The likely chart on Jay Powell's wall/Dell cautious, Ulta rocking/Global PMI's

There seems to be this belief on the part of many that if/when inflation starts to have a 2 handle on it that somehow the Fed's job is over, they can start cutting rates and all is fine. I want to include a chart here again of the late 1960's and 1970's where the same mentality took place each time inflation fell and I wouldn't be surprised if Jay Powell has it on his office wall. The key word right now is 'sustainability' and I'm not talking about energy, I'm talking about inflation not just getting to 2%ish but staying there. 

To this, NY Fed president John Williams said yesterday "I expect it will be appropriate to maintain a restrictive stance for quite some time to fully restore balance and to bring inflation back to our 2% longer run goal on a sustained basis." My bold. Mary Daly didn't use the word but made the same point yesterday, "I'm not thinking about rate cuts at all right now. I'm thinking about whether we have enough tightening in the system and are sufficiently restrictive to restore price stability."

Now I do believe the Fed will cut rates next year as rents further slow inflation and the unemployment rate further rises but anyone expecting a slash and burn easing campaign is going to be disappointed. And Jay Powell seems very intent on further reducing the size of its balance sheet. We of course hear from him today at 11am.