Good morning, it's Paul here with Friday's SCVR.

Estimated timings - I've got to stay in most of the afternoon for the electrician, so will keep typing away here until about mid-afternoon. Today's report is now finished.

Apologies for the site outages. The data centre fell over today, apparently.

US markets , Fed, inflation target - US markets hit new highs again yesterday, driven by a change in policy from the Fed. I listened to Powell's speech, and instead of his usual gloomy assessment about the economy (which usually drives markets down temporarily), he announced a change in inflation targeting policy.

Instead of targeting the specific figure of 2% inflation (which always struck me as odd), the Fed will now target an average 2% inflation rate over the long term. This means inflation will be allowed to overshoot 2%, if it had previously undershot.

This seems positive for markets, because it defers the possibility of interest rates rising to combat inflation. Did anyone actually think interest rates would rise? I think it's becoming increasingly clear that we are in a new world of permanently near-zero interest rates. Governments have too much debt to even consider raising interest rates meaningfully, because the cost of rolling over maturing debt would then become too expensive, and force them to cut spending elsewhere and/or raise taxes, which is electorally unacceptable.

What struck me about Powell's speech, is that he seems to have a certainty that the Fed is and can, control inflation, through its various policy measures. Where is the evidence for this? I think the internet, and globalisation, are the reasons that we've had low inflation for almost 3 decades. It's probably had little, if anything to do with central bank policy. Loose money should have stimulated inflation, but it hasn't. Instead, it's just driven up asset prices. Therefore, stepping out of the way, and just letting the economy do what it wants, is probably quite sensible at the moment.

Understanding conventional economics is actually a hindrance at the moment. The people making money from the stock market seem to be the least knowledgeable. Just buy a fancy tech stock, and watch it go up almost every day, and ignore valuation completely! We've been wasting our time doing analysis of fundamentals.

It feels increasingly like 1998-2000. Markets this exuberant never end well. That said, the big tech stocks of today…

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