Fed Independence & Policy - The speaker emphasizes the importance of the Federal Reserve's independence, suggesting that presidential interference could be detrimental when painful economic choices are necessary [1] - The market's reaction to potential Fed interference is difficult to assess, given other economic factors [2] - Overall policy volatility, including concerns about Fed credibility, is impacting the dollar's value [3] Currency Depreciation - The dollar has depreciated by approximately 10% against other major currencies this year, marking the largest depreciation in 50 years [2][3] - This dollar depreciation is surprising, as traditional economic models would predict tariffs to strengthen the dollar [3][4] Tariffs & Inflation - Traditional economists would expect tariffs to increase inflation, but this has not yet occurred in a widespread manner [4] - The inflationary impact of tariffs is estimated to be only about 50% passed through to the economy, with more impact expected [5] - The argument that exporters or importers absorb tariffs, preventing consumer impact, is dismissed; the consumer will ultimately bear the cost [6][7]

Morgan Stanley is advising a more cautious approach to the Turkish lira, citing a faster pace of currency depreciation https://t.co/cVuaSikWQ5 ...