On March 21, Atlanta Fed president Dennis Lockhart had “Kaleidoscopic” visions of rate hikes as soon as April.
In his speech to the Rotary Club of Savannah, Lockhart cited “sufficient momentum evidenced by the economic data to justify a further step at one of the coming meetings, possibly as early as the meeting scheduled for end of April.”
Lockhart also cited the Atlanta Fed GDPNow Model. Today we can update that model.
Sufficient Momentum
The title of Lockhart’s March 21 speech to the Rotary Club was to the Rotary Club was “Kaleidoscopic Context for Monetary Policy“.
My March 21 rebuttal was Kaleidoscope Eyes.
Here are some snips.
GDPNow – March 16
Questions of the Day
Question 1: Is Lockhart even watching the momentum of his own researcher’s model?
Question 2: Is 1.9% and falling really sufficient momentum to hike or does Lockhart have Kaleidoscope Eyes?
What Happened?
On March 22, I reported Richmond Fed Manufacturing Activity Jumps Most Since April 2010, Biggest Change in 23 Years; What’s Going On?
I suspected then, and even more so today, that Lockhart had advance warning of the Richmond Fed report and was foolishly willing to roll the dice on it.
Other logical explanations include the possibility Lockhart lost his mind, and/or Fed Chair Janet Yellen wanted Lockhart to float trial balloons for hikes.
I suppose there could be other reasonable explanations, but I cannot think of any at the moment.
Regardless, I cautioned about the small samples of the regional Fed diffusion indices while specifically noting: “The PMI manufacturing index comes out on Marc 22, the new home sales report on March 23, and durable goods orders on March 24.”
Momentum Since Lockhart’s Speech
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