E Market Briefing For Monday, Aug. 26

Optimism versus pessimism - roils markets repeatedly; with markets to a degree fairly untethered from both economic and monetary realities; while at the same time an unhinged President's shoot-from-the hip reactions to quid pro quo tariff impositions have an ability to throw markets into instant chaos; and that increases potential for accidents and policy miscalcuations that for the most part would be avoidable, if handled with a bit more delicacy.  

At the same time (as far as the President) Trump knows he's not dictator; he knows he moved the markets (was he short?) and all it will take (if inclined), might be an apology to both Powell and Xi for referring to them as 'enemies' to set things back on a more neutral rangebound course after this break. It's fair to say that what's 'at risk' is more than the S&P's high-level pattern; with real ramifications of things like 'ordering American companies' to bring back manufacturing to the US.  

 

That 'order' gets 'press' but has little legally enforceable aspects, other than indirectly there are ways to punish those who ignore or tell the White House to basically stick it. Never mentioned is that the US isn't capable of handling all manufacturing internally these days. So even though for years I've called for a 'manufacturing renaissance' in the US; it's not really that simple unless we increased migration or get truly robotic to a greater extent over time.       

Now, as for the lambasting of the Fed. Chairman Powell is not willing to be pushed into backsliding to an era of unanchored inflation expectations; even if the general goal is slightly higher growth and inflation. Those recalling the wild swings of the 1970's and 1980's are loathe to let this run down to 'zero' for US rates; because besides the U.S. not being in the comparable spot as much of Europe and Asia; they know it can be necessary to get 'hawkish' in a rapid fashion if need be. We saw that from Powell within the last year, as he hiked rates inappropriately (did so for balance sheet not because growth was too strong as was falsely claimed, and I noted that at the time).  

Now Powell flipped dovish and can revert back to hawk on a dime really. Of course markets react even more negatively when a direction change occurs, in a way that implies a policy shift. Notice his shout-out to Paul Volcker (the once great Chairman who described Greenspan as the best clerk he had at the time).. as Volcker ended rampant inflation with high rates in the 1980's.    

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Wannabe Warren 3 weeks ago Member's comment

Truck tonnage (70% of goods transported via truck in our 70% driven consumer econ) up +7.9% YTD 7.8% in June. Not recessionary twitter.com/.../1022171195926441984?s=19