The U.S. Makes Its Comeback w/ Andreas Steno Larsen
Feb 24, 2024
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The podcast explores the US economy's comeback with a focus on broader economic strength, growth, and falling inflation. Topics include semiconductor shipments, loan demand, job reports, non-farm payroll analysis, inflation recalibration, interest rate outlook, and global supply chain disruptions.
The US economy shows signs of strength with rising liquidity, growth, and falling inflation, indicating a positive cyclical momentum.
Annual revisions to inflation index factors, especially housing costs, could delay disinflation and lead to favorable rate cut conditions.
Deep dives
US Economy Re-Acceleration
The podcast delves into the re-acceleration of the US economy, citing positive surprises in the GDP over consecutive quarters and indicators like increased semiconductor exports from South Korea to the US as early signals of improving manufacturing cycles. The discussion also highlights a shift in credit demand due to eased financial conditions and signals a turnaround in the manufacturing sector, suggesting the economy's positive momentum from a cyclical perspective.
Inflation Index Adjustments Impact
The episode explores how annual revisions to inflation index factors, with housing gaining significance, could impact the inflation outlook. The recalibration indicates a potential delay in disinflation once the new housing costs are factored in, hinting at a favorable environment for rate cuts through the spring. By reweighting cost categories in the inflation index, the adjustments are seen as dovish and likely to influence interest rate decisions.
Liquidity Outlook and Interest Rate Trends
Lastly, the podcast discusses a benign liquidity scenario for the US economy, tied to the end of the quantitative tightening program. Anticipating potential interest rate cuts, the liquidity trend is linked to a positive outlook for risk assets. The correlation between liquidity changes and stock market performance, particularly in technology sectors, points towards a potential steepening of the yield curve as interest rates adjust in response to increased liquidity.
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Andreas Steno Larsen’s macro regime indicator suggests that the U.S. economy boasts broader economic strength, with liquidity and growth both on the rise and inflation falling. Today, he takes a look at the data to assess where inflation could be heading in 2024.
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Polkadot is the original and leading layer-0 blockchain with over 2,000+ developers. The Polkadot 2.0 upgrade will be a massive accelerator for the ecosystem. Join the community at https://polkadot.network/ecosystem/community/
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