Nomura's Janjuah Says Fed Is Willing to Take Risks

The transcript discusses the Federal Reserve's reaction function post-election, focusing on fiscal policy changes and the impact of Trump's election. It highlights the shift in focus from wage inflation to asset prices and financial instability. The Fed's policy approach is now more data-driven, with an emphasis on financial stability. The impact of quantitative easing (QE) on market prices and corporate behavior is examined, noting the trend towards financial engineering over business investment. The Fed's willingness to take risks in the current political environment is also discussed, with an understanding that Congress typically acts in response to crises.

What did the Fed assume would happen post-election that influenced their reaction function?

• An increase in wage inflation

• A rise in unemployment

• A decrease in asset prices

• Some fiscal policy changes

What is the Fed's current focus according to the second section?

• Wage inflation

• Asset prices and financial stability

• Unemployment rates

• Global trade policies

What historical perspective is mentioned regarding the Fed's mandate?

• The Fed has always focused on asset prices

• The Fed's mandate includes inflation, jobs, and financial stability

• The Fed's mandate is solely about controlling inflation

• The Fed's mandate is to regulate global trade

How has quantitative easing affected corporations according to the third section?

• Reduced financial engineering

• Decreased cash reserves

• Increased investment in business operations

• Increased stock buybacks

What risk is the Fed willing to take in the current political environment?

• Creating a deep recession

• Ignoring asset price inflation

• Taking some risks to break the cycle

• Reducing interest rates drastically