Trump’s Own Plans Stand in the Way of Repeating His Economic Success [WSJ]
In his first term, sweeping tax cuts preceded the imposition of selective tariffs. That meant the economy already had solid momentum when the negative impact from trade disruptions hit.
This time around, the order is likely to be reversed….
“Trump’s economic agenda is initially (mostly) negative for the economy, while ‘growth positive’ factors are back-end loaded to the end of 2025 and beyond,” Longview Economics wrote in a note. The note added that tariffs will effectively act as a tax hike on consumers, similar to high oil prices.
‘We Still Have an Inflation Problem.’ A Fed Newcomer Wants to Go Slow on Rate Cuts. [WSJ]
Arguments that the Fed needed to follow through with a rate cut because markets expected it fell flat with [Cleveland Fed President Beth] Hammack. “Just because something’s priced into the market, to me, is an insufficient reason to do it,” she said…. When it comes to making further cuts, “We can be very patient,” Hammack said. She now thinks it is likely that, decades from now, the ultralow rates of the 2010s will look more like the exception and not the norm.
IMF Raises Global Economic Growth Forecast on Stronger US Demand [Bloomberg via Yahoo!]
“The big story is the divergence between the US and the rest of the world,” IMF Chief Economist Pierre-Olivier Gourinchas said in a briefing with reporters. Broadly, the US has recovered to its pre-pandemic growth potential, while the euro area and China have not…. While the IMF said that most [of President-elect Donald Trump’s] policies could be short-term positive for US and global growth, they carry some medium-term risks.
“Uncertainties are high,” it said in the report.
China’s economy expands 5% in 2024, hitting target helped by strong exports, stimulus measures [AP]
Manufacturing was a strong engine for growth last year, with industrial output jumping 5.8% from a year earlier. Total retail sales of consumer goods grew 3.5% at an annual rate. Exports expanded 7.1% in annual terms, while imports grew 2.3%…. The Chinese economy grew at a 5.2% annual rate in 2023, and economists have forecast that it will slow further in coming years.
Two Sigma Waited Years to Fix Known Flaw, SEC Alleges [Bloomberg via Yahoo!]
The firm’s Two Sigma Investments and Two Sigma Advisers agreed to pay a total of $90 million in civil penalties to settle the SEC claims and voluntarily repaid $165 million to affected funds and accounts….
Two Sigma employees pointed out to management in 2019 that numerous staff had unfettered access to a database that stored parameters for some of the firm’s trading models…. Still, Two Sigma waited four years to tackle the issue, the agency said.
Goldman Gives CEO Solomon $80 Million to Stay Put, Raises Pay by 26% [Bloomberg via Yahoo!]
Goldman Sachs…. launched a program to give its leaders a slice of carried interest earned on private equity funds as it tries to compete on pay with top alternative-asset managers….
Goldman also gave Solomon a $39 million pay package for 2024, a year in which the bank’s profits surged. The award, disclosed in a filing on Friday, is a 26% increase on Solomon’s package for the previous year of $31 million.
