Episode 004: Officialdom grudgingly accepts stronger data

This week, Mark Farrington (substack.com/profile/31865492-mark-farrington) and I discuss what I learned from the semiannual World Bank-IMF meetings last week in Washington. Where do both policymakers’ and markets’ center of gravity lie?
0:00 Introduction: Impressions of World Bank-IMF meetings
2:25 IMF’s forecasts and embedded biases
4:08 Market participants’ views
6:13 Benchmarked managers more consensus than absolute-return managers
9:14 Strongest pushback on my views? Geopolitics and the dollar
12:00 Consensus take on Chinese rare earth controls is wrong
17:40 Why does the consensus accept that Trump’s economic policies may be working but not his foreign policies?
21:42 IMF forecasts out of date already
24:10 IMF ties themselves in pretzels to justify their forecasts
27:48 US labor supply growth slowing? Or demand?
31:38 2026 surprise will be labor supply constraints’ effects on inflation
33:54 Fed missing labor supply’s role; making a policy error cutting; markets’ price to aggressively
37:07 Strongest alignment of those agreeing with my views is to pay 1y1y interest rates
39:33 Markets failing to price inflation risks
42:07 How will the Fed handle a CPI upside surprise this week?
44:25 Where are the bond vigilantes?
45:07 Are there any “hard money” central banks?
47:53 IMF forecast risk cases: A hammer looking for a nail?
50:52 Is the AI boom Dot.com 2.0?
58:38 Nonbank financial institution risks

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