And The Beat Goes On . . .
Macro Perspectives
Let’s continue talking about the commentary out of Jackson Hole, where we heard from Jerome Powell (Fed) and Christine Lagarde (ECB).
On Saturday, the head of the Bank of Japan (Ueda) contributed to a panel discussion.
Here's my takeaway:
Powell told us they will keep throttling the economy by maintaining high rates.
Lagarde told us that they will keep intervening to fix whatever they break in the financial system, resulting from high rates.
Ueda told us that they will continue to be the backstop.
They will continue ultra-easy policy, printing yen, and manipulating/suppressing global market interest rates so that the tightening policies of its G7 counterparts don't blow up their own respective government bond markets (i.e. they don't trigger a cascade of global sovereign debt defaults).
That's the script they've been following for the past year, and it hasn't changed. To be sure, the "normalization of rates" in the U.S. and Europe only works with the assistance of the Bank of Japan.
Japan's benefit? As we've said, the world gives Japan the greenlight to devalue the yen, inflate away the world's largest debt load, and increase export competitiveness (through a weaker currency). It continues to happen.
