Market Participants
I understand what they're saying, but all I see is Frank Drebin in front of a fireworks company.
Here’s a question, how does the President of the European Central bank find her way to The Daily Show with Jon Stewart? That happened yesterday…
I’ll admit, I haven’t watched a full episode of The Daily Show in close to 20 years but as I recall, the program is supposed to be funny. As I remember it, guests are generally on the show to promote entertainment products like movies, music, or sports. Given that, it’s hard for me to imagine The Daily Show writers and producers sitting in the conference room considering guest ideas when someone threw out featuring the incomparable comedic timing of a lawyer-turned central banker.
Nah. This is clearly PR. Lagarde wanted to do this. Interestingly, Lagarde has been on The Daily Show before. Last appearance? 2009. Go figure!
So what is Christine Lagarde concerned about to the point that she was compelled to do The Daily Show again in 2024? I’m not going to attempt to answer that but I think we can probably assume there’s a reason central bankers show up on national television to reach the filthy masses. Talking about the economy? How about inflation? It took just four minutes for the latter to enter the conversation:
When asked what caused the COVID era inflation spike, Lagarde briefly mentioned stimulus as a result of lock downs. But when the two of them were summarizing her three main causes of inflation, this was the review:
Supply chain disruptions from the pandemic
Russia/
United StatesUkraine warEnergy prices
Might I suggest, the 30-ish percent moon shot in global liquidity between 2020 and the end of 2021 as a possible primary driver of consumer price inflation? I mean, if Bitcoin is any judge, it’s certainly true that higher prices are a direct result of money printing and very little else:
Money printing, coupled with supply chain problems, is absolutely without a shred of doubt what caused high consumer price inflation over these last few years. Don’t take my word for it, just listen Fed Chair Jerome Powell describing what the central bank did in response to lock downs four years ago:
Now we have an admittedly much older looking Powell cutting rates by 50 bps with official inflation still well ahead of target, stocks at all time highs, and an economy that we’re told is doing “fine” if you talk to “business people who are actually out there doing business.”
Here’s my other critique from Lagarde’s guest spot; Jon Stewart is not totally stupid, particularly when it comes to finance/Wall Street shenanigans. But beyond that, he’s capable of not throwing softballs. See just how antagonistic Stewart can actually be to a guest when it was Jim Cramer on the other side of the desk 15 years ago. Stewart could have gone hard on this Lagarde interview and he didn’t. I wish he did. But that doesn’t mean he didn’t raise a few interesting points about bailouts and stock buybacks:
Since the 80’s, it feels like the economy flipped over to an investment economy rather than a labor economy […] in 2008 it feels like we bailed out more on the corporate side rather than the people side.
Lagarde quickly responding:
Well, we secured the financial system to make sure that deposits of all the customers around the world were not completely lost.
And this is the important talking point and likely the real signal in all the noise. “Secured the financial system.” Now, I’ll ask you to think back all the way to… Friday… and recall what those deposits are actually backed by and what happens when too many people try to withdraw at the same time:
Perhaps, then, it’s more fair to say the central bankers secured the financial system to make sure all the ‘customers’ around the world didn’t get the guillotines out. But that’s admittedly just my own interpretation.
Ultimately, I’m sure the Federal Reserve cut by 50 bps last week because everything is tOTaLLy FiNe. Then again, arguably the worst outcome for central bankers tasked with stable prices and full-employment would be an ‘unforeseen’ rebound in inflation while the economy hemorrhages full-time workers…
Of course, everything is wonderful if you ask “market participants:”
Don’t forget, actions speak louder than love songs.