are endlessly full of shit. And "Chris" is laughing all the way to the bank...
Warsh is just acknowledging that the fedres has only "bad" choices at this point: save the Bond Market by tanking the dollar and unleashing massive inflation or save the Dollar by crushing the Bond Market (and the entirety of the remainder of the wildly over-leveraged financial system along with it). Three guesses which option he's going to choose (first two don't count). Hint - for whom does he work?
Wait till Thursday.
If nothing else, the ongoing collapse in commercial real estate and private credit is going to drive short term events. And, with the government’s need to finance $13-14 trillion a year in the bond markets the Fed is not in the driver’s seat. And, the ongoing retreat of overseas buyers from treasuries will only make the pressure worse.
I was impressed with Warsh's first press conference, but maybe that was just because he was something different at the time. I've watched many of Powell's carefully scripted press conferences as well, and they were quite predictably ambiguous and two-sided. More philosophical than informative.
This one was not impressive. I got the feeling that Warsh is trying to thread the needle of coddling the market while talking tough about inflation. He's resting on his honeymoon period to get some leeway, while doing nothing yet talking tough.
I believe that it may be because he doesn't want to make any changes until his task forces are done, and the new paradigm of the Fed arrives. I think he believes that raising and lowering short-term rates is an unnecessarily destructive tool, and that there are other ways of letting the market work to reduce inflationary pressures on its own. There are also ways of using liquidity to achieve objectives. I'm supportive of that, but he should probably work with the tools he has now, because this could otherwise get out of hand.
One reporter at the press conference asked him "what are you doing about inflation...other than talking about it?" It was kind of a blunt question, but it hit the mark. He was a little taken aback by it, but because he's smooth, he immediately replied that he "assured" us that he's "done more than just this press conference" today. She reiterated to him in follow-up, "what are you waiting for?" I don't remember his answer, but it was an unremarkable stumble of the same theme of talking both sides.
The honeymoon is over.
You misinterpreted it. As usual, the reporter had it wrong. Warsh is now in charge. He owes you nothing. He owes the good of the country everything--and he is aware of his responsibility.
This is the same thing that many don't get about the Treasury. Bessent is a GIANT. Just STFU, already--Let him work!!
Could be Warsh sees the writing on the wall with the superbubbles sloshing around the top of his latte and doesn't want to be the one to prick it. Or he could be another nothing-burger.
Nothingburger?? Fuck you.
The GENIUS act only applies to stable coins right? Not sure what he's saying here that all transactions must be backed by short term treasuries starting next year.
Wrong thread…