May FOMC Debrief

Hello my friends, today is May 3rd, my name is Joseph and this is my May FOMC debrief. Okay, so before we start, I'd like to level set with everyone as to where we are. Since the last FOMC meeting, we've seen data that is broadly positive as I discussed in my most recent markets weekly. GDP data is okay, unemployment remains very low, while growth is strong, and the Fed's favorite measure of inflation, or PCE, remains very elevated. So, despite all this timing, the economy seems okay, and inflation still seems to be elevated.

大家好，今天是5月3日，我的名字是约瑟夫，这是我的五月FOMC简报。在我们正式开始之前，我想和大家确认一下我们当前所处的位置。自上次FOMC会议以来，我们看到了广泛积极的数据，正如我在最近的市场周报中所讨论的那样。GDP数据还不错，失业率仍然非常低，同时经济增长强劲，而美联储最喜欢的通货膨胀指标，或者说PCE，仍然非常高。因此，尽管这些数据看起来不太合理，但经济似乎还不错，通货膨胀仍然似乎比较高。

Since the last FOMC meeting, we've also had the failure of First Republic, First Republic failed over the weekend, and was bought by JPMorgan. Yesterday, we had the stocks, but few smaller regional banks fall significantly. There is reporting from Eric Wallerstein of the Wall Street Journal that suggests that it may have been some sort of speculative attack. Just looking at the options volumes, you can see that put options on some of them were very close to zero, and suddenly searched to 200,000 yesterday. So, when I look at the earnings reports of those banks, they all indicated that they had to pause it outflows in March, since then stabilized and began to increase again, which is also what Chair Powell noted in the press conference. So, the banking system there really does seem to be stabilizing, but if you have speculative attacks, like we had yesterday, that can totally change sentiment and panic people, even though there's nothing to be worried about.

自上一次FOMC会议以来，第一共和银行（First Republic）也宣告失败，这在周末被JPMorgan买下。昨天，我们看到了一些较小的地区银行股票下跌的情况，根据华尔街日报的Eric Wallerstein的报道，这可能是一种投机攻击。只需要看看期权的交易量，你就会发现某些银行的认沽期权非常接近零，但昨天突然涨到了20万。因此，当我看这些银行的收益报告时，它们都表明他们在三月份不得不暂停资金外流，但之后稳定下来并开始增加，这也是鲍威尔主席在新闻发布会上所指出的。因此，那里的银行体系似乎正在稳定，但如果像昨天那样发生了投机攻击，就可以完全改变情绪，引起人们的恐慌，即使没有什么可担心的。

Okay, now today, so today, Chair Powell hiked rates 25 basis points, as was broadly expected by the market. The Fed does not like to surprise the market, so that's never a secret. What the market wants to know now is whether or not this is the last hike, and whether or not Powell thinks he's happy with progress. How is he going to guide expectations? And of course, is the Fed going to cut rates later in the year as the market is aggressively pricing the market is pricing in about two to three rate cuts by the end of the year.

今天是要讲的事情，今天Powell主席把利率上调了25个基点，这在市场上是被广泛预期的。美联储不想惊吓市场，所以这不是什么秘密。现在市场想知道的是，这是否是最后一次上调，Powell是否对进展满意。他将如何引导市场预期？当然，美联储是否会在今年晚些时候降息，因为市场正在积极地预测到今年年底将会有两到三次降息。

Now, when we look at the FOMC, first we want to start with the FOMC statement, and the way one we want to look at this is to compare the current FOMC statement to the last one. So this is a red line done by Nick Tomorrow's, which is the lead reporter on the Fed. And here in the statement, you can clearly see how the Fed has shifted its posture. The last statement said this, the committee anticipates that some additional policy firming may be appropriate. There's a Fed clearly signaling that they're going to hike rates more. That's been deleted.

现在，当我们看FOMC时，首先我们希望从FOMC声明开始，而我们想要看的方式是将当前FOMC声明与上一份进行比较。这是由Fed的主要记者Nick Tomorrow列出的红线。这里可以清楚地看到联储已经改变了立场。上一份声明说，“委员会预计可能需要一些额外的政策收紧。”明显地，联储表明他们要加息更多了，而这一句话已被删除。

The new phrase is in determining the extent to which additional policy firming may be appropriate. Okay, so that change in wording is a lot more open-ended, and it suggests that the Fed is now super data dependent. They're not strongly telegraphing additional rate hikes, but they're open to the possibility that they may be some. If inflation comes in hotter than expected, if weight growth is hotter than expected, they're open to hiking rates again, but that doesn't seem to be their default path the way it was last time.

新的短语是要确定是否需要进一步加强政策。这个改变表明美联储现在更加关注数据，态度更加开放。他们没有大力预示将会加息，但他们开放可能会有加息。如果通胀高于预期，如果失业率高于预期，他们会考虑再次加息，但这似乎不像上一次那样成为默认路线。

Nick also notes that this was the same language that the Fed used in a prior or high-income cycle. And notably, when the Fed used this language last time, it was the last hike of the cycle. So there we are. Now, how does the Fed, how is Paul thinking about where he is in terms of monetary policy? Is 5% where he wants to be? Is it enough?

尼克还指出，这是美联储在之前的高收入周期中使用的相同语言。值得注意的是，当美联储上次使用这种语言时，那是周期中最后一次加息。因此，现在我们在这里。那么，美联储如何看待货币政策的发展？保罗认为5%的利率是他想要的吗？这足够了吗？

Now, he seems to suggest that it's enough, and he's noting a couple other aspects that are exerting tightening pressure on the economy in addition to rate hikes. One, the Fed hiked rates from 0 to 5%, pretty quickly, and two other things are happening in the background. Paul noted first, of course, quantitative tightening. We may have forgotten all about quantitative tightening, but it's still happening.

现在，他似乎暗示这已经足够了，并指出除了加息之外，其他因素也在对经济施加紧缩压力。首先，美联储从0%加息到了5%，速度相当快；其次还有两个背景因素。保罗首先注意到的当然是量化紧缩。我们可能已经忘记了量化紧缩，但它仍在发生。

The maximum rate it can happen is about $95 billion a month. We're not at max because of various mechanical factors, but it continues to happen gradually, and it's expected to continue. Quantity of tightening is one of the main drivers of shrinking deposits in the baking sector. So it's tightening liquidity, supposedly, that over time, what will exert downward pressure on economic growth. The other thing that's happening is that banks are tightening their living standards. Now, this was happening even before all the excitement in March.

最高发生率大约为每月950亿美元。由于各种机械因素，我们还没有达到最高水平，但它仍在逐渐发生，并预计将继续。收紧数量是银行存款收缩的主要驱动因素之一。因此，所谓的紧缩流动性随着时间的推移将对经济增长施加向下压力。另一件事是银行正在收紧它们的借贷标准。现在，即使在三月份的所有激动之前，这种情况就已经发生了。

So let's look at this survey here. So the Fed does a survey to commercial banks about whether or not they're tightening credit conditions. This is really important because when a bank makes a loan, it's creating money. So wherever borrowed money from a bank now has money to spend on good services, investments, and so forth.

让我们看一下这份调查。美联储对商业银行进行了一项调查，以了解它们是否在收紧信贷条件。这非常重要，因为当银行发放贷款时，它正在创造货币。所以现在从银行借款的任何人都有钱去消费商品服务、投资等。

So when you have a lot of credit creation from the baking sector, that's positive for growth and inflation. Over the past few months, banks had been steadily tightening credit conditions, which we can see in this chart here. And of course, this is totally normal and cyclical.

当银行业有大量信贷创造时，这对于经济增长和通胀是积极的。在过去的几个月里，银行一直在稳步收紧信贷条件，我们可以在这张图表中看到这一点。当然，这是完全正常和周期性的。

As we progress in an economic cycle, we're always gradually approaching economic cycle maturers, and gradually there's a slowdown in a recession. Totally normal happens all the time. And as we approach economic slowdowns, banks gradually tighten their lending conditions because they want to protect themselves from defaults. On the borrowers side, the same thing happens as rates go higher. Barlowers still want to pay higher rates, so there's less demand for credit.

随着我们经济周期的发展，我们总是逐渐接近经济周期的成熟期，并逐渐出现经济衰退的放缓。这是完全正常的现象，经常发生。当我们接近经济放缓时，银行会逐渐收紧他们的贷款条件，因为他们想要保护自己不受违约的影响。在借款人方面，随着利率上升，同样的情况也发生了。借款人仍然想支付更高的利率，因此对信贷的需求较少。

So over the past few months, again, forgetting anything that happened in March, credit growth has been the growth in loans and leases by banks has been slowing. It was very high last year. It's now slowing to more moderate pace. Now the Fed knows this, but it's also thinking that the excitement in the baking sector might potentially have a further dappening effect on credit creation.

在过去的几个月里，忘掉三月份发生的任何事情，银行贷款和租赁的增长一直在放缓。去年增长非常高，现在正在逐渐趋于稳定。美联储知道这一点，但同时也认为，在银行业可能会引发更大兴奋的情况下，信贷创造可能会进一步减缓。

You could have smaller banks being more reluctant to make loans because they're scared that everyone would run from them. There could be a panic and then they won't have enough cash to meet withdrawals. They don't want to be in that situation. We don't know how big of an impact that the panic in the baking sector is.

您可能会发现较小的银行更加不愿意放贷，因为他们害怕每个人都会从他们那里跑掉。可能会出现恐慌，然后他们就没有足够的现金来满足提款要求。他们不想处于这种局面。我们不知道银行业恐慌会产生多大的影响。

Again, we have to be very careful. We're seeing prices go up and down, but that could be a factor of, let's say, perhaps big hedge funds trying to bully the Fed and you're cutting rates. After all, small banks are not very liquid, and it's really easy to move their price. Or the underlying flows in the baking sector deposit flights could be really stabilizing as Powell has noted, and as we see actually in the banks earning reports. But in any case, that's a negative for economic growth. That's something that's happening that makes Powell more comfortable in his current position.

我们要非常谨慎。我们看到价格上下波动，但这可能是大型对冲基金试图欺凌联邦储备委员会并削减利率的因素。毕竟，小银行的流动性不太高，很容易影响它们的价格。或者银行业存款流动的基本流向可能会使得鲍威尔注意到并在银行的收益报告中看到的稳定，但无论如何，这都是对经济增长的负面影响。这是一种正在发生的事情，使得鲍威尔在他目前的职位上更加轻松。

One of the things of interest is that although the Fed staff is forecasting a recession later in the year, we know this from the minutes. Powell himself candidly offered his own assessment of the economy, and he doesn't think that's going to happen. He thinks we're going to be in a soft landing.

有趣的一点是，尽管美联储的工作人员预测经济衰退将在今年晚些时候到来，但这是从会议记录中得知的。鲍威尔本人坦率地给出了自己对经济的评估，他认为不会出现经济衰退，相反，他认为我们将迎来一个软着陆。

Now, the last thing I'll talk about is the prospect of rate cuts. Again, this is, in my view, the biggest factor that's driving old market pricing. A fairly aggressive rate cuts later in the year, two to three. The Fed is pretty clear that that's not what they see.

现在，我要谈论的最后一件事是降息的前景。在我看来，这是推动旧市场定价的最大因素。在年底时进行相当激进的两到三次降息。美联储非常明确地表示，他们不认为会这样做。

So, when you're thinking that the Fed is going to cut rates later in the year, that has a lot of asset price implications. Again, the dollar's weekends, as we've seen, rates go lower, as we've seen. And of course, many people want to get ahead of the rate cutting cycle, thinking that asset prices are going to go to the moon again. And so, we see a lot of equity risk assets going higher.

因此，当您认为美联储将在今年晚些时候降息时，这会对资产价格产生很大的影响。正如我们所见，随着利率下降，美元会走弱。当然，许多人想要在降息周期之前抢先行动，认为资产价格将再次飙升。因此，我们看到许多股权风险资产上涨。

So, Powell looks at that, and like many Fed officials, he looks at the difference between market pricing and what the Fed is saying, and he wants to explain it somehow. And market participants are a wide range of people. We don't really know exactly why people will do what we do, but we look at price action and we tell a story.

因此，鲍威尔看到这一点，像许多美联储官员一样，他关注市场定价与美联储所说的之间的差异，他想以某种方式加以解释。市场参与者是广泛的人群，我们并不确定到底为什么人们会做我们所做的事，但我们看价格的走势来讲述一个故事。

The story that Powell is telling is that, well, the market is pricing in rate cuts later, because the market thinks that inflation is going to be contained, and it's going to go down really quickly, and so the Fed will cut rates. He's saying that that's not my forecast of inflation. And so, I don't think rates are going to be cut very this year.

鲍威尔讲的故事是市场正在预测之后会有降息，因为市场认为通货膨胀将被控制住，并且会迅速下降，所以美联储会降息。他说这不是我的通胀预测，所以我认为今年降息幅度不会很大。

And he also notes that over the past two years, inflation has been persistent, much more persistent than I think the market expects. So, going forward, what I'm going to be focusing on, again, is what the Fed is focusing on, that is data. So, we have non-farm payroll coming up, and of course, we'll look at other things like what's happening in the banking sector, and inflation to see how the Fed is, whether or not it's done or not. My best guess, I think we could be at the last hike of the cycle, but it's not unreasonable for there to be another hike later in the year.

他还指出，在过去的两年中，通货膨胀一直存在，比市场预期要持久得多。因此，未来我将继续关注美联储所关注的数据。我们将关注非农就业数据，以及银行业发展和通货膨胀情况，以了解美联储是否已经结束加息。我认为我们可能已经到了加息周期的最后一次，但在今年晚些时候再加息也不是不合理的。

What I think is really, really unlikely is for us to be cutting rates so soon. After all, all the data that we see suggests that the economy is okay, and inflation remains persistent.

我认为极不可能我们会如此快地降息。毕竟，我们所看到的所有数据都表明经济状况还行，而通货膨胀依然持续存在。

Alright, that's all I have to talk about for today. Thanks so much for tuning in. Talk to you guys this weekend.

好的，今天的讲话就到这里。非常感谢你们的收听。周末再和大家交流。