At first, I thought there was an irony/contradiction in this new breed of US policymakers - they come from a "markets background" and yet constantly want to intervene in & manipulate markets. But actually it makes sense: they just think they are smarter than the market....

Great piece by @chrisgiles.ft.com on the Warsh inconsistencies. The Anna Wong response he quotes still astounds me... how can you praise a Fed chair for what is basically just spin?

There's a rumour going round - no idea where it started - that Kevin watches back all his press conferences on TV, while cheering himself on and heckling the journalists... 😉

"The market hiked for him" until it came time for him to follow through on the market's hike and when he didn't the curve steepens to unwind its own pre-emptive hike and throws in a bit more for lost credibility, too, so, yeah, that letting the market do his work for him sure is a big win all round

"The market hiked for him". Yeah but eventually you have to validate those expectations. Otherwise inflation expectations rise and real yields fall back...

The Warsh approach to dropping forward guidance isnt v smart. If he really wanted to be smart, he would take the Bailey approach - offer 9 completely different views on the outlook, alongside three different macro scenarios, and present 15 new inflation "indicators". more is less

Bit unfair to call him a rookie when he has a well established track record of being consistently wrong during the GFC

The "do your own homework"(WSJ) view of Warsh is such a lazy perspective. There is a difference between forward guidance and transparency. Press conferences are an exercise in transparency, and 45 minutes of "everything is great" and "trust me, bro" are a major step backwards

Does anyone remember when we used to have that wet stuff that fell from the sky?

Trying to change my dog's name to Franco in honour of Baresi and my kids wont have it. No respect...

All this stuff about the number of FOMC meetings in 2027 is largely irrelevant because when the AI bubble bursts they'll be meeting every day... 😂

It’s a family fight, and we just have to fill in some cousins four times removed on what’s happening.

he’s cultivated a work environment where his colleagues feel empowered to share their thoughts (with their local journalist)!

Clearly he is too busy to have so many meetings about monetary policy... too much blue-sky thinking to do. And the bond market aint gonna watch itself

I dont get emotional often but this Baresi stuff has pushed me over the edge

Remember, when yields go up its good because it shows the Fed is credible. And when they go down, its also good because it means the market is doing God's work... so the Fed doesn't need to. Win, win

If Warsh doesn't say anything, others on the Fed will fill that gap, as predicted.

Dario Perkins @darioperkins.bsky.social · 5d ago

New Fed communication model - we dont know why they did what they did, but we know - in some detail - why some officials wanted to do something different to what they did. Useful

New Fed communication model - we dont know why they did what they did, but we know - in some detail - why some officials wanted to do something different to what they did. Useful

Legend

It's very good. I think the point could have been made even more strongly because you don't need the 2008 housing analogy. Exactly this dynamic took place in the telecom and cable bust which happened shortly after the dot com.

I'm slow to this, but here is a beautiful piece on the dynamics of the AI buildout and how they could flip into reverse. Wish I had written it tbh www.groundbrkr.com/p/the-second...

The Second Derivative: Why No One Understands the AI Boom

The market misremembers 2008. That same blind spot sits at the center of the AI boom.

groundbrkr.com

You think you’re Maradona but maybe you’re Nani

Dario Perkins @darioperkins.bsky.social · 6d ago

everyone is citing "Maradona central banking". But Mervyn King had a deep disdain for markets. In his analogy, the market was a hapless England defender, falling at the feet of central-banker genius. Warsh is saying the opposite - that markets are omniscient

The GDP data were another reminder that a lot of America's AI boom leaks into the RoW via rising imports. Its like a huge fiscal stimulus with a really crap multiplier

they have been weirdly (for them) explicit about this. They are basically offering the govt a Rubinomics-style deal

@planb2025.bsky.social · 6d ago

I know they aren't technically supposed to do this, but do you not think they are worried about fiscal policy adding to demand and/or causing another Gilt mess this autumn?

My read of the UK economy is so different to the Bank's. The evidence says rates should be 100bps lower. Its only past errors and the BoE's fear of second-round effects - not based on any actual data - that has them in a totally different place

And now we have Bailey reading from a table of oil prices. F*** my life 🤣

BoE gives us 9 different versions of forward guidance, while Warsh wont even answer simple questions about stuff that has already happened. Cant we find some happy medium? OMG is the ECB *it*?! 🤣

For most of my life I didnt know any other Darios. So you can forgive me slight panic when I get emails like this:

The whole construct is nonsense. A somewhat benevolent view of markets is that they are the risk managers for society. Central banks are the monetary policymakers for society. We're on the same team!

everyone is citing "Maradona central banking". But Mervyn King had a deep disdain for markets. In his analogy, the market was a hapless England defender, falling at the feet of central-banker genius. Warsh is saying the opposite - that markets are omniscient