A Terrified Thom Tillis Worries Jerome Powell May ‘Meddle In The Election’, Wants Senate Hearing
Bill Dudley took a number of risks in publishing a Bloomberg Opinion piece on Tuesday imploring the Fed not to enable Donald Trump's trade war.
To be sure, Dudley's reasoning was entirely sound, and he's hardly the first person to suggest that cutting rates in order to ameliorate the uncertainty created by incessant trade escalations could be extraordinarily dangerous, in that it risks emboldening still more tariff escalations, in a self-feeding loop.
"What if the Fed’s accommodation encoura
“Tillis is leaning on what amounts to an emotional appeal and a colloquial summary of historical injustices perpetrated by China.”
That is very kind way of saying he’s suffering from a psychotic delusion.
I’m sure nobody is paying attention to old fashioned ideas, but the market is at a very high level of fear and it seems like no big deal, so very weird IMHO. VIX @ 19.35 and 10 yr @ 1.45% — this normally is like a danger zone, but maybe this is the new normal, where risk doesn’t matter????
FRED chart: https://fred.stlouisfed.org/graph/?g=oII6
About a decade later, we seem to be caught in a time warp, with failing economies, slow GDP and the economics of stupidity, chasing the Japan Model of 3 lost decades — only this time, we have a lot more morons playing with fire and tweeting like pimple covered teens whom are hoping their brains mature:
May 2010
The shadow chancellor, Ed Balls, said: “It’s now clear that this is a recession made in Downing Street by this government’s failed policies. Despite all the problems in the euro area, France, Germany and the eurozone as a whole have so far avoided recession and only exports to other countries stopped us going into recession a year ago. The result is that Britain is now in a weaker position if things get worse in the eurozone in the coming months.”
https://www.theguardian.com/business/2012/may/24/uk-economy-contracted-2012
“The Economics of Stupidity”
Now that’s a good book title!
Chapter 1: Carter, Milton Freidman and Reagun
Chapter 2: The Sheeple
Mr. H hope this doesn’t bug you too much, but here’s a FRED chart showing the fear level in mkt, with VIX/10-yr — but, as a bonus, check out the Wilshire 500 Total mkt cap reaction to fear, as a percent change. Interestingly, it seems that markets love volatility and thrilling little episodes of confusion,e.g. the whipsawing effect of over-reactions up and down within short time periods. Does trump tweet manipulation change this type of instability, followed by stability or is it just a faster version of the same game? Seems like these windows or waves are times when opportunity and crisis collide, like the Russian crisis in 1998, or maybe when tresury lost its AAA, or BREXIT — but what of trumps mini tweet storms, how might that play out in time, where the boy cries wolf too often? Perhaps he starts targeting specific corporations or encourages his MAGA troops to boycott corporations or gives them trading tips at rallies or engages in fraud in some new way and nobody can contain him? It seems like we’re in the danger zone — thought this chart was entertaining:
https://fred.stlouisfed.org/graph/?g=oIJ3