One of the reasons we want our clients to own (L - S) the US term structure is that we expect price pressures over the intermediate term to increase. The Fed’s link to core CPI as a policy guide simply puts off the inevitable.
St. Louis Fed president James Bullard writes in the Bank’s July/Aug 2011 Review: "One immediate benefit of dropping the emphasis on core inflation would be to reconnect the Federal Reserve with households and businesses who know price change when they see it."
Nixon got Burns to convince Congress it was best to drop the headline because he, Nixon, wanted Burns to fire on all burners.
Bullard continues, "There are several..arguments...used to favor a focus on core inflation.....all of them are essentially misguided." As we have argued for years.
Thus, the mkt crowd obediently accepts the core and will eventually get bush wacked as a result.
The FOMC might recall the Lincoln story, and the case of the boy who, when asked how many legs his calf would have if he called its tail a leg, replied, "Five," to which the response was made that calling the tail a leg would not make it a leg.
Robert Craven
St. Louis Fed president James Bullard writes in the Bank’s July/Aug 2011 Review: "One immediate benefit of dropping the emphasis on core inflation would be to reconnect the Federal Reserve with households and businesses who know price change when they see it."
Nixon got Burns to convince Congress it was best to drop the headline because he, Nixon, wanted Burns to fire on all burners.
Bullard continues, "There are several..arguments...used to favor a focus on core inflation.....all of them are essentially misguided." As we have argued for years.
Thus, the mkt crowd obediently accepts the core and will eventually get bush wacked as a result.
The FOMC might recall the Lincoln story, and the case of the boy who, when asked how many legs his calf would have if he called its tail a leg, replied, "Five," to which the response was made that calling the tail a leg would not make it a leg.
Robert Craven
No comments:
Post a Comment