Episode 004: Officialdom grudgingly accepts stronger data

This week, 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21:42 IMF forecasts out of date already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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