Hi YXI friends,
Powell, speaking on Tuesday, reiterated the Fed’s challenge in balancing its dual mandates. However, the Fed is becoming more confident that tariffs wouldn’t impact inflation as highly as previously feared.
A reasonable base case is that the tariff-related effects on inflation will be relatively short lived—a one-time shift in the price level….
Near-term risks to inflation are tilted to the upside and risks to employment to the downside - a challenging situation….
This policy stance, which I see as still modestly restrictive, leaves us well positioned to respond to potential economic developments.
At the same time, Bowman, the Vice Chairman, said the following in a separate speech.
"Assuming the economy evolves as I expect, last week's action should be the first step to bring the federal funds rate back to its neutral level…
as I gain even greater confidence that tariffs will not present a persistent shock to inflation, I see that upside risks to price stability have diminished. ”
The latest speeches reinforce our view that the Fed has shifted to a decidedly more dovish stance than earlier in the year. Despite high asset prices and sticky inflation numbers, the Fed now wants to focus on saving the labour market with lower policy rates.
Today, in addition to our usual daily coverage of equities, bonds, crypto, and gold, we will shine a spotlight on AMZN’s asset behaviour. This is part of an ongoing series in which we take a closer look at specific names for a deeper dive.
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DISCLAIMER: This newsletter is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.
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