Today, from Ed Yardeni:

In recent weeks, Fed officials have been signaling that the economy may be too strong. No doubt, it has been running hard thanks, in part to President Donald Trump’s tax cuts. But it has yet to show any sign of running too hot—i.e., hot enough to kindle inflation fires—based on the latest data from inflation barometers including the core CPI, PPI, import prices, and average hourly earnings (the most widely followed wages measure).

Indeed, average hourly earnings has been rising at a remarkably subdued pace despite the tight labor market. No wonder both the President and Larry Kudlow, director of the White House’s National Economic Council, are upset with the Fed for raising interest rates. They believe that their supply-side policies can boost productivity-led economic growth without heating up inflation. While they are stepping on the accelerator, the Fed is tapping on the brakes.

That conflicting mix of fiscal and monetary policies has sent stock prices spinning over the past couple of weeks. Recently released Q3 corporate earnings reports have just compounded the instability: Some companies are reporting results confirming that the economy is doing just fine, while others—particularly the more cyclical ones—have been bruised by rising interest rates, rising oil prices, and the strong dollar; their earnings reports have raised warning flags about the economy. The mounting fear is that Fed officials are on course to make a serious policy mistake, i.e., moving interest rates higher too rapidly despite the cracks showing up in some earnings reports.
Perhaps most unsettling: Some Fed officials have signaled in the weeks since their September 25-26 meeting that the economy may be so strong that they might have to raise the federal funds rate higher than they had mentioned doing in the past. That would be unfortunate given how well they’ve prepared the financial markets for a federal funds rate raised to 3.00% by the end of 2019. Now they’re talking more about 3.40% in 2020. Is that really necessary? A “gradual normalization” of the federal funds rate to what they’ve claimed is a “neutral” rate (3.00% in 2019) has been clearly telegraphed and is widely anticipated. Why suddenly speculate about turning restrictive in 2020?”


The Healthy Consumer

by Laura Ehrenberg-Chesler on September 27, 2018 in Debt

Today from Ed Yardeni: “Consumers are sitting pretty these days. Initial claims for state unemployment benefits fell last week to the lowest level since 1969, and the number of people receiving benefits after an initial week of aid fell to the lowest level since 1973. Household net worth rose to a record $106.9 trillion in […]

Read the full article →

Theodore Roosevelt – A Great Quote from a Great President

by Laura Ehrenberg-Chesler on September 20, 2018 in Tribute

A conversation with one of my partner’s this morning reminded me of this great quote from Theodore Roosevelt. Enjoy. “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who […]

Read the full article →

Good News from the Census Bureau

by Laura Ehrenberg-Chesler on September 12, 2018 in capitalism

From the WSJ today: “U.S. household incomes rose again in 2017, according to Census Bureau figures released Wednesday that suggest more Americans are benefiting from the strong economy. Median household income increased to $61,372 last year, up 1.8% when adjusted for inflation. The poverty rate inched down 0.4 percentage point. The percentage of people without […]

Read the full article →

More Good Economic News

by Laura Ehrenberg-Chesler on September 7, 2018 in Economic Indicators

From today’s WSJ: “Meanwhile, the number of open jobs this spring exceeded the number of unemployed Americans seeking work for the first time in records going back to 2000. The appearance of plentiful job openings is pulling people from the sidelines who may have been discouraged from looking earlier in the expansion, but businesses have […]

Read the full article →

Ignore the Noise

by Laura Ehrenberg-Chesler on September 6, 2018 in Earnings

If one can ignore the noise of the day, and ignore of all the distractions, the economy is clicking on all cylinders. Here are some facts and commentary from Ed Yardeni yesterday: “I’ve said it before, and I’ll say it again: “There is method in Trump’s madness.” Hamlet said it first in 1602: “Though this […]

Read the full article →

John McCain and the Moral War – courtesy of Geopolitical Futures

by Marilou Moursund on August 29, 2018 in Military

Geopolitical Futures published an obituary for John McCain today, and like many of their pieces, it ties together many historical and geopolitical threads.  From the linked article: There’s a saying that John McCain never saw a war he didn’t like. That is only partly true. He understood the price of war more than most. What […]

Read the full article →

Quote of the Day

by Laura Ehrenberg-Chesler on August 20, 2018 in Tribute

From an article in the “Washington Examiner” rebutting the recent statement by Andrew Cuomo that “America has never been that great”. “Great is an aspiration — a higher elevation to which you constantly try to take yourself and your countrymen. And that greatness resides in our people. Character is a mosaic of tiny acts, rather […]

Read the full article →

The Currency Crisis of 2018? – courtesy of Geopolitical Futures

by Marilou Moursund on August 15, 2018 in currencies

Geopolitical Futures sent out an interesting article today that considers whether what’s happening to the Turkish lira is only a problem for Turkey.  From the linked article: What do the Turkish lira, the Iranian rial, the Russian ruble, the Indian rupee, the Argentine peso, the Chilean peso, the Chinese yuan and the South African rand […]

Read the full article →

Some Good News About America

by Marilou Moursund on August 3, 2018 in Employment

Jim Geraghty of The National Review had an interesting column today that recounts some of the good things happening in America.  From the linked article: We groan that we’re governed by crooks, incompetents, and morons, but we’ve actually done a pretty good job of solving the problems that faced this country a generation ago. Crime […]

Read the full article →