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Jack D. Schwager

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54

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2022-06-16

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2022-06-16

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1. “Also, an unemployment rate is increasing, also when the economy is slowing down. They are so convinced and so committed in their own summer of economic projections that collateral damage is not a problem. They're going to remain very tight. But look at the other thing which is interesting here. Core inflation projections conditional to their very tight stance for a long period of time. conditional to the collateral damage they'll be doing to the labor market even then core PC inflation slows down to only 2.7% in 2023 and 2.3% in 2024 those are levels still way above their inflation target basically in a nutshell what they're telling you with the press statement and with the summer of economic projections is we know we have to be serious we will be serious we will make collateral damage as well to the economy and even then we are unsure we can meet our inflation”

   2022-06-16 · Forward Guidance · Cash Is King During Fed's Hawkish Warpath, Says Former $20 Billion Fund Manager · IDENTIFIED FROM THE TRANSCRIPT

2. “What they did is, I think, very telling already. We have unemployment rate that in their projections moves up from 3.7% all the way to above 4% in 2024. So they are aware, Jack, that they will do some collateral damage to the economy as they progress towards hiking interest rate to slow inflation. They now acknowledge that. Nevertheless, the federal funds rate are projected to go all the way up to 3.8% in 2023. And this number shouldn't be looked at in an absolute basis. As I always say, it should be looked in a relative term versus the longer run Fed funds rate, which is another way to say the neutral interest rate, which is 2.5%. So they have a neutral at 2.5, and they want to hike 130 basis point above neutral. And they want to keep rates above neutral, a full 100 basis point above neutral also in 2024.”

   2022-06-16 · Forward Guidance · Cash Is King During Fed's Hawkish Warpath, Says Former $20 Billion Fund Manager · IDENTIFIED FROM THE TRANSCRIPT

3. “And he was pretty hawkish in there, I think, or at least he met the very hawkish market expectations because we need to measure what the Fed delivers against what the market is pricing across asset classes, bonds, credit spreads, equities, et cetera. And he met those expectations, I think, because what he did there is effectively in the press release, Jack, he basically took off the sentence where he said that earlier, you know, they're going to hike crates, but the labor market's going to remain strong. That sentence was erased by the press release. And it was only basically changed into a statement that said, well, we are very committed to hiking interest rates to make sure inflation goes down to 2%. So no mention anymore of a strong labor market. And that was reflected as well in the summary of economic projections. Well, look at these guys. I mean, if we can pull it up, the picture on the screen.”

   2022-06-16 · Forward Guidance · Cash Is King During Fed's Hawkish Warpath, Says Former $20 Billion Fund Manager · IDENTIFIED FROM THE TRANSCRIPT

4. “So Jack, basically Powell yesterday tried to play bad cop good cop. So he inverted the roles, but still that was his idea. He went out and in the first part of the press conference and in the press release as well and in the summary of economic projections, as you can see in the picture in my article there.”

   2022-06-16 · Forward Guidance · Cash Is King During Fed's Hawkish Warpath, Says Former $20 Billion Fund Manager · IDENTIFIED FROM THE TRANSCRIPT