Daily update
Daily update
- Federal Reserve governor Waller suggested there was “no rush” to cut rates. There is no absolute urgency, but there are three counter arguments. Real rates for businesses and consumers have risen significantly since last July. Any lingering US inflation is mainly confined to Texas and Florida, not the whole country. And saying there is “no rush” is unlikely to be appreciated by struggling lower income households.
- The ECB publishes inflation expectations. Using surveyed inflation expectations to justify a policy stance is the last refuge of the economic scoundrel—consumers assume future inflation is the same as past inflation for food and fuel. Expectations only matter if they change consumer behaviour, which they are not doing.
- German final fourth quarter GDP data was unchanged (remaining negative). However the details of past data were revised stronger—notably third quarter consumer spending moved from negative growth to stability. German consumers are doing better than initially reported.
- The ECB published an anti-Bitcoin blog, describing it as having “zero intrinsic value.” This is true, but perhaps not the point. Gen Z with no prospect of buying a house may abandon low risk investing in favour of gambling. That would explain crypto, NFTs, and meme stocks. The question is what happens if housing becomes affordable again.
