As the economy normalizes, forced savings will act like delayed stimulus. Even now, the housing market is on fire, with prices surging across the world. “This is a way of spending that can also drag in some of that surplus labor,” he said. But the rise in house prices doesn’t show up in official measures of inflation.
The Fed already is trying to address the challenge of coming inflation readings that, into May and June, may show 3.5% to 4% year-over-year gains. “I will tell you that anything above 3.5%-4% will create a significant breakdown in correlations [between stocks and bonds], because people have not seen inflation really in a big way in the advanced economies for the last 30 years,” he said.
“The real challenge will come in 2022, when a lot of spending will have been deployed into goods or into housing, monetary aggregates will still be high with velocity rising,” he said. He expects the yield curve to steepen further, and that if the Fed implements another Operation Twist or yield curve control, it will push inflation even higher.
Asset returns will be harder to extract, inequality will fall but against a backdrop of weak growth, and central bank independence will come under increasing threat, he forecasts.
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Shared-office provider WeWork has agreed to merge with a special-purpose acquisition company BowX Acquisition Corp.
at a $9 billion valuation. The Wall Street Journal reported that media startups Axios and The Athletic could merge and then go public with a merger with a SPAC.
The Ever Given container ship is still stuck in the Suez Canal, disrupting roughly $10 billion of trade a day.
lifted its outlook for earnings, citing sales trends that it expects are being driven by changes in consumer spending patterns stemming from government stimulus checks, a relaxation of COVID-19 restrictions on movement and other factors.
Personal income plunged 7.1% in February — close to economist expectations — reversing much of the 10.1% surge in January. Consumer spending fell 1%, while the PCE price index rose to 1.6% from 1.4%.
The trade in goods deficit rose 2.5% in February, while inventories were steady.
The Fed said temporary limits on dividend payments and share buybacks will end for most banks after June 30.
Another up day?
U.S. stock futures
were pointing to a quiet start as the yield on the 10-year Treasury
rose to 1.67%.
were approaching $60 per barrel, while the dollar
NASA is getting ready to fly a helicopter over Mars.
Nothing quite like the pandemic to inspire the competition for the all-important Shed of the Year.
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