YouSaid · the spoken record

Jon Turek

lines on the record: 37
first: 2021-12-23
most recent: 2021-12-23
sittings or episodes: 1
sources: podcast

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“Sounds good. Thank you so much for having me. Yeah, I mean, I think summer of 2022 is the big one. We kind of know what the inflation endgame is.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“And I really think you should be on the side of two and a half given what base effects will do starting Q2 of next year. And you get into that two and a half world. That's still a world where the Fed is hiking because inflation is above target and in terms of the fate checklist, it's all hit. But it's not a world where the Fed is kind of hitting the brakes on the cycle. And I think as long as the Fed is not hitting the brakes on the cycle, the market and the economy can deal with higher interest rates. Now, can it deal with, you know, in two years or three years when the Fed gets back to an assemblance of neutral? Will I have a different view? Yes, but I think, you know, in terms of next year, and you told me, you know, that the unemployment rate is three and a half, inflation is two and a half, 275, and the Fed is at 87.5 basis points on Fed funds. My guess is stocks did okay. I'm not saying that it's another 25% year, but in that kind of backdrop, I think.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“It's actually getting pretty close in the odds. I mean, I think given where spot inflation is, there is this bias to kind of assume that the asymmetry is into more. And the asymmetry was into more hikes for a long time. But I think the interesting thing now is we're getting close to a pretty nice equilibrium point where inflation may be four, but it also may be two and a half. And I think like the odds are kind of...”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“And in terms of like distribution of where multiples can go, given that, I do think it is significant. But, you know, I think more broadly is, I think the market is actually readjusting now to the possibility that the Fed may have to be more drastic next year than especially originally intended to, but also in terms of like, you know, the last 10 to 20 years of what it has done. And I think that's become like really obvious in things like the really techie stuff and arc and those type of things where they just cannot handle a hawkish fed. But I think, you know, in terms of the market at large and in terms of the S&P, I think we're getting to actually closer to an equilibrium point. And I think a lot of people”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, you know, I think it's interesting going into next year. I think that there's kind of this broader narrative that we've been alluding to that the economy is not really going to be able to deal with this public to private sector handoff. The Fed is going to be a big impediment to the market. And something I do think is true is that the quote unquote Fed foot has been restructure.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“To say since the labor market progress we've had since August and the continued price pressure we've had, that that has just been moved forward six months. And it's, I think it's pretty consistent to say that fate will actually be hit in June of next year. And the Fed won't be kind of Same old fetting it in terms of okay, how do we come up with reasons to hike when we're really only scared about inflation? I do think inflation is the dominant variable in kind of this recalibration of policy, but I think it's this recalibration of policy also happened in the context of a labor market that is healing much faster than it has in past cycles”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“May have not risen drastically, but I think the Fed is going to be less comfortable with the idea that you can get back to three and a half percent unemployment and have no marginal inflationary cost, especially at this point in time when inflation is in the sixes. I think going into next year, there is this idea that it's like kind of all over, same old Fed, whatever the data comes in, is that they'll react. And I do agree that the Fed is now less preemptive in terms of policy being the dominant variable, not the data. The data now is definitely the dominant variable. And that was kind of the Fed shift post June. But I think looking into June and you look at the fate checklist, something that Claritis gave a speech on in August that really caught people by surprise is, well, he said I'm looking at the fate checklist and I could see it being hit by the end of 2022. And I think it's reasonable.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Common inflation expectations indicator is that the Fed could decide that spot inflation so above target for so long has a risk of de-anchoring that it could require a faster pace. And that would actually be consistent with their monetary policy strategy. And I think, you know, going into next year more of a base case world, right, where the Fed kind of hikes three times, it ends QE in March, at least looking, if you assume the first hike is going to be in June, well, what's going to be the case in June? You're probably going to have a sub 4% unemployment rate. You're going to have prime age epop that's probably going to be back at pre-COVID levels. And I think there is this implicit bias from the Fed, and it may not come across in a higher US star or a higher natural rate of unemployment, is that the natural rate of unemployment probably did rise post-COVID.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think that has kind of come with the broader perception that this is a fed that flinches. That fate is kind of dead. And I think going into next year, there is a possibility that fate does die, but it's a possibility the fate dies within kind of what the Fed told you in their monetary policy statement, which is that the goal of fate is to be reactive, right? It's not to be preemptive. However, there was one thing that the Fed said they would be preemptive on, even within the context of fate, and that was inflation expectations. And inflation expectations, as we've known this year, is kind of this messy concept. But I think what's easier to say, you could read the Jeremy Rudd paper and different papers that have come out on this year that kind of show how messy it is to kind of manage. And we know that Clarita looks at things like CIE feds.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, it's a good question, and I think on the surface, I think a lot of people would say that kind of same old fed. I don't think so. And the reason, I don't think so is I think that part of what's made this And we've basically gone from no hikes until 2024 to three hikes in 2022 in a very short period of time.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Growth range. And I think we've reached the point now where growth has gotten too low that they want it to be pretty much pick up. And I think what you will see in the next two quarters is the credit impulse will pick up and China wants that. But they don't want it necessarily going bananas. So I think that's kind of what's different this time is that China is not going to be this big marginal impulse to global growth. But I think China, especially as we've seen over the last two quarters, is the fear of China being this big drag on global growth, I think will recede going into the first half of next year.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“From seven to nine percent. Then we also saw from the state council and the peel borough that there is more of a fiscal backstop that will probably kick in next year. And then on the monetary side, we saw that they're going to cut the RR rate again and have, you know, at least in the market been a little more aggressive on the liquidity side. So I think we've had these three in theory independent macro stabilizers that have all kind of happened at once that I kind of think give you the message that listen China is not going to go into next year and start doing massive fiscal or massive infrastructure or massive monetary stimulus through rate cuts. You know, I wouldn't even be surprised if, you know, the loan prime rate or, you know, kind of China's now default policy rate doesn't actually move down at all. But I think China is going through the process of kind of narrowing the confidence interval within.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“This is really one of the more important questions. I think I kind of come at it with a China's not going to go full easing, i.e. there's not going to be, well, there's a national party congress, so we go pedal to the metal. I don't really think that will be China's policy posture. I think what we are seeing, though, is, and this became extremely evident when we had three separate macroeconomic stabilizer events in China. that I think China is putting a floor in in terms of where they're going to let growth go. And I think this became really noteworthy over the past two weeks when three things happened. One, as you noted, China basically said, okay, Yuan has gone a lot and we're comfortable with a strong yuan policy, especially as we're in this broader context of dual circulation and wanting to increase domestic demand. But it's gone too strong and they hiked forex reserve ratio.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Probably not as purposefully as China did this time is the West went into austerity and China stimulated. And kind of the way out was that Chinese demand carried the way. And this time China made the, I think, calculation that they were going to let the West lead. They were going to import that excess demand. And that would let them achieve some policy tightening that they wanted to do anyway without a big marginal cost to growth.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Much weaker credit impulse, I think partly because it was able to import that loss demand. And I think that's what kind of they kind of set this up as China wanted two things from this year. One is they wanted to offset some of the inflationary pressures that the rest of the world was feeling. One way to do that is to have a stronger currency. And then the other thing is that they've wanted to have this tightening either on the credit side and won't really speak to the tech side as I'm not an expert on it is they've wanted to really tighten credit post 2020 and big credit acceleration they had then, especially as the property sector is extremely vulnerable right now. They wanted to replace that demand through the West, which is not too dissimilar to what the West effectively did post GFC, right? The post-GFC, the West basically led, not purposefully and probably”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“See, in 2018, which followed China stimulus in 2016, is China, because of how strong US and European demand was, especially US, China was running a current account surplus 3% this year. And this is in contrast to it basically drawing its current account to zero in 2018. And I think that China has basically made the calculation that they could import the demand that they were offsetting by being tight on credit. It seemingly was a bet that worked. I mean, it's hard to say that, you know, China's had this robust growth era. It didn't, especially in a relative sense. But China was not this massive drag on.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“To be strong, they have politically become more sensitive to kind of new credit in the economy, especially as it relates to the property sector, et cetera. So I think that there's been this impetus to bring credit lower. And then that traditionally weighs on domestic growth, which it did this time. I think the difference that happened this time and why China wasn't this kind of disaster for the global economy as it really did have a pretty big deceleration in its credit impulse is that China was able to not fully, but replace a lot of domestic demand that they usually got through marginal credit increase via the current account. And this is something that didn't happen the last two times that China has had these pretty stark credit decelerations that we saw post-2011, which ended up in kind of a commodity bust in 2014. And we didn't.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, you know, I think China has been probably outside of the Fed and inflation. I think one of the more interesting drivers this year where we've clearly had this policy goal or crackdown on both the tech and property sectors that have obviously made Chinese assets underperform. But at the same time, we've had this massive outperformance of the Chinese currency. And this is also this outperformance has happened in the context of Chinese growth. you know, kind of decelerating faster than it has pretty much anywhere in the West. And I think, you know, something that I definitely talked about with Tracy is this China's had this interesting policy posture this year where they came into this year with two things. One, they wanted to get the credit impulse lowered because they thought, okay, you know, we did a lot in 2020. We got demand back, global.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Current accounts have kind of stayed sticky to the surplus side. I mean, we've had this year, we've had South Africa have a current account surplus, which is kind of unheard of. And it's not to say that that will last. It won't. But the question is, you know, same thing with US inflation is kind of what does it come back to for EM, the interesting thing for next year is all these guys have pretty much hiked a lot in terms of trade are really strong. If the Fed is not doesn't have to say, oh, you know, inflation got too high, we have to do something drastic, then this setup is actually pretty strong, especially as, you know, Chinese growth starts to bottom around here.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“From an EM perspective, going into next year, I think the setup is fairly binary as it usually is in EM, where you could have a bed that's kind of priced for what it's going to do, right? It's for the first time we're not kind of incrementally adding hikes into the implied for next year. At the same time, that terms of trade in EM are off the charts. On the other hand, you could have an EM where the Fed says, oh, by the way, we really have to stop this thing because inflation is too high. And that's at the same time that you have political developments such as Brazilian elections in October, et cetera, and you have a further mess. But I do think EM is going into next year actually with some better buffers than people I think give it credit for, given that because US demand is so strong, because the Chinese currency has been so strong this year, terms of trade are really strong.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Moment of, yeah, we're also live this year. And then that kind of speaks to something that I think is very different this cycle than last, which is in this period of 2018 was very fed dominant, very US growth dominant. But kind of looking into next year, you could be in this much more coordinated policy growth dynamic, which I don't think will have the same dollar spillover. Now, if we went to four next year, then the chances of five, I think, actually become maybe the same or even less than the chances of three. Because five would be the Fed saying, okay, we're off, we're not on a quarterly pace, something really bad happened, and we have to address it right away. So I think in terms of the dollar, I don't know that it's obvious sell, but I do think there are elements that are actually topping.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Likely that they hike more than life. On transitory. I think that hike makes it much more likely that central banks like the ECB go hold on a second, maybe 2022 should be live in terms of rate hikes. The other thing that I think is really interesting is if we went to four, that means to go at a quarterly pace, the Fed would have to go in March, but also that they would be hiking in the same meeting that they're basically ending Quebe. And now there's no necessary precondition to the Fed having to have a gap between the end of QE and rate hikes. We only know that the Fed can't hike while they're buying bonds. But I think in terms of a message or a signal of intent, that would be a pretty big one where the Fed would say there's no gap in between the end of QE and rate hikes. And that would also, I think, make it much more likely that central banks like the ECB, like the RBA, kind of have their”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I think it's a really interesting one, and I think that for EM, the question for the Fed next year is not if they're hiking, but what they're hiking at relative to market pricing. And I think, you know, EM has had this tricky few months, and you could really argue since the summer, partly because we've had to continuously add hikes, especially into the 2022 implied. And it's kind of always still, those added hikes have come with the asymmetry that the next pricing is towards a hike and not towards less, right? We've kind of entered since June FOMC, market pricing for next year went from zero to one with the asymmetry of it being two. It went from two to three with almost the asymmetry of it being four. And I think that's kind of what the dollar has leaned into, right? The dollar has leaned into, okay, they're hiking and it's more like.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Of Fed policy, where it's like, okay, well, what's the percent chance they go too much? What's the percent chance that in three or four years they have to take it back? And thinking about that kind of whole scope vis- ⁇-vis the equity market, which is like, well, next year earnings growth is still going to be really good, even if the Fed goes four times. 2023 earnings, they may have to come down a little. And I think that's what we've seen in forward PEs coming down actually, or at least not really moving all year, even though earnings growth and earnings estimates continue to be picked up, is I think there is that element, but the equity market's not going to be like, oh, in four or five years, the Fed, you know, may have to go back to zero. I think in terms of time horizons, they're really operating on different ones. And the bond market is, you know, leaning into its symmetry and the equity market is leaning into its own. And I don't think necessarily, you know, they have to be saying.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I think that we have had a little bit of multiple compression this year, especially looking at what forward earnings are projected to do. I think there has been some. But a question I get a lot is, well, the bond market is flattening a lot, so shouldn't stocks care? And you can make an argument that 530s may actually be inverted this time next year. And while that's always, or at least in twos, tens, that's always traditionally a harbinger of recession. And you know, I think that actually that there should be this delink between kind of the slope of the yield curve and kind of equity market risk premium, when I think that, you know, from a distribution perspective, the bond market has to weigh the risk, especially in things like five year, five year, or 10-year U.S. Treasury yields, is the bond market has to weigh the risk of kind of the whole trajectory.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Raises the chances that the Fed will be back at zero because we're in this low R star world and the assumption is if the Fed overdoes it, that means the next move is to cut. And if they cut, that means they go to zero. I think that's kind of the calculation that the bond market is making right now, which is why I think we're in this interesting time where people like me have this pretty positive view about nominal GDP growth next year. And then we look at the tenure and it's like, well, that's not confirming it. And I think the reason that's not the trade yet is the market kind of has to get through this period of what is the peak of inflation and what is the inflation run rate. And those are both questions we don't have the answer to yet. And I think until we do, the market's not going to feel comfortable taking these quote-unquote destination trades higher, especially Neil.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Is why I think we've kind of had not only this front loading of the hiking cycle, but also this relentless flattening as the market has had to weigh the probability that if the Fed has to go, let's say, faster than quarterly next year or has to go at a pace that's more than 25 basis points a meeting, then the chances of the Fed overdoing it go up. And we also know that we're still in a very low R star world. So if the chances the Fed overdo it, the chances that the forward-looking bond market is like, okay, that raises the odds that we're actually going to end up back at zero. So you're in this interesting paradox where the bond market is weighing hikes, but also weighing what kind of hikes we get. And the fatter that residual risk premium is, that the hikes we get are disruptive or too much given the level of spot inflation or the worry about inflation expectations that actually paradoxically”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, you know, I think it's especially one of the more prevalent questions right now as we're going to end the year probably with between 11 and 12 percent nominal GDP growth and all the tenure does is rally and we're entering a Fed hiking cycle and it still rallies. And I actually think it does make more sense than it would appear on the face. You know, I think looking at things like five-year, five year OIS, which the Fed and market participants kind of look at as an estimate of where the Fed will get to in terms of the hiking cycle or destination, which equates to around the 10-year U.S. Treasury yield. I think there is this element in we were just talking about this, of this residual risk premium that inflation got too high and the Fed is going to have to react asymmetrically to it next year.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Inflation is high. We're hiking, but there's marginal risk of us hiking too much that we're going to crush this thing, which I think really is the risk now, right? The risk now is that inflation comes down in Q2, but it comes down to 4%. It comes down to 3.5%, 4%. And in that world, does the Fed say that is not tolerable to us? That could meaning relief meaningfully affect inflation expectations. And we have to act more aggressively than we have in the last few cycles. And I think that's kind of what the market is weighing now, right? Is there's this residual risk premium that the Fed is going to have to almost hit the kabash or kind of smash this thing because spot inflation is going to start leading to a de-anchoring of inflation expectations or at a level that they don't see as tolerable. So I think that's really the big question of next year. And we'll probably find out late Q.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, yeah. So, you know, I think the question for me next year on inflation run rate is, is it below three or much above three? Because I think that if we start getting to, you know, if you do like simple math and you start going through, okay, what is Q2 inflation going to start looking like? And let's say we assume that month over month prints go back to 0.1s and 0.2s. And 0.2s are actually pretty high relative to the last 10 years. We've become kind of immune to that as we've seen 0.7s and 0.9s. But if you start getting 0.2 month over month prints, you're still going to get back to an inflation number around two and a half by the end of the summer next year. And I think that number while it's still high relative to the fed's target and in terms of their moderate overshoot, I think that would be a nudge high. I do think that that gives the Fed enough room to say that, listen.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Like, well, everyone bought a washing machine, or everybody bought a car. I think that argument does hold weight. The question is, does it get you all the way down? And does it get you all the way down in some senses to start printing negative prints on durable goods? And that, I think, is just, it's just a harder bet to have given the level of demand that we're continuing to see. And I think that's kind of like the broader macro point of this to me is, you know, and especially I think this is especially relevant with the tenure at 140 and the market like very skeptical forward-looking growth is we're in the midst of this public sector to private sector handoff. And everyone kind of doubting it. So, you know, I think that that story is actually more alive than market is giving credit for.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I think you probably will. And I think that the broader point that I want to make is that inflation will come down the question now is what is the run rate? And getting that run rate back to 2% is seemingly getting a little harder, especially for next year. And I think within this good services composition is that there is goods pressure that is going to come down as the economy does hand off back to more service oriented, especially the US economy has always been. But there's also this element that goods are not going to go back to where they were in the 2010s, where you saw many years of goods prices actually printing deflation and goods prices were falling year to year. And given this level of nominal demand being a little more sticky, I think it's hard to kind of see that even as we get into next year.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Labor's pretty tight right now. So wage growth should continue. And I think that kind of makes that handoff in terms of like, you know, things coming back from mean reverting to normal next year kind of tricky.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Some income quartels, wage enhancement effectively. But now looking into the economy into 2022, especially at the lower end. That it's hard to have this big deceleration in demand that will broaden out or help inflation come back to the Fed's 2% target in an environment where wage growth is really strong. And I think that's also kind of the point missed about this year, right? Is there supply-side fragilities, especially that were enhanced in Southeast Asia, through Delta when we had Malaysian shutdowns and that affected semiconductor fobs and et cetera? But income growth pretty much, at least, and especially on the wage side across the Western world has been really strong this year. And there's no real sign that this labor tightness is going to give way. We may get more labor surprise and participation rates may go higher.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, you know, I think that what's looking at, especially retail sales on things like two year stacks and seeing that like how above trend nominal consumption is, I think it's amplified the supply fragility. So it's kind of created a perfect storm for prices. And, you know, I don't think that it's only a demand issue, but it's clear that we had a recession where household income in aggregate went up, which is obviously most peculiar. The thing that's worth thinking about going into next year, especially as inflation will peak in Q1, it will come down in Q2. The question is, you know, what is the run rate? What is the handoff that the economy is dealing with? Well, looking back at 2020 and beginning of 2021, you can argue the transfer payments and things of that nature made a big difference in wage replacement or even for.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“Idea of flexible average inflation targeting is would it be would that be the best position to look through and for the Fed to basically avoid a 2011 ECB moment where they were kind of hawkishly reacting to spot inflation that was not telling a demand story. But now I think what's becoming clearer is that while there are supply bottlenecks and there are kind of supply fragilities that have weighed on spot inflation, there's clear that there's also excess demand and that the Fed is kind of had to have this broader shift that's really started since June FOMC but has kind of really been enhanced post Powell reappointment that fate may still be the policy playbook, but it kind of has to adjust to the force that fiscal policy was at the lower bound and kind of changed the nature of where nominal GDP is now. Probably for the next 12 months.”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I think that one of the things that really kind of changed, and this is pretty obvious, you know, ex post, is kind of the stickiness we've seen in inflation this year. Going back to before the year, there was kind of this obvious forward-looking effect that inflation would be higher given the supply bottlenecks and also given the base effects from 2020 and the pandemic, negative oil prices, et cetera, kind of seeing the stickiness and broadening out of inflation when we really haven't seen that in almost 20 years. I mean, there's this famous joke for the US that really the only thing that goes up in price is education and healthcare. And that's not been the case this year. And I think especially as this relates to Fed policy, is we kind of entered this year with this thinking of like, okay, was the Fed reaction function, especially as it changed post-Jackson Hole 2020 and they introduced this?”
2021-12-23 · Odd Lots · Jon Turek on the Macro Outlook for 2022 · IDENTIFIED FROM THE TRANSCRIPT · source