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Illustration: Lazaro Gamio/Axios
The absence of inflation is forcing a wide-ranging rethink of long-held economic assumptions.
Driving the news: In his annual letter to shareholders, Warren Buffett admits that though he regularly preached "doom because of government budget deficits" he is no longer in that camp.
As the New York Times' Neil Irwin points out, politicians also are quickly joining the deficits-don't-matter club.
What's happening: The debt has not mattered largely because inflation has been absent from the economic equation.
It's inflation that raises capital and labor costs for businesses, reduces available capital for investment and clogs government balance sheets, forcing other expenditures to be capped or scrapped. But over the past decade or so, inflation has been a nonfactor, even after back-to-back years of above trend growth and government spending binges.
What they're saying: "We've got inflation well under control here, and we don't need to be pre-emptive trying to control inflation going forward," St. Louis Fed President James Bullard said Friday.
In an interview the same day, Bullard elaborated, saying there has been a breakdown in the "Phillips curve," or the relationship between unemployment and inflation. "That's got people backing off the idea that there’s such a lockstep relationship between the real economy and inflation," Bullard said.
Further, officials at the Federal Reserve now are reconsidering the 2% inflation target that has been in effect since 2012.
Other central banks also are moving away from raising rates or slowing down stimulus as inflation has globally gone missing in developed markets like the Japan and Europe as well.
But, but, but: The ongoing crisis in Venezuela has shown that too much money chasing too few goods can still create problems. President Nicolás Maduro's money printing has led to an expected 10,000,000% inflation this year, undermining any attempts to stabilize the country's currency or its economy.
U.S. banks raked in a record $236.7 billion in profits last year. Even without the boost from the corporate tax cut, banks would have still made more money than ever before, according to the FDIC's latest report.
There's more good news for the banking industry, Axios' Courtenay Brown writes.
The good times are also playing out in the stock market.
Still, the FDIC issued a stark warning about how long the good times can last. FDIC chair Jelena McWilliams said the lack of bank failures last year is not "the new normal."
"We need to be thinking about what may be around the corner and looking for risks, even if we don't have indications [of bank stresses] now."— FDIC chair Jelena McWilliams to reporters last week, according to the Financial Times
With Wall Street analysts anticipating a possible earnings recession in 2019, Goldman Sachs' economic research team estimates that this could, but is unlikely to, lead to an actual recession.
Why it matters: The forecast 10% decline in profits lowers GDP growth by 0.6 percentage points, Goldman's analysts note, and if earnings growth were to slow to 15 percentage points it could knock a full 1% off of first quarter GDP, now projected to slow from 2018's pace.
But, but, but: Analysts listed 4 key reasons not to expect a recession this year:
"Weaker profit growth is likely to weigh somewhat further on economic activity but does not indicate an impending economic recession," Jan Hatzius, and Goldman's research team said in a note to clients.
China’s Huawei unveiled the Mate X, a $2,600 5G folding-screen phone, on Sunday at the Mobile World Congress in Barcelona, challenging Samsung's new bendable device and the consumer threshold of pricey mobile phones, the Associated Press reports.
The big picture: Huawei is pushing premium products in Europe and at home in China as it remains unlikely that their phones will be sold in U.S. anytime soon due to trade and security concerns. China is the largest country market for smartphone consumption, accounting for roughly one third of global shipments.
"Even without the U.S. market we will be number one in the world," Richard Yu, Huawei's consumer division chief, said in late January. "I believe at the earliest this year, and next year at the latest."
Bonus: CNBC reports that when asked if dropping the criminal charges against Huawei would be part of the deal during the Oval Office meeting with Chinese Vice Premier Liu He, Trump said he'll be discussing the issue with U.S. attorneys and the attorney general in the coming weeks.
President Trump announced on Sunday a delay in increasing tariffs on Chinese goods to 25% on March 2 thanks to "productive" trade talks between the two nations. He also announced that he and Chinese President Xi Jinping would meet to seal a deal if progress continued.
The big picture: While the delay should provide a jolt to stocks this morning, it's the exact resolution, or lack thereof, investors have been expecting for some time.
Similar expectations last week had been expressed in research from Bank of America Merrill Lynch, Morgan Stanley, Deutsche Bank and a host of others.
Be smart: Rather than quit while they're ahead, Chandler expects the administration's focus will now simply shift toward Europe and Japan.
The Americans' next moves have been laid out by Trump's other foreign policy decisions:
"The U.S. is demanding others follow it in three issues in relatively quick succession," Chandler said, "without apparently offering inducements of any kind."
History: Ngozi Okonjo-Iweala is an economist and international development expert who served for 25 years on the World Bank and rose to become the organization's managing director of operations, the global bank's No. 2 overall position.
She sits on the boards of Standard Chartered Bank, Twitter, Global Alliance for Vaccines and Immunization and the African Risk Capacity. She has sat on the board of the Rockefeller Foundation.
She was listed as the most powerful woman in Africa by Forbes and joined Nigerian billionaire businesswoman Folorunsho Alakija, for a time the richest black woman on Earth, on Forbes' list of most powerful people in the world.
Okonjo-Iweala has been one of the most honored leaders in the world, having been named:
Okonjo-Iweala also was listed among 73 "brilliant" business influencers in the world by Condé Nast International.