Stable But Hotter Inflation
Ironsides Macroeconomics 'It's Never Different This Time'
by Barry C. Knapp
1d ago
(BN) SCHMID: DON'T THINK FED SHOULD HAVE SLOWED ASSET RUNOFF Top-Down Inflation In the wake of April producer, consumer and import price reports, we heard a considerable amount of optimistic bottoms-up analysis, and we will dig into the details using Chair Powell’s November ‘22 framework, but we found little evidence to dissuade us from our core view that an increase in aggregate demand resulting from the largest expansionary government spending and deficits with no exit plan, has increased the trend rate of inflation. We remain convinced monetary policy is incapable of offsetting fiscal accom ..read more
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The Path of Least Resistance
Ironsides Macroeconomics 'It's Never Different This Time'
by Barry C. Knapp
1w ago
This audio summarizes our note dated May 11, The Path of Least Resistance Figure 2: Interest as a percent of outlays and GDP was flattered by deleveraging and Fed rate suppression despite a growing debt load. The outlook is bleak. Barry C. Knapp Managing Partner Director of Research Ironsides Macroeconomics LLC 908-821-7584 bcknapp@ironsidesmacro.com https://ww… Read more ..read more
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The Path of Least Resistance
Ironsides Macroeconomics 'It's Never Different This Time'
by Barry C. Knapp
1w ago
Policy Tweaks, Payrolls & Treasury Supply April ISM manufacturing and services surveys slipping back below 50 and a weaker than expected April employment report, created a favorable environment for the 3-year auction on Tuesday, the part of the curve we are overweight. By Wednesday, the outlook began to shift for a dubious reason: the Atlanta Fed 2Q24 GDP Now 4.2% tracking estimate, based on a strong end to 1Q but very little actual 2Q data. We have long urged caution on these models until much later in the quarter, and it never ceases to amaze us how the vast majority of individuals who a ..read more
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Comfort with the Curves
Ironsides Macroeconomics 'It's Never Different This Time'
by Barry C. Knapp
2w ago
Comfort with the Curves Figure 5: During 2022 the Phillips Curve went ‘vertical’, in other words wage growth cooled without any increase in unemployment. During 2023 and the first four months of ‘24 the curve appears to be normalizing to its theoretical construct, wages growth eased with rising unemployment. This will reassure the Fed that policy is inde… Read more ..read more
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Comfort with the Curves
Ironsides Macroeconomics 'It's Never Different This Time'
by Barry C. Knapp
2w ago
Monday at Noon Eastern we will be a guest on Barron’s Live weekly subscriber webcast Tuesday at 1 pm eastern we will be a guest on CNBC’s The Exchange with Kelly Evans Comfort with the Curves The important policy events this week — the Department of Treasury’s financing requirements and Quarterly Refunding Announcement (QRA), and the FOMC meeting — contained no big surprises, leaving the markets incrementally more dependent on cooler inflation and softer labor market conditions. Chair Powell’s press conference and the slightly larger reduction in the monthly cap on Treasury redemptions (QT) pr ..read more
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April Payrolls: Churn Collapse
Ironsides Macroeconomics 'It's Never Different This Time'
by Barry C. Knapp
2w ago
Churn Collapse As we started digging into labor market data in preparation for this note, our Bayesian prior was that the stabilization of demand for labor at a relatively robust pace that developed in 1Q24, was likely to have continued in April. Initial and continuing jobless claims were remarkably (unbelievably) stable at low levels. The April ADP report was close to the consensus forecast for BLS private sector payrolls and March was revised up marginally. April Regional Federal Reserve manufacturing employment surveys were marginally weaker at contractionary levels, however the ISM manufac ..read more
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No Stag, Just Flation
Ironsides Macroeconomics 'It's Never Different This Time'
by Barry C. Knapp
3w ago
This audio summarizes our note dated April 27, No Stag, Just Flation Figure 2: The belly of the curve has borne the brunt of the selling since March CPI. Barry C. Knapp Managing Partner Director of Research Ironsides Macroeconomics LLC 908-821-7584 bcknapp@ironsidesmacro.com https://www.linkedin.com/in/barry-c-knapp/ @barryknapp This institutional communication h… Read more ..read more
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No Stag, Just Flation
Ironsides Macroeconomics 'It's Never Different This Time'
by Barry C. Knapp
3w ago
Scenario Analysis Perhaps the most interesting discussion of our week was with technical analyst John Kolovos about his view that the S&P 500 could have a 10% correction with cyclicals outperforming. Although we have a different process, we share his view and after several convoluted fundamental macro explanations, we arrived at a concise scenario analysis. In short, weaker expected growth is not the only reason the stock market declines. To be sure, earnings are the primary driver of stock prices over time, however in an inflationary regime, real rate shocks reverberate across asset class ..read more
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Unhealthy Broadening Out
Ironsides Macroeconomics 'It's Never Different This Time'
by Barry C. Knapp
1M ago
This audio summarizes our note dated April 20, Unhealthy Broadening Out Figure 5: Financial conditions as measure by real rates were much tighter in 2006. Importantly, the household sector was extreme in 2006, now it is the government that is stretched. Excessive private sector debt is deflationary, government debt is inflationary. Barry C. Knapp Managing … Read more ..read more
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Unhealthy Broadening Out
Ironsides Macroeconomics 'It's Never Different This Time'
by Barry C. Knapp
1M ago
When Chaos Hits the Fan One of our key themes for 2024 is that until and unless the FOMC begins a reasonably aggressive rate cutting cycle to our estimate of the natural policy rate at 4%, a ‘healthy broadening out’ of the technology-, industrial- and energy-led equity market rally to small caps, financials and rate sensitive stocks, was improbable. Strong March economic activity and inflation data from the ‘big four’ reports (ISM manufacturing, payrolls, CPI and retail sales) rendered null and void the thesis that the hot January and February reports were a statistical aberration attributable ..read more
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