7 thoughts on “Monday Open Thread”

1. As John McCain used to use say, "It's always darkest just before the light go completely out."

   US Stocks Fall Sharply After Market Declines in Asia and Europe: Live Updates – The New York Times (nytimes.com)

   The good news is that with a recession, inflation won't be a problem.

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   1. The over-caffeinated meth-heads on Wall Street and their high speed trading algorithms are putting stocks on sale for us.  While I agree stocks have gotten ahead of themselves, this panic is ridiculous.  The Fed is not going to implement an emergency rate cut based on the job creation numbers.  The main driver of the increase in unemployment is due to more people wanting to enter the job force (a good thing).  I'm not sure the Fed will drop the rates in September more than a quarter point.  Inflation is exactly on track.  Here's Nobel Laureate Economist Paul Krugman's take:

      The Sahm Rule hints at recession. Sahm says don’t panic.

      The thing is, new entrants to the work force, who are still finding their way in the job market, typically have higher unemployment than more established workers. So some of the recent rise in unemployment probably reflects friction rather than a weakening economy.

      But it’s not all a statistical illusion. I like the way Sahm puts it: “The Sahm rule is currently sending the right cautionary message about the labor market cooling, but the volume is too loud.” We probably aren’t in a recession, at least so far, but after many months of high interest rates the labor market is indeed weakening.

      This has clear policy implications, especially for the Federal Reserve. We may not be in a recession yet, but the job market is looking a bit, shall we say, pre-recessionary. To be fair, other indicators are looking stronger. Still, the Fed, as the saying goes, is supposed to skate toward where the puck will be, not where it is right now. We may or may not be about to trigger the Sahm Rule, but there is already a very strong case for cutting interest rates.

      But what about inflation? Glad you asked. On Monday the New York Fed released its latest estimate of underlying inflation, based on an algorithm that’s supposed to separate the signal from the noise. The Fed’s target is 2 percent; the current New York Fed number is 2.06:

      By the way, this is not an outlier. Goldman Sachs has a proprietary measure of core inflation, and it’s also right at the Fed’s target.

      So, back to the Sahm Rule. It looks as if it may be triggered on Friday. Even so, don’t panic; it probably doesn’t mean that we’re in a recession. But the Fed should definitely be cutting rates.

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      1. The Fed absolutely blew it in postponing a cut.  Jobs reports are going to be less rosy the next 9 months.  The ECB had it right in June.  Powell is a pearl-clutching asshat.  A September cut will likely come, but it will be too late.  Of course, it would also help if the US engaged in any real fiscal policy instead of kicking the can to the Fed to handle monetary policy, but here we are.  

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   2. Data is always a pesky distraction for the red hat crowd:

      

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2. Memo to Kamala Harris …..

   Whatever you do, do NOT get in a front of a camera and parrot what John McCain said in October 2008 when he said, "The fundamentals of our economy are still sound."

   Blame it on Jerome Powell – who was first appointed by Trump.

   Blame it on Donald Trump – for first appointing Powell.

   Blame it on the Republican House of Representatives.

   Just as long as you blame it on someone other than Biden. And do it loudly.

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   1. This week, the line for Harris ought to be "my Vice President will be … "

      IF the stock market stays down beyond a few days, a line could well be "Donald Trump claimed the stock market is reacting to his candidacy." 

      If the stock market stays down, then Harris ought to express concern about what the FED will do.  As a bonus position, point out the House of Representatives needs to make certain they act responsibly, get a consensus with the Senate and President Biden, and get the government funded for October 1 so they don't make things worse.

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      1. This sounds smart. I like this. Let's do this.

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