Something from Barron’s this weekend – they interviewed Larry Jeddeloh, who sells macroeconomic research and consults for hedge funds and sovereign wealth funds…
A couple of weeks ago, I drove exactly the same route I did two weeks before the elections in 2016—through Winston-Salem and Raleigh-Durham and Charlotte, N.C., up into the Shenandoah Valley in southwestern Virginia and then up to Washington, D.C. One reason I thought Trump would win was that almost every lawn had a Trump sign. It went on for miles. Now it has completely flipped—there are no Trump signs, but there are large numbers of Help Wanted signs. We are going to get some wage pressure. The Fed will be pushed to raise interest rates. The natural rate for 10-year Treasury yields is more like 4% to 4.25%, not 3%. The last time the 10-year took a run to 3%, in January and March, the markets started to wobble. The speed of the move is just as important as the level. So the market can drive the economy in my view.
It’s an interesting conversation, if you disagree with his conclusions or you’re skeptical of his forecasts. His basic framework is that the era of international cooperation that arose after WWII is now officially over. The era of economics-as-national-defense is now underway.