Threat to Fed Independence is Un-Anchoring Inflation Expectations | Jens Nordvig
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It's tempting to say, okay, we have this incredible pressure on the Fed now, right? We're gonna have more inflation in the next year or two as a function of the Fed overdoing it. But what's the Fed actually gonna do? You can have an ironic situation where all the name calling and, Powell is late. Narrative actually makes him late. We have a very interesting situation here where the September meeting is kinda like crunch time for the Fed. If there are real issues with, you know, fiscal dominance, debt levels getting too high, Fed independence being in question, I can imagine a situation where
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you very much. Going well. Good.
Good. I'm glad. Yeah. Before we get into it, love to just hear a bit about, bit about you. Obviously, just mentioned a a few of your touch points of your career path, but where is your areas of expertise? What do you mostly focus on? And just high level, how do you think about what your macro framework is?
I I launched the Exante data in, 02/2016. Right? So we've been advising macro market participants for almost ten ten years now, the anniversary will be in in January. And, we, really have a combination of of really data centric analysis. That's what we do on our our platform. A lot of that data is in the capital flow space. So this year, where we have sort of big, questions around changing asset allocation, it's been very powerful. So we've we've had a good year so far in navigating those, shifts around the dollar and so forth. But sometimes, there are topics where it's hard to have a a super
Amazing. Yeah. To your point about Fed independence, it really feels like we're going through this pretty monumental regime shift right now. And the biggest thing I'm trying to ask myself and ask other guests is just a way to conceptually understand this regime and and get past the the news headlines that feel like they change every two minutes to actually derive a signal and start to understand. And to your point, like, our our sample size of these occurrences are are very, very small. It feels like the maybe the last time that we were in in a true situation of of thinking through Fed indepen
I think, like, when when you have limited sample size, like, one one way to handle it is you sort of broaden your perspective. Is there is there any situations outside the the Fed itself, right, we can use? So we certainly have a lot of clients in emerging market space, in Brazil, other places that have had a lot of experience with, central banks that have been under political pressure in a way that we're not used to in United States. Right? And they they've seen that play out. So, I think that has to do with, like, taking in into account data that's not maybe the most obvious, but still has s
Yeah. It feels like one way to think about this is viewing The US as as going through this e mification moment of of sorts. And I'm I'm curious, like, comparing it to what you just mentioned in early April where we saw a lot of these correlations move towards thi
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