Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
Stocks are lower this morning after markets digest the Fed move yesterday. Bonds and MBS are up.
As expected, the Fed didn’t make any changes to the Fed Funds rate, and the dot plot became marginally more hawkish. You can see the comparison between December (left) and March (right) below. The central tendency is for 50 basis points of cuts this year.
The forecast for 2025 economic growth was revised downward from 2.1% to 1.7%, while the unemployment rate was bumped up to 4.4% from 4.3%. The estimate for headline PCE inflation increased from 2.5% to 2.7%, while the estimate for core PCE inflation rose from 2.5% to 2.8%.
Despite the hawkish plot and forecast, bonds rallied because the Fed is reducing quantitative tightening, and will cap runoff at $5 billion per month instead of $25 billion per month. This will create incremental demand for Treasuries at bond auctions, which will help absorb supply. The Fed did not adjust its runoff for MBS.
The press conference prepared remarks are here. The highlights are below:
Economic activity continued to expand at a solid pace in the fourth quarter of last year, with GDP rising at 2.3 percent. Recent indications, however, point to a moderation in consumer spending following the rapid growth seen over the second half of 2024. Surveys of households and businesses point to heightened uncertainty about the economic outlook. It remains to be seen how these developments might affect future spending and investment.
In the labor market, conditions remain solid. Payroll job gains averaged 200 thousand per month over the past three months. The unemployment rate, at 4.1 percent, remains low and has held in a narrow range for the past year. The jobs-to-workers gap has held steady for several months. Wages are growing faster than inflation, and at a more sustainable pace than earlier in the pandemic recovery. Overall, a wide set of indicators suggests that conditions in the labor market are broadly in balance. The labor market is not a source of significant inflationary pressures
Inflation has eased significantly over the past two years but remains somewhat elevated relative to our 2 percent longer-run goal. Estimates based on the Consumer Price Index and other data indicate that total PCE prices rose 2.5 percent over the 12 months ending in February and that, excluding the volatile food and energy categories, core PCE prices rose 2.8 percent. Some near-term measures of inflation expectations have recently moved up. We see this in both market- and survey-based measures, and survey respondents, both consumers and businesses, are mentioning tariffs as a driving factor. Beyond the next year or so, however, most measures of longer-term expectations remain consistent with our 2 percent inflation goal.
Looking ahead, the new Administration is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation. It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy. While there have been recent developments in some of these areas, especially trade policy, uncertainty around the changes and their effects on the economic outlook is high. We do not need to be in a hurry to adjust our policy stance, and we are well positioned to wait for greater clarity.
Finally, the Fed Funds futures now see a 70% chance for a rate cut at the June meeting, and have 3 cuts this year as the most likely scenario. We will probably see 25 at the June, September and December meetings.
If we take the 4 issues Powell mentioned: trade, immigration, fiscal policy and regulation, we can talk about how it affects growth and inflation.
Trade: tariffs will be a net negative for growth and inflation, at least in the short term. Trump is hoping that tariffs will either (a) force our trading partners to reduce their tariffs or (b) increase investment in domestic production. If (a) happens, that is a positive for growth and inflation. If (b) happens, that is probably good for growth, but not so much for inflation. If a trade war is the result, it will be bad for growth and inflation.
Immigration: Reducing immigration will probably be bad for inflation and growth in the short term. That said, it probably won’t have a big impact either way.
Fiscal Policy: Reducing government spending will reduce GDP and inflation. As government workers are cut, and contracts decrease, the labor market will weaken.
Regulation: Deregulation generally reduces costs, so it will be positive for inflation and growth.
I suspect the net effect of all of this will be minimal, but the possibility for outsized effects remain a tail risk. So chances are it won’t affect monetary policy one way or the other. Notwithstanding the jump in inflationary expectations out of the UMich consumer sentiment survey, pricing on 5 year TIPS remains more or less in the same range it has been in for the past 2 years. The pricing on 10 year TIPS is even less dramatic.
Filed under: Economy |
All Things in Moderation 
Republicans are immensely unpopular in (checks notes) Wyoming, y’all.
Trump’s doomed.
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Clearly, this is the extent of the “ideological spectrum on the right” as represented by David Brooks, Ross Douthat, David French and Bret Stephens.
https://www.nytimes.com/2025/03/21/opinion/trump-administration-polling.html
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This strikes me as closer to the mark:
https://www.joshbarro.com/p/abundance-liberals-have-a-carbon
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This one made me laugh,
Republicans and Democrats have very negative views of each other, and many Republicans (sadly!) want their opponents to suffer. They’re actually happy to see people lose their jobs or to see nonprofits lose funding if those people are perceived as part of the “deep state” or RINOs.
No mention of the converse, interesting.
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Washington General Conservatives.
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I didn’t think any government spending could surprise me, but this did. Plus, the butthurt is just,… chef’s kiss.
https://www.skynews.com.au/australia-news/prime-minister-urged-to-call-emergency-meeting-after-trump-administration-cuts-funding-to-seven-australian-universities/news-story/2849b3274db1cc6a1774b1991106b6da
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Looks like he got Venezuela to cave.
https://www.nytimes.com/live/2025/03/23/us/trump-news#trump-venezuela-deportations-migrants
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Maybe I’m not understanding Anne here,
Was it better when Europeans had delusions about the U.S.?
And while I’m thinking about it, I thought lefties didn’t believe in stereotypes?
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Ironic thing is that the Prime Minister of Poland gets it.
https://reason.com/volokh/2025/03/09/500m-europeans-are-begging-300m-americans-for-protection-from-140m-russians-who-have-been-unable-to-overcome-50m-ukrainians-for-three-years/
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Interesting.
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Delaware was always one of the more shareholder-friendly states, and that is why a lot of companies incorporated there. If you incorporate in a state like Pennsylvania or Ohio, you are generally takeover-proof and your stock gets a multiple that reflects that fact.
I could see Texas becoming the state where companies incorporate.
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lol
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Worth reading:
https://time.com/7269604/el-salvador-photos-venezuelan-detainees/
https://time.com/7268733/el-salvador-mega-prison-cecot-trump-deportations/
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Good piece on Paul Weiss law firm
https://www.thebignewsletter.com/p/monopoly-round-up-the-democrats-corporate
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How is it not authoritarian to sic Big Law on your political opponents, but it IS authoritarian to punch back?
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Live by index funds, die by index funds?
https://www.nytimes.com/2025/03/24/opinion/stock-market-trump-retirement.html
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Not sure how to react to this story that Jeffrey Goldberg was on a Signal thread with the Administration covering the raid on Yemen.
I think the most likely explanation is that Goldberg is making it all up, and the second most likely explanation is that there was a leak, and the Admin needs to find a mole.
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Looks like Mike Walsh was the one who added JG. My guess is a staffer set up the chat and either he or Walsh had him on their contacts and that is the real scandal. I guarantee there were no war plans on there just messaging advice and bitching, but the issue Walsh faces is MAGA, they never have trusted him and have been looking for a reason to get rid of him, it will be a bumpy couple of days for Walsh and his COS.
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Someone needs to get fired publicly
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For having JB in their contacts, absolutely! They’ve proven they’re untrustworthy just by that.
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It’s not fake as far as I can tell. They are just that sloppy.
Good piece on it and how Goldberg is selective in what he’s releasing.
https://www.kenklippenstein.com/p/trump-admin-caught-making-war-by
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Security Concerns As Trump Holds Strategy Meeting At Cracker Barrel
https://babylonbee.com/news/security-concerns-as-trump-holds-strategy-meeting-at-cracker-barrel
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Love the Democrats on the Senate Intelligenxe Committee acting SHOCKED and PISSED about the Signal Chat non-story, given the following:
https://www.justice.gov/usao-dc/pr/former-us-senate-employee-sentenced-prison-term-false-statements-charge
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It’s not the first time this has happened:
https://convulsions.substack.com/p/that-time-i-overheard-state-secrets
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https://babylonbee.com/news/well-crap-darth-vader-realizes-he-added-admiral-ackbar-to-holochat-planning-alderaan-bombing
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It’s interesting to me that at the Senate hearings yesterday and the House hearings today, the Democrats target has been Pete Hegseth. To me, that is the Deep State DoD gunning for him. The actual guilty party is either Mike Walz or a staffer. If Walz has JG in his contacts, he should be canned unless he can prove he didn’t put it there (how, I don’t know). If it was a staffer that did it, the staffer needs to be fired and the person that hired that staffer needs to be fired. To me, Walz is the key and he set up go/no go paradigm on Ingraham last night saying he’s responsible but he did not put JG in his contacts.
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Yeah, they just hate Hegseth and he’s a higher profile target. Waltz was the one who screwed up. I don’t think this has anything to do with staff. I think they all did this group chat on their own to avoid the government record keeping requirements.
However, Hegseth was apparently the one who shared actual operational details of the strikes while they were occurring in the chat.
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https://theonion.com/teen-warned-not-to-accept-group-chat-invites-from-national-security-advisors-she-doesnt-know/
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Saw a Tweet from Natalie Winters saying that a Federal Judge has ruled that Goldberg must be added back into the chat.
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According to Gabbard and Radcliff, Signals app is an approved and archived chat allowed under record keeping rules- rules and approval established under Biden’s admin. Still, Walz is either brazenly lying that he doesn’t know Goldberg and is not in his contacts, or he is telling the truth and has his ass hanging out there for Goldberg to submit an affidavit that he’s lying and that he does not Walz contact info – it can’t be both.
As for “operational details”, I am underwhelmed. I get Hegseth is a more elevated target but my gut is telling me that Hegseth is feared and Walz is not, hence the left wing and deep state emphasis on Hegseth and not Walz as he’s considered an ally. Obviously YMMV.
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“Still, Walz is either brazenly lying that he doesn’t know Goldberg”
He’s lying.
https://substack.com/@levparnas/note/c-103565538?utmSource=%2Fsearch%2Fgoldberg%2520french%2520embassy%2520waltz
Gotta love Substack.
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I’m fascinated by him torching his entire credibility on this versus telling Trump that he was in his contacts but hadn’t spoken to him for years, before the Atlantic and JG went scorched earth. Or, defend his having the contact.
Finally, why would the deep state risk losing their guy, Walz, over a nothing burger like this that was sure to miss on Hegseth.
Regardless, it’s entertaining as hell!
And speaking of Pete Hegseth, just saw this.
https://x.com/kylegriffin1/status/1904896195937382419?s=46&t=vSGsUlnc4rLxcUf7zfUiHg
Tell me whom you’re afraid of without telling me who your afraid of.
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More Hegseth attacks.
https://x.com/senduckworth/status/1904902542099706001?s=46&t=vSGsUlnc4rLxcUf7zfUiHg
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It takes a heart of stone not to laugh.
Gell Mann Amnesia, do your thing!
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Legacy media is not a bastion of actual expertise. I’ll take the comments section in a good Substack any day over the quality of most new reporters these days.
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Lol
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