“It ain’t the heat, it’s the humility.”
‐ Yogi Berra
Trade wars make for good headlines, but investor attention is more closely trained on the
recent strength of the U.S. economy, and what it means for monetary policy and interest
rates. The Fed is the thermostat1 keeping the economy a nice, constant temperature
despite occasional extreme weather outside. You only notice the thermostat if it breaks.
The recovery from the last recession was long because it was slow. Households,
corporations, and governments retrenched at the same time, leaving the Fed alone on
one side of an epic tug‐of‐war battle. It could have been better, but it could have been
worse, and indeed it was worse in Europe and elsewhere.
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