Ethan Harris
Ethan Harris
corporate imagine interested lend load pay reasonable safe sector seen
Imagine you're a bank. The corporate sector isn't interested in borrowing, so you can't lend to it. So where do you go? Well, mortgages. They pay a reasonable rate. They're seen as a safe investment. Load up on mortgage-backed securities.
case economy functions good help quite
If we have an economy that functions O.K., with a little help from the Fed, in that case gridlock is quite good for the market,
chance cut fed four gone hold might months period rates reasonable sitting
We've gone from a period where there was a reasonable chance the Fed might cut rates just four months ago to one in which the Fed is very much comfortably just sitting on hold for now.
fed market
If the Fed isn't happy, the market isn't happy.
match matter
This was the big match to get. You just want to get to (today), no matter what it takes.
believe extended fed inflation neutral side stay tight
With inflation trending up, we believe the Fed will want to stay on the tight side of neutral for an extended period.
attitude economy happened screw state trying
What's happened between now and then is that we've accomplished everything we've set out to achieve, ... Then they were trying to get the economy to the state it is in now, so the attitude now is, 'lets not screw anything up.'
aggregate along bias break consumer demand expect fed few growth inflation leave prices rates remains signs statements upside vote
With few signs that consumer prices are about to break to the upside ... along with signs that aggregate demand remains robust, we expect the Fed will not only vote to keep rates constant, but will leave the growth and inflation bias statements unchanged.
benign inflation remain
We think inflation is going to remain benign going forward.
drop fed language number reasons
We see a number of reasons for the Fed to drop its 'measured pace' language.
both confidence fed financial greater less market means retirement risk somewhat
While the Fed is more than one person, Mr. Greenspan's retirement means less confidence in the Fed, with somewhat greater risk of both financial market instability and inflation.
across based fourth nice rebound seeing strength
You are seeing a nice rebound from the hurricane-distorted fourth quarter, with strength broadly based across the economy.
coming growth next wage
We are going to get some follow-through, some hiring, but it will be slow. I don't see wage growth coming back in the next year.
challenger device healthy number telling useful
Even in a healthy economy, you have layoffs. The Challenger number is more useful as a story telling device than an indicator.