Friday Macro Unwind - August 19

After several whirlwind (summer) weeks of policy and data, here is some weekend food for thought.

Aug 19, 2022

Today’s links cover a lot of ground. Enjoy!

Source: Getty Images.

How much Fedspeak is too much Fedspeak?

Once again, we have an avalanche of Fed officials out in public opining, followed by an even greater avalanche of market interpretations. Next week is Jackson Hole, so it will get worse before it gets better.

The back and forth reminds me of provocative research by Annette Vissing-Jorgensen. She goes beyond the “public cacophony” and considers the “quiet cacophony:” the private channels that Fed officials have used to influence markets.

Of course, it’s hard to measure the amount of Fed-to-market private talk, and by all indications, the Fed has tried to reduce it, arguably with mixed success. When you get tired of all the Fed talk on the news, remember it’s better in public.

How many takes are too many takes?

It’s not only Fed officials who might be guilty of talking too much and making it hard for us to think straight. I appreciated this post by Kyla Scanlon. Her term “Hypertakeinflation” gave me pause as, sadly, it’s something I contribute to.

kyla’s Newsletter

Hypertakeflation and the Sportification of the Fed

This piece does discuss some of the recent data we got (Fed minutes, retail sales, Inflation Reduction Act getting passed etc - more in my Notion on that) but it also examines how we *respond* to that data, across the lines of entertainment, casinos, and takes…

3 years ago · 33 likes · 5 comments · kyla scanlon

Kyla is an excellent example of someone trying to get macro to people, especially younger people. Sharp points and engaging delivery.

American exceptionalism in wealth inequality

Wealth inequality has risen steadily in the United States over several decades, much more than in Europe. New empirical research by Clara Martinez-Toledano and Thomas Blanchet finds that labor income and asset prices drive the gap.

Clara Martínez-Toledano @cmtneztt

2) However, the dynamics of wealth inequality have been strikingly different in both regions. After an equalizing period during the 1970s, the top 1% wealth share has risen in both regions since 1980, but much more moderately in Europe than in the US.

American exceptionalism in inflation

Inflation differs too. Preston Mui dives into the details of the high inflation now in the United States and Europe. The big picture is well-trod ground: inflation excluding food and energy (or core) has picked up more in the United States and energy inflation more in Europe. Preston’s contribution is looking at the how different pre-Covid spending patterns like cars and pre-Covid institutions like rent controls interacted with the specific Covid-related shocks. It’s a nuanced story; we need more of those.