Eric Wallerstein

Chief Macro Strategist, Clocktower Group. formerly at the Fed and White House.

[Eric Wallerstein @ericwallerstein]

@TheRealDanSaedi he’ll be sacked in 18 months. disappointing for usmnt

[Eric Wallerstein @ericwallerstein]

@MarioIsmailanji @SenWarren are you saying you’re not PRO cyclical?? blasphemous.

[Eric Wallerstein @ericwallerstein]

usually the economists pitch expanding supply and then the less-economically inclined staffers (and the Hill) resort to subsidizing demand.

but Lael Brainard impressively cuts out the middle man here

[Bloomberg @business]

A top Biden administration economic official is pitching Democrats on a low-down-payment proposal to bring millions of new homebuyers into the market, as incoming congressional leaders take stock of affordability measures that might help them notch early legislative wins https://t.co/RhM56cPEiI

[Eric Wallerstein @ericwallerstein]

Abundance / Reindustrialize bros: if BAAJA can’t pass, i fear the next two years are going to be doubly painful as whatever you complained about over the past two.

[Joshua Siegel @SiegelScribe]

NEW: The Congressional Progressive Caucus is officially opposing BAAJA "unless significant improvements are made"

[Ozan Korman Tarman @ozanktarman]

Walllerrrr … the real ally of Anti Risk Parity

Since he now lost the race, back to his true colours!

[Eric Wallerstein @ericwallerstein]

the number of FOMC meetings should be 12.

at each meeting, the Fed will set a reaction function based on the incoming CPI data. if core CPI m/m is x<y<z, the fed funds rate will automatically adjust to reflect a cut, hold, or hike.

no forward guidance, all reaction function!

[Eric Wallerstein @ericwallerstein]

the number of FOMC meetings should be zero.

By leaving the fed-funds rate unchanged, long-term interest rates will adjust to exert the appropriate amount of restrictiveness on financial conditions and the real economy, as determined dynamically by the wisdom of the market.

no further questions at this time.

[Eric Wallerstein @ericwallerstein]

what month will Waller flip dovish and say hikes need to stop and the Fed must consider cuts?

i’m setting the line at April

[Eric Wallerstein @ericwallerstein]

full extra hike priced into m7, fun

[Eric Wallerstein @ericwallerstein]

three hotter-than-expected CPIs in a row
labor market data was super hot
Waller put 50bps on the table

spicy

[Eric Wallerstein @ericwallerstein]

10y back to 5% with WTI $85… welcome to the new normal

[Eric Wallerstein @ericwallerstein]

chatted with Politico about the Jensen scandal. my big three takeaways:

1) National security trumps shareholder returns.

Dems are critical of the Trump Administration’s corporate stakes today, but we may see a horseshoe effect. oversight and taxpayer support will be sought by both parties.

2) Jensen is the Fed chair of the AI complex.

I see few benefits to getting rid of him, unless Nvidia decides that “righting the ship” amid headwinds to the AI trade include refocusing the company on its core businesses and away from backstopping all AI-related financing. Removing the “Jensen put” could be costly.

3) Jensen is not just a tech CEO.

He has been a mainstay of political events, abroad and domestically, flanking President Trump with a cadre of CEOs. Dumping him would call into question his presence as well, making this a diplomatic issue.

after the buzzer: what an operation by the MSS. it seems like Jensen may have known; but regardless, really elevates the status of their IC into a serious player.

[Eric Wallerstein @ericwallerstein]

2s10s 12bps of flattening past few days… total opposite of my post-midterms setup:/

[Eric Wallerstein @ericwallerstein]

The Unaffordable Affordability Agenda

[Andrew Lautz @andrew_lautz]

I saw over the weekend that Gov. JB Pritzker (D-IL) released a long policy agenda for the new Congress.

Might be the first detailed tax agenda I've seen for a possible 2028 POTUS candidate.

Tax/trade highlights below, link in next post.

[taobanker @taobanker]

my quant just said "Fintwit is for people who have no one else in their lives who wants to hear them speak" and I felt that

[Eric Wallerstein @ericwallerstein]

@toiletkingcap o interesting

[Eric Wallerstein @ericwallerstein]

@matt_slotnick ty for your service

[Eric Wallerstein @ericwallerstein]

i probably should not be CEO of Nvidia

[Eric Wallerstein @ericwallerstein]

i should be fed chair

[Eric Wallerstein @ericwallerstein]

really excellent piece on the growth impacts of the AI buildout.

essentially, GDP has benefited almost entirely from the wealth effect, with ambiguous effects otherwise as income flows to Korea and Taiwan.

FRB/US (and Eric, fwiw) suggests a deep bear market would be deleterious for economic growth whereas a halt in the buildout alone wouldn’t do much on its own.

[econvitals @econvitals]

✍️ New from Jason Furman: The AI Boom’s Two Engines

So far the AI economy is less a story about data centers than about the stock market—and that is also where the risk is.

https://t.co/BcjjsgBucv