Kamil Kovar

Economist, paid for doing what I love by Moody's Analytics as senior euro zone economist. Views my own. @crisisstudent.bsky.social

[Kamil Kovar @CrisisStudent]

So what does this mean for the recent past and the future tariffs?

Broadly, my thesis is that individual tariffs have a different mix of motivations belonging to different categories, which implies different durability, but overall, tariffs are not going away anytime soon.

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[Kamil Kovar @CrisisStudent]

What is the point of Trump tariffs?

I am not going to pretend I know the answer. As a matter of fact, I don’t think there *THE* answer.

This thread is really just a place for me to put my semi-structured thoughts on this question, so that I can go back to them in future...

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[Kamil Kovar @CrisisStudent]

One question on the Pikety/Stiglitz/et al op-ed:

Does the technology for manufacturing poverty randomly/suddenly become worse in various places around the world (Eastern Europe, China..), or how does this theory work?

(I know I should not bother with this, but I got annoyed..)

[Kamil Kovar @CrisisStudent]

@ClausVistesen @AndreasSteno Yeah, dont get the takes on here about growth including Ireland falling short of ECB predictions... who cares? Certainly not ECB governors...

[VKMacro @VKMacro]

Just like there were so many variables with the shutdown of Hormuz, reopening will be just as difficult.

Beyond production restart stuff

1) will China begin building crude inventories rapidly
2) will US actually buyback SPR next year? Others?
3) speed of UAE production hikes?

[Mario Cavaggioni @CavaggioniMario]

With Brent now below $86.50, rightly EUR OIS has removed 1 hike for the current year, now implying 39bps of hikes until December 2026.

[Kamil Kovar @CrisisStudent]

@SuburbanBourbo2 (1) yes, to a large degree, (2) risk aversion and internal politics (as dove you prefer to slow things down, as otherwise you risk hiking more on adverse news in future).

[Kamil Kovar @CrisisStudent]

The pushback against insurance is interesting but also predictable.

For hike to be an insurance hike it makes it sound like it is unnecessary, which makes Lagarde uncomfortable. Hence the pushback...

[Kamil Kovar @CrisisStudent]

Personally, this sentence to me reads like one word: insurance.

This (and September) are insurance hikes allowed by rates being at lower end of neutral range.

[Kamil Kovar @CrisisStudent]

Funny.

But actually I think both are true. July pause is more likely, but hike is possible if things (oil or inflation) get worse by then. We are now at 30-40% probability.

[Frederik Ducrozet @fwred]

ECB sources vs. counter-sources game is up to another level.
*ECB GOVERNORS EYE JULY PAUSE AFTER FIRST HIKE
*ECB OFFICIALS SEE NEXT RATE HIKE POSSIBLE AS SOON AS JULY

[Dario Perkins @darioperkins]

PODCAST TIME. This one should have been called A MESSAGE TO THE HATERS... because we read out (and respond) to that nice chap's email...

[Kamil Kovar @CrisisStudent]

Another way to see this is through the mandate: It would be harder to argue for this hike if ECB had dual mandate, but under single inflation mandate it is the more of a right choice.

[Kamil Kovar @CrisisStudent]

In other words, I am with (almost) everyone else in thinking that this is an unnecessary hike, but also as @darioperkins pointed out, likely it will not matter much at the end of the day.

[Kamil Kovar @CrisisStudent]

@ClausVistesen I am sure it is, but you make a different argument to the council itself at this point... You will start arguing by neutral when you are at 2.5% and hawks push for another hike.

[Kamil Kovar @CrisisStudent]

@francois_cp Yeah, she does not like it! 😁

[Kamil Kovar @CrisisStudent]

Personally, this sentence to me reads like one word: insurance.

This (and September) are insurance hikes allowed by rates being at lower end of neutral range.

[Frederik Ducrozet @fwred]

🇪🇺 Our take on ECB staff projections:
- core HICP looks a bit low in 2026 (even accounting for a June setback in services) but a bit high in 2027 (too much pass-through)
- headline HICP back to 2% in 2028 (likely below 2% by Q4 2028)
- GDP growth still too high in 2026 (Ireland)

[Michiel Bakker @bakkermichiel]

"What will happen to Europe if it keeps ignoring AI?"

Three American labs each (!!) operate more AI compute than all of Europe combined. Today we're launching Europe 2031: a story of what might happen if that doesn't change.

[Kamil Kovar @CrisisStudent]

@pietergaricano While the broader point is true, this chart is misleading because definitions of unemployment differ. If you compare the more comparable unemployment rates (normal in eurozone and permanent layoff in US) this are much closer to each other.

[Oliver Rakau @OliverRakau]

This time is different for energy-intensive sectors in Germany (for now?). Disrupted supply from Middle East, surging prices and soaring demand for precautionary inventories have given a temporary boost to energy-intensive firms in Europe especially chemicals.

[Kamil Kovar @CrisisStudent]

@stevehou True. Plus economy most likely follows multiple DGPs mixed together (think Hamilton regime switching in recessions).