Reading the shift….
The perceptions of Mr Trump’s character are so far apart from the perception of what democracy and good government means that it brings into the electoral markets voters on a crusade to set things right. Mr Trump’s importance has more to do with getting voters to participate than selecting the right policy.
Fortunately for Mr Biden’s political economy, the vast majority of Americans have no where else to go. Being a digital nomad may be an option for a number of Americans, but even as foreign exchange rates between the US dollar, the pound, and the euro flirt with parity, Mr Biden realizes he has a captive audience that will opt for the greater availability of resources here in the U.S.
While Jerome Powell, chairman of the Federal Reserve System, has admitted that there will be pain along the way as rates tighten to combat inflation, President Biden has not been as definitive about the expected stress Americans are expected to bear should increased rates result in business cycle downturn and layoffs.
Mr Biden’s framework amounts to word salad designed to buy more votes for a political problem that does not exist. Can Mr Biden afford to alter the expectations of the sixteen percent of Americans already holding or trading crypto?
Politically, Mr Biden needs the markets’ forward looking indicators to be off. In seven weeks the Democratic Party will be tested in the mid-term elections. Mr Biden is counting on an argument that he is the steward for a recovering economy and that he will need majorities in the House and the Senate to continue his inflation reduction agenda.
For traders, I would expect that increased short term rates will make the dollar more attractive and politically will find Mr Biden having to spin a new and positive narrative around rising rates.
Politically, labor markets will continue to take on some importance, but as the structure of labor continues to change in the face of the growing value of financial assets, labor will play a less important component in determining the strength of the economy.
Labor will be the next “to what end” question.
Today, President Joe Biden heaped praise on Senator Joe Manchin, Democrat of West Virginia, and Senate Minority Leader Mitch McConnell, … More
Today, Mr Powell may have signaled some coordination on recession messaging, but if the CPI numbers do not signal some kind of respite for the consumer, Mr Powell may find himself thrown under the political bus.
To Mrs Warren’s credit, she is two-thirds of the way in meeting her thinly-veiled objective which is to provide Joe Biden and the Democrats with as much cover as possible going into the mid-terms. The objective here is to separate the Democrats from the inflation problem by providing a legislative initiative while reminding the electorate that the management of the money supply, the real cause of inflation, is in the Federal Reserve’s lane.
Alton Drew, Consiglieri 