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Surveillance: The Pros and Cons of A "Rules-Based" Fed

bloomberg-surveillance-podcast economics-business-work Apr 11, 2026 source →
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economics-business-work
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10 min
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Surveillance: The Pros and Cons of A "Rules-Based" Fed

Claims from this story

Every atomic assertion extracted from the underlying record, ranked by evidence strength.

Europe is expected to see the emergence of the same populist wave observed in the UK and US.

paraphrasestatedeconomics-business-workApr 11, 2026

Italy and France are identified as the next vulnerable countries for rising yields and spreads due to populism.

paraphrasestatedeconomics-business-workApr 11, 2026

A 'no' vote in Italy's referendum or Marine Le Pen rising in France could cause Italy's spread to exceed 200 against Bunds and France's spread to reach around 100 against Bunds.

paraphrasestatedeconomics-business-workApr 11, 2026

Investors should be in investments positioned for a rising inflationary and rising bond yield environment.

paraphrasestatedeconomics-business-workApr 11, 2026

Inclusive growth policies, including infrastructure spending and support for periphery countries that underwent austerity, are needed.

paraphrasestatedeconomics-business-workApr 11, 2026

Spain currently has a stable political situation.

paraphrasestatedeconomics-business-workApr 11, 2026

Italy will vote on a referendum to simplify its Constitution and government on December 4th.

paraphrasestatedeconomics-business-workApr 11, 2026

The Italian referendum vote has been framed by the opposition as a way to oust the current government.

paraphrasestatedeconomics-business-workApr 11, 2026

There is a risk of Marine Le Pen rising in France.

paraphrasestatedeconomics-business-workApr 11, 2026

The current leading center-right candidate in France is very harsh on economic policy.

paraphrasestatedeconomics-business-workApr 11, 2026

Marty Feldstein expressed real concern about elevated markets and asset bubbles.

paraphrasestatedeconomics-business-workApr 11, 2026

Alberto Gallo's firm has been cautious on bonds, calling for a bubble to deflate for many months.

paraphrasestatedeconomics-business-workApr 11, 2026

Alberto Gallo is worried about Italian, French, and UK bonds.

paraphrasestatedeconomics-business-workApr 11, 2026

UK inflation expectations are 3.5%, while 10-year yields are 1.4%, indicating no value in bonds.

paraphrasestatedeconomics-business-workApr 11, 2026

Bond funds, especially those with passive strategies and ETFs, are not set for a rising inflationary and bond yield environment.

paraphrasestatedeconomics-business-workApr 11, 2026

The European Central Bank (ECB) has given time for fiscal spending by not pricing risk into bond yields.

paraphrasestatedeconomics-business-workApr 11, 2026

Buying bonds is a strategy when growth is low and central banks are expected to prevent economic collapse.

paraphrasestatedeconomics-business-workApr 11, 2026

If there is growth and fiscal spending, investors should buy high-yield bonds, stocks, or position for a steeper yield curve.

paraphrasestatedeconomics-business-workApr 11, 2026

Banks and insurance companies are investments linked to growth that people were not looking at previously.

paraphrasestatedeconomics-business-workApr 11, 2026

There is a huge rotation occurring from dividend trades like utilities and telecoms to growth trades in equities.

paraphrasestatedeconomics-business-workApr 11, 2026

The bond market played a role in removing Silvio Berlusconi's government in Italy, leading to a technocratic government.

paraphrasestatedeconomics-business-workApr 11, 2026

Mario Draghi is leaving his position in January 2019.

paraphrasestatedeconomics-business-workApr 11, 2026

Inequality is leading to populism, and monetary policy has not solved this problem.

paraphrasestatedeconomics-business-workApr 11, 2026

The US is expected to see stronger growth due to the impact of some fiscal policies, particularly infrastructure spending.

paraphrasestatedeconomics-business-workApr 11, 2026

Infrastructure spending can increase GDP by around a dollar or more for every dollar spent.

paraphrasestatedeconomics-business-workApr 11, 2026

Cutting taxes for the top 1% does not have the same GDP impact as infrastructure spending.

paraphrasestatedeconomics-business-workApr 11, 2026

In the UK, inflation is likely to outpace GDP due to a weak pound and uncertainty.

paraphrasestatedeconomics-business-workApr 11, 2026

The German finance minister stated they would double the Juncker plan, which is only 0.1% of GDP.

paraphrasestatedeconomics-business-workApr 11, 2026

The Juncker plan needs to be 10 times bigger to have a significant impact.

paraphrasestatedeconomics-business-workApr 11, 2026

A weaker euro helps Germany and export-oriented businesses but is not a complete solution for economic issues.

paraphrasestatedeconomics-business-workApr 11, 2026

The growth divergence between Germany and other European countries is too large.

paraphrasestatedeconomics-business-workApr 11, 2026

Euro parity with the dollar is in the cards, especially if there's a 'no' vote in the Italian referendum or Marine Le Pen rises in France.

paraphrasestatedeconomics-business-workApr 11, 2026

The dollar has been strong since the election.

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Kamal Sreekumar has been a dollar bull for quite some time and expects the euro to go to parity.

paraphrasestatedeconomics-business-workApr 11, 2026

The market shows a 100% probability of a Fed rate hike.

paraphrasestatedeconomics-business-workApr 11, 2026

Donald Trump has indicated he will not re-nominate Janet Yellen as Federal Reserve Chair when her term expires in January 2018.

paraphrasestatedeconomics-business-workApr 11, 2026

Janet Yellen might hike rates if she is not going to be re-nominated, doing what is necessary.

paraphrasestatedeconomics-business-workApr 11, 2026

Kamal Sreekumar expects at least two Fed rate hikes next year, a change from his pre-election view.

paraphrasestatedeconomics-business-workApr 11, 2026

Trade restrictions imposed by Donald Trump would strengthen the dollar by increasing global uncertainty and risk, drawing money into the US.

paraphrasestatedeconomics-business-workApr 11, 2026

The 10-year US Treasury yield of 2.34-2.35% is unsustainable due to a more than 2% spread with the German 10-year bond, the highest since 1989.

paraphrasestatedeconomics-business-workApr 11, 2026

Bond vigilantes have gone too far in selling US Treasuries, implying yields will come down while the dollar strengthens.

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Lyle Brainerd, a permanent voter on the Federal Reserve Board of Governors, contributed to Hillary Clinton's campaign.

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Presidents have historically bullied the Federal Reserve, as exemplified by Richard Nixon and Arthur Burns in the early 1970s.

paraphrasestatedeconomics-business-workApr 11, 2026

Paul Volcker was an exception to the historical trend of Fed chairmen being influenced by presidents.

paraphrasestatedeconomics-business-workApr 11, 2026

G. William Miller served as Fed chairman for only one year in 1979-80.

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Donald Trump will have a significant opportunity to reshape the Federal Reserve through personnel changes.

paraphrasestatedeconomics-business-workApr 11, 2026

Federal Reserve policy in recent years has been characterized as "seat of the pants policymaking," reacting to the latest data points.

paraphrasestatedeconomics-business-workApr 11, 2026

A rules-based Federal Reserve policy, like the Taylor rule, would provide market certainty and reduce subjectivity.

paraphrasestatedeconomics-business-workApr 11, 2026

John Taylor, a professor at Stanford University, is famous for his Taylor rule.

paraphrasestatedeconomics-business-workApr 11, 2026

The Taylor rule would currently call for a federal funds rate of about +1.5%.

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A significant increase in fiscal spending, before impacting productivity, is likely to push up prices.

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Low-wage or manufacturing jobs, where competitors are in Mexico or China, are gone forever and cannot be brought back by trade restrictions.

paraphrasestatedeconomics-business-workApr 11, 2026

The Hartz reforms in Germany in 2003 focused on retraining and educating workers for jobs with greater demand.

paraphrasestatedeconomics-business-workApr 11, 2026

Workers need to be retrained and educated in jobs with greater demand, with salary support during training.

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There will be fiscal stimulus under the Trump administration, with tax cuts being the easier part to implement than infrastructure spending.

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Tax cuts structured only for the highest income levels will not benefit core Trump supporters.

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Effective infrastructure programs require private sector participation, such as toll roads where investors benefit from tolls.

paraphrasestatedeconomics-business-workApr 11, 2026

A report from MSNBC states that President-elect Donald Trump will not pursue an investigation into Hillary Clinton.

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Donald Trump canceled his meeting with The New York Times, which the editorial board learned via his tweet.

paraphrasestatedeconomics-business-workApr 11, 2026

Rudy Giuliani is being considered for Trump's national intelligence director.

paraphrasestatedeconomics-business-workApr 11, 2026