Trump’s corporate tax cut is supply-side stimulus I could agree with if done right, even though it primarily helps the rich. Trump's cut of the top rate from 35% to 15% is the largest of its kind in the history the United States.
The old Wall Street expression is “They don’t ring a bell at the top.” This snarky adage is usually employed by those saddened financial managers who ride a successful investment to a peak and then watch in horror as it reverses course to a level below their cost basis. A pity this notion is misguided, since the market frequently “rings the bell.” It is just that most market participants are not listening. Perhaps they should be listening now.
The much anticipated payrolls day, expected to provide at least some more clarity on future Fed policy, has arrived and heading into today's report both price action and newsflow has been muted. U.S. equity index futures were fractionally higher, as European stocks rise 0.6% while Asia was flat. Gold fell as the dollar rose, while comments by Vladimir Putin which endorsed an OPEC oil production freeze while granting Iran an exemption, have pushed oil higher.
Central bankers these days are seriously trapped. They cannot now reverse their policies for that means they have to admit that they have failed. That is far more serious than you might imagine. To even entertain backing down from negative interest rates means they have to admit that Keynesian/Marxist economics has failed and therein socialism, which is based upon the very principle that government can and is capable of managing the economy.
The Federal Reserve’s long-term influence hinges in part on its ability to convince millennials that its current policies can help push inflation closer to the central bank’s 2% goal. That’s not as easy as it sounds, because this cohort has both a different history and current relationship with this economic variable. Why?
In short, the economic model of the second half of the 20th century is over. Increased issuances of debt no longer translate into increased economic growth. Instead, they produce wild asset price swings, casino style speculation, and epic bubbles and busts. Nonetheless, the technocrats continue offering up yesterday’s solutions with unabashed certainty.
Infamous rules-based economist John Taylor attended the first monetary-policy conference in Jackson Hole in 1982, and he may be the only person to attend both the 1st and the this year's 35th. With Fed policy the easiest (relative to economic fundamentals) every in history, Taylor has one wish for an outcome... "less weird policy"
The title of this year’s Jackson Hole meeting – “Designing Resilient Monetary Policy Frameworks for the Future” – is a telling one. It is actually a call to a specific goal, rather than the typical generic one. You get the feeling that the Fed has something on its mind... Translation: Fed projections have been wrong, and the central bank doesn’t know how to make them any better in the future.
India appointed Urjit Patel as the country’s next central bank chief, replacing the departing Reserve Bank of India governor Raghuram Rajan. Patel is currently a deputy governor at the RBI. He has been appointed for three years and will begin his term once Mr. Rajan steps down on Sept. 4.
The notion that something good might come out of a Trump policy elicits guffaws in certain economic circles. However, by insisting that the U.S. Treasury label China a “currency manipulator” and by promoting trade that is both free and “fair,” Mr. Trump may be laying the groundwork for a significant breakthrough in international monetary relations - one that could ultimately validate the rationale for an open global marketplace and restore genuine free trade as a vital component of economic growth.
A very reliable rule of thumb to keep in mind during (and before) a banking crisis: don’t trust anyone in the establishment, especially a politician. It’s good advice these days.. Europe’s banks and its governments are caught like two drunken sailors holding each other up.
The former Fed chairman says he believes another debt crisis is inevitable. He believes it will lead to high levels of inflation. His solution? Gold: “Now if we went back on the gold standard and we adhered to the actual structure of the gold standard as it exists let’s say, prior to 1913, we’d be fine. Remember that the period 1870 to 1913 was one of the most aggressive periods economically that we’ve had in the U.S., and that was a golden period of the gold standard.”
During Friday’s bloodbath we heard a CNBC anchor lady assuring her (scant) remaining audience that Brexit wasn’t a big sweat. That’s because it is purportedly a politicalcrisis, not a financial one. Here’s a news flash. That’s all about to change. The era of Bubble Finance was enabled by a political abdication nearly 50 years ago. But as Donald Trump rightly observed in the wake of Brexit, the voters are about to take back their governments, meaning that the financial elites of the world are in for a rude awakening.