Please see below, the ‘Daily Update’ from EPIC Investment Partners, detailing inflation expectations and highlighting the key news from markets. Received today – 06/06/2023
Mark Zandi, Moody’s chief economist, believes the Federal Reserve should not “sacrifice the economy to the altar of a 2% inflation target”, adding that he expects the Fed to pause the run of interest rate hikes at the upcoming meeting. Over the weekend, Zandi tweeted “Why should the Fed sacrifice the economy to the altar of a 2% inflation target (closer to 2.5% for CPI), when most Fed officials probably think a 3% target makes more sense? The zero lower bounds is too close at 2%. They wouldn’t (shouldn’t) let on they have this view, but…,”. He went on to say “The Fed appears set to pause its rate hikes at its upcoming meeting. Thank goodness. Economic growth is fragile, the strong May payroll job gain notwithstanding. Hours worked are falling, so despite all the jobs, aggregate hours worked have gone nowhere this year”.
Another reason he believes the Fed should hit the pause button is the recent stress within the banking sector. Zandi said that government actions had curtailed the deposit run. However, he believes the sector is still “fragile” and depositors are still “on edge” as they continue to move their cash into money-market funds.
Moody’s has also stated that the recent deal on the US debt ceiling will have a minimal impact on the US’ credit profile. “The outcome is consistent with the stable outlook on the US’ Aaa sovereign credit rating,” they said in a statement, adding the agreement “does not change our assessment of the US sovereign credit profile given the act’s limited impact on the federal government’s fiscal position, institutions and governance strength, and the broader economy”.
Also, for those of you that only turn left when boarding a plane and would not dream of flying any lower than first class, Qatar Airways have some bad news for you. The airline, considered by many to be the best in the world, has announced that it will not have first-class berths on its next-generation long-haul aircraft. Akbar Al Baker, Qatar’s Chief Executive Officer, said the investment in the most luxurious seats does not justify the returns, given that Qatar’s business-class offering provides many of the same perks.
So, sorry, going forward you’ll just have to slum it in business class.
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Alex Kitteringham
6th June 2023