Wishing Upon An R-Star

Executive Summary: The Fed has no North Star. Steering monetary policy toward the ideal outcome that would keep both inflation and unemployment low requires knowing where the “neutral” federal funds rate is, i.e., the rate that wouldn’t influence either—a.k.a. “r-star.” But r-star is a theoretical construct only, neither measurable nor constant. … Also: Joe provides an update on the MegaCap-8 stocks, which haven’t been the bullish driving force behind the S&P 500’s performance that they were for most of this year. Quite the opposite.