By Michael Every of Rabobank
Day by day, we live more and more in a world in which facts no longer matter. Social media, a bitterly-bipartisan mainstream media, and socio-economic and cultural polarization all mean we can inhabit the world of facts we find most comfortable and convenient. Indeed, as the economy becomes more Dickensian in terms of income and wealth equality it also becomes more *literally* Dickensian:
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way—in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”
And that’s just the US Vice-Presidential debate from last night, which offered up generous helpings of political pound(ing)s, shillings, and (Mike) Pence. Which for those who don’t know, was the old British Imperial money system until 1971 when, as my late grandmother referred to it, the UK joined the “decimal diddle dum dee club”. And one wonders how people ever wondered how Brexit could happen…
Of course, the VP debate also saw vast quantities of question-dodging over key issues, or answers that seemed to be to entirely different questions - to no response from the moderator-bot, which only seemed to be programmed to worry if people over-ran, rather than running over facts. It was still a vast improvement last week, however, in that there was actually some debate in it.
Who ‘won’? See the various polls from different sides of the political aisle: CNN said Harris 59% - 38%; Telemundo said Pence 76% - 24%. But the key point is that nowadays whomever *you* like won – after all, it is the ‘epoch of belief’. Likewise, whomever *you* like is comfortably winning the election. That is the meme both sides can cling to until 3 November. (And then, political risk analysts fear, it may be time for either loser to embrace a conspiracy theory as to why they didn’t actually lose.) Yet if we wanted to pretend actual facts mattered for a fleeting moment, the key question would be which side’s base feels more enthused after having sat through the VP debate: who got more policy red (or blue) meat thrown their way?
Talking of the (overdone) red meat side of things, the Heavenly side (as shall be explained), the conspiracy-theory side, and the ‘best of times, worst of times’ side, yet again we also see a Tweet from Trump trumping other news. Trump announced he believes the drug he was treated with is a “cure”; more important than the vaccine (which is coming “very, very shortly….right after the election”); and Regeneron will be shortly be freely available *and free* to those who need it. Indeed, Trump said he wants everybody to be given the same treatment he got without payment as “It wasn’t your fault…, it was China’s fault, and China is going to pay a big price.”
Is that related to the Bloomberg story yesterday talking about a possible looming US crackdown on Tencent and Ant Financial to stop China expanding its digital payments platforms? Or is it related to Mike Pompeo busily trying to form an Asian version of NATO? Or is it something else equally world-splitting if carried out in full?
Another good question that wasn’t asked at all at the VP debate that happened after that Trump video: is free Regeneron socialised medicine? The media aren’t asking either, instead running with the Trumpian phrase it was “a blessing from God” he caught Covid-19 (which he instantly qualified to “a blessing in disguise,” which itself is disguised in all those exegesis-esque headlines).
Meanwhile, preceding both the VP debate and the Trump video we had the FOMC minutes, a body which has played as large a role in our drift into all forms of Dickensianism as anyone. As Philip Marey notes, these represent “The quiet before the storm”. In particular, he points out that the minutes revealed quite some disagreement within the FOMC regarding the forward guidance on rates: a Dickensian dichotomy, one might say. As long as we are in a pandemic environment this may not matter very much. However, he believes that “by the time we get closer to the exit, the practice of flexible average inflation targeting may become a cacophony”. There’s something to look forward to.
The minutes also showed that the economic outlook (and thus the FOMC’s projections) assumed additional fiscal support, and that if future fiscal support was significantly smaller or arrived later than expected the FOMC thinks the pace of the recovery could be slower than anticipated. “Send more money now,” in short. This could still happen before the election in one form or another, even if Larry Kudlow isn’t in the loop. After all, if you are giving away Regeneron free now, why not?
Philip concludes that several headwinds are converging in Q4 that could upset the economic recovery, and that the next time the Fed meets will be in the stormy environment after Election Day.
The Fed, meanwhile, will continue to try to send us the message that ends the book whose long opening line I have already quoted: “It is a far, far better thing that I do, than I have ever done; it is a far, far better rest that I go to than I have ever known.”(**Spoiler alert** - that particular guy gets his head cut off in a revolution.)
Which is what Nicola Sturgeon must be thinking of as she closes down central Scotland’s pubs (and restaurants) for over two weeks(?)