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Strategies & Market Trends : ajtj's Post-Lobotomy Market Charts and Thoughts

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ajtj99

From: sunabeach

11/18/2021 7:42:27 AM

1 Recommendation Read Replies (1) of 97535

(Bloomberg)

And finally, here’s what Joe’s interested in this morning

I have a few random things on my mind this morning.

1. The first is that the John Deere strike appears to have been a huge success for workers.

From my Bloomberg colleague Joe Deaux:

The deal, which follows two other failed ones, is a six-year contract that will increase worker wages by 10% in the first year and then 5% in the third and fifth years. A 3% bonus will be paid in the even years of the contract based on prior-year earnings, and each worker will receive an $8,500 signing bonus.

This is one of the powers of tight labor markets.

2. Oil has been falling lately. West Texas is back below $80.

3. The Citi Surprise Index for the U.S. is up and up. Data, on net, is solidly beating expectations again after having briefly gone negative.

4. As of right now, the Atlanta Fed's GDPNowcast is for 8.2% fourth-quarter growth.

5. I have piece coming out in BusinessWeek tomorrow. I won't spoil it now. But it's partly a response to the intensifying criticism of the Fed's current strategy. Numerous pundits -- today it's Martin Wolf at the FT -- are criticizing the Flexible Average Inflation Targeting Framework on the grounds that it doesn't make sense to deliberately make a mistake (higher inflation) to fix another mistake (lower inflation).

However, it's not clear to me that this is what the Fed's new framework (unveiled in August 2020 at Jackson Hole) is actually trying to accomplish. If the Fed could "deliberately target" anything, it wouldn't have all the challenges it's had.

So better to characterize the new strategy as not deliberately trying to overshoot, but in being willing to tolerate an overshoot. There's a big difference between aiming for hotter-than-normal inflation and being willing to tolerate hotter-than-normal inflation.

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