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JL
Joe Lavorgna
SMBC Nikko Securities
First call on the ledger
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else is a labeled paraphrase. Every call links its original source. Before you trust the call, check the record.
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Said Jul 16, 2026 · resolves Dec 31, 2026
“So the Fed, in my view, has to hike. Kevin will hike, and it will be this year.” Backed on tape: “inflation will not go back to target without some help from the Fed.”
Where they stand
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Joe Lavorgna (SMBC Americas) says the Fed should already have hiked, framed as removing last year's insurance cuts.
I do, Brian, because had the Fed hiked and couched it in terms of removing the insurance that it put in place last year when the labor market looked really soft
Joe Lavorgna says the economy is booming, with Q3 GDP growth possibly upwards of 6%, so last year's insurance cuts are no longer needed.
It looks like growth might be upwards of 6%. In the third quarter, margins are high. The general employment trends are good
Joe Lavorgna expects tomorrow's PPI to stay above 4% and notes core PCE is running well over 3%, so inflation is too high to justify cuts and supports a hike.
your PPI the next day is probably going to remain over 4%. And the core PC deflator, which is the Fed's preferred metric, is still running well over 3%.
Joe Lavorgna expects the Fed to hike rates before the end of 2026.
Having said that, I do expect to set the hike before the year is out.
Joe Lavorgna says a soft core CPI (0.18 m/m, 2.5% y/y) would make markets price out a September hike and the Fed would follow and not hike.
if we get a 0.18 tomorrow on the core and that rate dips down to 2.5%, or even surprises to the downside again, the market will completely take out or largely take out a September hike, and they won't go.
what the Fed should do at this meeting
“Hike. Hike now, hike tomorrow.”
his case for tightening
“the Fed has missed its inflation target going on six years”
'inflation will not go back to target without some help from the Fed' @1:33; 'with this AI boom... the neutral or real rate is higher' @2:28; 'Chris Waller made the same point in his speech this week' @2:54. He adds a rates kicker: if the Warsh Fed hikes, 'you actually may get long rates to actually fall' @5:49. This is the title claim of the video.
“So the Fed, in my view, has to hike. Kevin will hike, and it will be this year.”
'we're gonna have double digits in the mid to high teens for CapEx and GDP, the retail sales are strong, the labor market shows no signs of weakening now. It's actually appears to be firming. Claims are super low' @1:15-1:30; last year's 75bp of easing was based on labor-market concerns that 'now are misplaced' @1:36-1:44.
“I mean, the economy is booming, but there is certainly inflation pressure.”
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