FOMC Debrief December 2023

Hello, my friends. Today is December 13th, and this is my December FOMC debrief. So we just had the December FOMC meeting, and in my view, it was the most important meeting this entire year, because one, it was unambiguously dovish and two, it signaled a fed pivot. Now, this should not be a surprise to you. After all, I warned you about this in my Saturday weekly markets video and even went on cable news and told you about it yesterday. But before we dive into what happened at the meeting today, let's level set a little bit.

大家好，我的朋友们。今天是12月13日，我要给大家做一次12月份货币政策委员会 (FOMC) 的简要总结。所以我们刚刚结束了12月份的FOMC会议，从我看来，这是整个年度最重要的会议，因为一是它明确表达了鸽派的立场，二是它暗示了美联储的转向。这对你们来说应该不会意外，毕竟我在上周六的市场周评视频中警告了你们，甚至在昨天在有线新闻上告诉了你们这个消息。但在我们深入讨论今天会议发生了什么之前，让我们先做一点基础了解。

So the last fed meeting, Cher Paul, was pondering whether or not rates were sufficiently restrictive. He knew that he had high grades a lot, he knew that rates were slowing the economy down, but he didn't know if it was high enough. So that's what he was thinking. But between then and now, a lot of things happened. First, the inflation data we've gotten has been very encouraging. Inflation has been coming down at a faster than expected rates. Also, we got some very important fed speak. So Governor Waller, who has been doing a good job and has been a noted hawk, expressed openness to cutting interest rates because inflation had come down, not because the economy is in any trouble, but simply to reflect that inflation has come down. So we would cut rates a little bit so that interest rates would not be too restrictive so that we wouldn't over tighten.

因此，上一次的联邦储备会议上，Cher Paul在思考利率是否足够收紧。他知道他们已经多次加息了，也知道加息已经拖慢了经济增长，但他不确定是否足够高。所以这是他的思考。但在那之后，发生了很多事情。首先，我们得到了非常令人鼓舞的通胀数据。通胀以比预期更快的速度下降。此外，我们还得到了一些非常重要的联储发言。因此，一直表现良好且一向保守的沃勒州长表示，他愿意降低利率，因为通胀已经下降，而不是因为经济出现问题，只是为了反映通胀已经下降。因此，我们将适度降低利率，以使利率不会过于收紧，避免过度紧缩。

So the last fed meeting, the markets were pricing in basically higher for longer, no break cuts until maybe the second half of next year. And between then and today, the market has basically did a huge shift in its price and went into this fed meeting aggressively pricing in a lot of fed cuts as many as five. So this fed meeting being a December meeting was also special and that we got quarterly dot plots. The dot plot is basically the Fed's way of communicating how different people on the FOMC are thinking. So the dot plot gap, so every FOMC member basically expresses in the dot plot where they think inflation, unemployment, and the interest rate policy would be in the coming years. And when you look at the dot plot, you can get a sense as to what the committee as a whole is thinking people usually focus on the median. The last time we got a dot plot was in September. And at that point, the medium dot plot was showing that we would have two rate, huck rate cuts next year in 2024. So there was a lot of interest going into today's meeting as to what the December dot plots was show. Would it show a big shift?

所以，上一次联邦会议，市场基本上预计会维持较长时间的高利率，直到明年下半年可能才会有降息。而在那之后到今天，市场价格发生了巨大变动，并且在这次联邦会议中积极预计了多次降息，多达五次。因此，这次十二月份的联邦会议也很特别，我们得到了季度点图。点图基本上是美联储表达FOMC成员不同观点的方式。每个FOMC成员在点图中表达了他们对未来几年通胀、失业率和利率政策的看法。当你看点图时，你可以了解到整个委员会的想法，人们通常关注中位数。我们上次得到点图是在九月。当时，中位数点图显示，我们明年2024年将有两次降息。所以人们对今天的会议非常感兴趣，想知道十二月份的点图是否会有大的变化。

Okay, finally, we're caught up and now let's talk about what actually happened today. Let's start with the dot plots. So the dot plots were unambiguously dovish. There are dovish in a couple ways. First, of course, noting that inflation has been coming down faster than expected. It seems like a lot of people on the FOMC adjusted their rate cut expectations. Last time in September, the median expectation was two cuts next year. Now December dot plot is showing three cuts next year. So again, that is a lot more dovish than it was the last meeting. Now, the second thing that I thought was noteworthy about this, the dot plot was that the committee seems to have slightly changed its view on our star. So our star basically is where the Fed thinks the long term long term interest rates will be. It has to do with review on the structure of the US economy. Over the past couple years, we've had significant inflation. And even though we raised rates, it didn't seem to go away. And so there was kind of an increasing number of people on the FOMC that were thinking that maybe something structurally changed in the economy, such that in order to get a 2% inflation, we're going to have to keep rates structurally higher. So that is to say, the long run neutral rate for the federal funds rate for the Fed's policy rate was would be higher going forward than in the past. And in this stop plot, it seems that those people change their mind and began to think that, you know what, maybe the future will be like the past. Maybe the neutral rate has not changed. So those two are unambiguously dovish changes from the last meeting. And you saw that reflected immediately in markets.

好的，最后我们赶上了，现在让我们谈谈今天实际发生了什么。让我们从点图开始。点图明确表明鸽派。有几个方面是鸽派的。首先，当然要注意到通胀下降得比预期更快。看起来很多联邦公开市场委员会成员调整了他们对降息的预期。上次在九月，中位数预测明年将会有两次降息。而现在12月的点图显示明年会有三次降息。所以，这比上次会议要鸽派得多。第二个我觉得值得注意的点是点图显示委员会似乎在“星”上有轻微的观点变化。所谓的“星”是指美联储认为长期长期利率将会是多少。这与美国经济结构的审查有关。在过去的几年中，我们有显著的通胀，即使我们加息了，通胀似乎并没有消失。所以在联邦公开市场委员会中，有越来越多的人认为也许经济结构发生了一些根本性的变化，以致于为了达到2%的通胀率，我们必须保持较高的结构性利率。也就是说，联邦基金利率的长期中性利率将来会比过去更高。而在这个点图中，似乎那些人改变了想法，开始认为，你知道吗，也许未来会像过去一样。也许中性利率并没有改变。这两个方面与上次会议相比是明显的鸽派变化。你可以立刻看到市场对此的反应。

So at the release of that statement and during the press conference, you saw a tremendous rally in the bond market. People were pricing in more and more Fed cuts. Now to be clear, the price in a ton of Fed cuts heading into the meeting, but the market has a habit of getting carried away. So if you noticed in the past couple years, when Chair Powell was telling everyone that he'd be higher for longer, well, the market was really thinking that he said was, I'm going to cut rates really soon, which of course was not what he said. Now finally, when we're at the pivot point, the market, which was already pricing in a ton of cuts, was pricing in even more. So that's just how the market reacts.

因此，在发布声明和召开新闻发布会时，你会看到债券市场发生了巨大的反弹。人们正在预期更多和更多的联储减息。现在，需要明确的是，在会议之前，已经有很多人预期了联储会进行大量的减息，但市场往往会有过度反应。因此，如果你注意过过去几年，当鲍威尔主席告诉大家他将保持较长时间的利率时，市场非常认为他的意思是，我很快将削减利率，当然，这不是他所说的。最后，当我们处于转折点时，市场已经预期了大量的减息，并继续加码。这就是市场的反应方式。

Okay, so that's the first thing that was noteworthy to me. The second thing was during the press conference, Chair Powell basically, all but acknowledged that the pivot is in. So remember, last meeting, he was talking about whether or not rates were sufficiently restrictive. And now he he's coming, he's basically acknowledging that basically everyone on the FOMC thinks that rates are high enough. And the next path next move would be a cut.

好的，所以这是我注意到的第一件事。第二件事是在新闻发布会上，鲍威尔主席基本上承认了政策转向。请记住，在上一次会议上，他在讨论利率是否足够限制经济发展。而现在，他基本上承认FOMC上的每个人都认为利率已经足够高了。下一步的动作将是降息。

Now he's not going to come out and say that he's going to say that, you know, if things change, we're still open to cutting. We're still open the hiking rates. But it's pretty clear from his language, which we'll hear now how to raise the policy rate. And that's really the question that we're still on here. We're very focused on that.

现在他不会直接说他要说什么，你知道，如果情况改变，我们仍然愿意进行削减。我们仍然愿意加息。但是从他的语言中可以很清楚地看出，我们将听到如何提高政策利率的线索。这真的是我们当前所关注的问题。我们非常专注于这一点。

As I mentioned, people generally think that we're at or near that and think it's not likely that we will hike, although they don't take that possibility off the table.

如我所提到的，人们普遍认为我们已经接近或处于这个水平，并且认为加息的可能性不大，尽管他们并没有排除这种可能性。

So that, and also the dot plot, that, you know, the pivot is here that rates are as high as they'll be. And the next move is a cut.

所以，还有点图，就是说，你知道，关键在于汇率目前已经达到了最高水平。下一步将是降息。

Now, the third thing that I thought was noteworthy in the, in the presser was that the Fed is open to continuing quantitative tightening. That is to say shrinking their balance sheet, even after they cut rates. Now, traditionally, the Fed doesn't do that.

现在，新闻发布会上我认为值得注意的第三件事是美联储对继续量化紧缩持开放态度，即使在降息之后也会收缩其资产负债表。传统上，美联储不会这样做。

Traditionally, they think of, let's say, cutting rates and, let's say cutting rates and doing QT would not work makes sense, because on the one hand, you are making policy more accommodative by cutting rates. And on the other hand, you are making policy tighter by doing QT.

传统上，他们认为，例如，降息和缩减资产负债表规模（QT）是不合理的，因为一方面，通过降息使政策更具包容性。而另一方面，通过QT使政策更加紧缩。

You don't want to step on the gas in the brakes at the same time. It doesn't make sense. Now, that's Fed tradition. But today, though, policy seems pretty open to the idea that we could continue to let the balance should run off, even after we cut rates, because he's viewing, he's interpreting it in a different way.

你不想同时踩油门和刹车，这是没有意义的。现在，这是美联储的传统。但是如今，政策似乎非常开放，允许我们在降息后继续让资产负债表缩减，因为他以一种不同的方式进行观察和解释。

That's a question of, can you continue with QT at such time, QT, which is a tightening action, at such time as policy still tight? And the answer is, it depends on the reason. You know, if you're cutting rates because you're going back to normal, that's one thing. If you're cutting them because the economy is really weak. So you can imagine, you have to know what the reason is to know whether it would be appropriate to do those two things at the same time.

这是一个问题，就是在政策仍然紧缩的情况下，你能否继续实施QT（紧缩量化宽松）？答案是，这要取决于原因。你知道，如果你是因为回归正常而降息，那就是一回事。如果你是因为经济真的很疲弱才降息，那又是另一回事。所以你可以想象，为了知道是否合适同时进行这两件事，你必须知道原因是什么。

He's thinking that if we cut rates because inflation is coming down, not because we're trying to change the stance of monetary policy, not because we're trying to ease monetary conditions because the economy is weakening, then it's okay to continue to do QT. And that's what I expect them to continue to do.

他的想法是，如果我们之所以降低利率是因为通胀正在下降，而不是因为我们试图改变货币政策的立场，也不是因为经济正在减弱而试图缓解货币条件，那么继续进行QT是可以的。这也是我希望他们继续做的。

After all, we have a lot more stability in the bond market now, and they seem to be willing to really wanting to shrink the balance sheet to, I guess, to be smaller than it is. They think that it's grown too much and then focus on changing policy through the overnight interest rate rather than the balance sheet.

毕竟，现在债券市场更加稳定，他们似乎真的想要缩小资产负债表，我猜比现在还要小。他们认为它增长得太多了，然后集中精力通过隔夜利率来改变政策，而不是通过资产负债表。

Now, just to this aside, another observation that I made was, my sense throughout this was a bit of an awkward conference. It was awkward because my sense was that Paul was actually probably the most hawkish person on the committee, but he was just completely completely overwhelmed by the other members who were very dovish. And so he had to relook and recede to their views and to the data that is showing progress on inflation.

现在，顺便提一下，我还有一个观察，就是我对这次会议的感觉有些尴尬。这是因为我感觉保罗实际上可能是委员会中最鹰派的人，但在其他非常鸽派的成员的压力下，他完全被压制了。因此，他不得不重新审视和屈从于他们对通胀进展的看法和数据。

So my sense is that he didn't really like to see the tremendous, tremendous amounts of easing that was getting priced into the markets, the tremendous rally in the bond market and the stock market, but also he had to acknowledge where the other committee members were and what the data is. But we'll see how that plays out.

所以我的感觉是，他并不真的喜欢看到市场上被定价进入的巨大、巨大的宽松政策，债券市场和股票市场的巨大涨势，但他也不得不承认其他委员会成员的意见和数据情况。不过我们将看看这将如何发展。

Going forward, I think that this is probably going to be very positive for all assets. Remember, not the fettest cutting deficit spending is continuing. I think there is tremendous upside risk in all assets from equities, housing and so forth.

从现在开始，我认为这对所有资产来说可能会非常积极。记住，财政赤字开支并没有停止。我认为股票、房地产等所有资产存在巨大的上行风险。

So it seems like we're going into the crash up scenario that I wrote about a couple weeks ago, and it's going to be exciting. All right, so I'll be back on Saturday to give you my weekly markets video. All right, talk to you guys soon.

看起来就像是我们正在进入我几周前写过的“崩盘飙升”情景，而且会非常激动人心。好的，所以我将在周六回来给你们带来我的每周市场视频。好的，很快和你们再见。