There's one thing that the Fed is missing

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Livewire Markets

There's one thing that the Fed is missing. Chris Watling, CEO at Longview Economics says the Fed is underestimating the strength of the US labour-market and this has big implications for global asset markets. Our view is that the Fed is far too complacent. Unemployment's been falling sharply. Wage inflation has started to tick up and there's this view at the Fed that there's lots of slack in the labour-market. We've been crunching the numbers and it seems to us that even on a benign view of the labour market the unemployment rate should hit 4% in 2016. 4% is totally full employment. It just doesn't go any lower. So Wage inflation is going up, cheap money has to go. And of course it's cheap money that's sustained high asset prices over the course of recent years. This is a pretty dangerous cocktail.

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