Joseph LaVorgna - Deutsche Bank

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Last quote by Joseph LaVorgna

It's an experiment the Fed is hoping they can extricate themselves from to some extent. ... They're going to try to do it in a way that's not destabilizing. That's the hope. Given the fact we've been talking about it for a while, my guess is the Fed will be successful because it's been so well advertised. It will very much depend on financial conditions and the evolution of the forecast of how the economy is expected to evolve. What the Fed would like to do is avoid anything similar to 2013 when the taper tantrum caused significant market disruption.feedback
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May 23 2017
Joseph LaVorgna has been quoted 43 times. The one recent article where Joseph LaVorgna has been quoted is Friday's retail sales could show whether the economy is bouncing back. Most recently, Joseph LaVorgna was quoted as having said, “My sense is the late Easter really wreaked havoc. I think we're going to see some decent number, and I expect we'll see some revisions.”.
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Joseph LaVorgna quotes

It's not inconceivable that some of the job growth tomorrow might be partly related to the optimism for economic growth in 2017.feedback

What they didn't do and what they left out to me are more important than the tweaks they made. It's going to be a very tall order for the Fed to move at their next meeting. Never say never, but the probabilities of such a move are very, very low.feedback

They might think March is on the table, but I don't. I don't know why you would want to be tightening ahead of that.feedback

Look at the rotation within the equity market, more toward cyclicals or those industries more sensitive to the economy. Those are the things I would focus on. We're at the steepest yield curve in a year. That to me is an unambiguous sign of faster growth.feedback

They don't have to tweak things in any appreciable way. It will be a place holder for the meeting in March, because then we will be halfway through the president-elect's first 100 days.feedback

Almost every economic data right now is effectively backward looking. Post-Trump's election, you want to look at the rotation and the overall level of stock prices, and look at the slope of the yield curve. Those things tell me that growth is going to meaningfully accelerate, relative to expectations.feedback

Headline retail sales will be good. We sold a lot of cars and trucks last month. It's really a vehicle story.feedback

You've seen a rotation out of the stocks that people thought could grow in a very soft environment – FANG, if you will.feedback

You're possibly unshackling a lot of businesses where sentiment has been very poor. You could really harness ... the innovation, creativity and dynamism that arguably has been lacking for a while that now possibly can shift.feedback

When you're growing at 1-percent-something, unless global growth is a lot better … at any pothole, you're in a recession.feedback

What businesses want is some idea that the parties are working together.feedback

Inflation's bottomed, but without a more robust economy, higher inflation is going to eat into wage growth, which means real wages are going to be shrinking.feedback

If we had stronger growth to accommodate higher inflation, I'd be more excited about what it means for risk assets.feedback

There's no economic data between now and Friday that's going to move the needle.feedback

The market's focus is on what's happening in Japan, what are [Japanese government bond] yields doing, and they're looking ahead to next week's jobs number. I think the only data that's going to matter is the data that's going to change investors' outlook for the U.S. economy. If next week we get a significantly lower than expected nonfarm payroll number, that's really going to affect expectations for the economy.feedback

I think next week if you get some weaker than expected number, people are going to worry about the economy. I think it's going to be a drip, drip, drip of slower growth but just enough to get the Fed to go in December.feedback

It's actually lower than the Bank of Japan is targeting, so people are getting concerned about whether the Bank of Japan would come in and sell JGBs, but that runs against their commitment to buy bonds.feedback

The reason the economy has still been able to expand is because of labor input. Firms are hiring people at a reasonably healthy rate.feedback

Nobody's going to invest ahead of the election. Who is going to invest? They're going to wait to see what happens. It's not like the candidates are saying the same thing with the same tax policy. Certainly both parties have totally different ideas of how they're going to approach tax reform.feedback

I think it's going to be weak. I think it's a one handle. I've got 1 percent. The tax receipts were very weak last quarter, job growth slowed and productivity was weak.feedback

I have a big inventory drag. I have further weakness in capital spending. Everything is sort of on the weaker side with the exception of consumer spending, and that should be up about 4 percent.feedback

If the next couple of employment reports surprise to the upside, it really won't matter if second quarter GDP was on the weak side.feedback

The statement has a bit better tone, reflecting significantly better data relative to expectations over the last six weeks. However, the Fed has gotten wise to the fragility of markets. They kept in that they're still monitoring financial conditions, so even though many things broke positively for the Fed since their last meeting, they want to be extra cautious.feedback

Importantly, the recent weakness in capital spending has been broad based and not simply attributable to the energy sector. Moreover, forward-looking surveys of capital spending remain depressed, pointing to negligible improvement in the back half of the year.feedback

The only way the market will be surprised by Fed tightening is if the data is unexpectedly strong. I don't believe the Fed will be able to convince the market it will raise rates (without that). There's only so much the Fed can do to get the market to price a move.feedback

It does appear to be a noticeable downshift in job growth. Historically, when unemployment gets near 5 percent, job growth slows.feedback

My guess is it's more of what happens overseas, because any data we get is [from] before Brexit and before rates plunged to new lows.feedback

They're responding to market conditions. It's (making) it harder for them to take rates to where they should be. The rate should be higher but the Fed is having a hard time getting it where most economists say they already should be.feedback

With the Fed so close to the data tomorrow, unless it's an outlier, the market's just going to (await) the Fed.feedback

It's the tail wagging the dog. If the market stabilizes, the Fed will hike. The problem is, the markets are looking for some certitude and they can't get it. That's the problem with data dependency. It means different things to different people. The inability of (Fed Chair) Janet Yellen to articulate this is going to be a growing source of concern for markets.feedback

Overnight is going to set the tone. We'll look at the data and maybe some Fed comments. This is a very fluid environment.feedback

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