Eurodollar University’s Making Sense; Episode 25, Part 2: The Awe In The Law

———WHERE———

———WHO———

Twitter: https://twitter.com/JeffSnider_AIP

Twitter: https://twitter.com/EmilKalinowski

Jeff Snider, Head of Global Investment Research for Alhambra Investments with Emil Kalinowski, exempt from Murphy’s Law. Artwork by David “the right stuff” Parkins. Podcast intro/outro is “Sleeves” by Cushy at Epidemic Sound.

———HOW———

25.2 Murphy’s Law of Murphy’s Laws

The Federal Reserve’s new, grand strategy includes an implicit mea culpa: ‘we raised rates too soon!’ By the way, they waited six to eight years to do it. Still, the Fed says it needs more time – more priceless time. Like the Bank of Japan’s 30-year vortex? Enough.

———WHY———

Last week, current and former Federal Reserve officials offered a mea culpa, saying the timing of the 2015-18 rate hikes may have curbed a potentially quicker recovery from 2008. Apparently, seven to ten years is not enough time.

Well then, if time is the problem your podcaster will take a page out of Hugh Hendry’s book. Recently the early-21st century Scottish philosopher suggested the Fed would be taken seriously at its attempt of irresponsibility if it was headed by the funny, mixed martial artist, media-sensation Joe Rogan. Why not then filmmaker Christopher Nolan? He offers Rogan-style pyrotechnics, plus he knows his way around time. In Memento he reversed it, telling the story from back to front. With Inception he slowed it down – allowing multiple realities to exist simultaneously. Interstellar showed him capable of harnessing no less than the gravity well of the black hole Gargantua to ‘steal’ decades of time. And in his latest opus – TeneT – Nolan folds all of these ideas into the same movie. Not just the same movie, but the same frames! Entire sequences are shown with characters and objects sharing the same space but not the same eddies of entropy.

Hopefully the point survives the exaggeration. A true, fundamental overhaul is long overdue and recently the Federal Reserve did perform just such a review at the end of which it announced a new, grand strategy. In this, the 25th episode of Making Sense, while we wait for Rogan, Nolan or Deus-forbid anyone with authority, Snider offers his review of the new, grand strategy.

———WHEN———

00:05 What did the Fed Vice Chairman recently tell the world regarding the new, grand strategy?
05:08 Full employment was a big deal in economic policy, but now? ‘Whatever. We don’t know.’
06:52 ‘Mea culpa! We raised interest rates too soon! Six to eight years was not enough time!’
09:27 The Fed hasn’t achieved its inflation mandate because we are too impressed with Fed power
11:31 Forward guidance. The Fed believes the public doesn’t understand the Fed’s message.

———WHAT———

Peak Inflation? No, Peak Stupidity: https://bit.ly/357HFKr
Read Richard Clarida’s Speech: https://bit.ly/3lPo2wO
Watch Richard Clarida’s Speech: https://bit.ly/2QXB793
Alhambra Investments Blog: https://bit.ly/2VIC2wW
RealClear Markets Essays: https://bit.ly/38tL5a7