Daily Economic Update: December 11, 2023

Jobs Friday faded into what I’ll call Shohei Saturday with Ohtani getting a record $700mm, 10 year deal.  If the Dodgers market him correctly, maybe he’ll create a Taylor Swift economic boom?  We need more excuses for economic growth and inflation. 

The 10Y starts the week at 4.26% and the 2Y at 4.75%, both up from where they started the day Friday as Friday's jobs numbers seemed to cause a reassessment of the pace of rate cuts that the market had priced into the curve.  If you're looking for a summary of Friday's jobs report, perhaps the best read on Friday's jobs number was this take from Barry Ritholtz per his blog post here: "You may have missed the most important data point in today’s Employment report.  It wasn’t that Nonfarm payrolls increased by 199,000 in November, somewhat higher than expected; nor was it the unemployment rate, which fell to 3.7% in November, from 3.9% in October; nor was it that Wages continued to rise at a modest pace, with average hourly earnings up 0.6%.  It was that 157.087 million people are employed full-time in the United States....  First, it is a full 5 million more people working today than in January 2020, just before the pandemic struck."

In other news, the UofM survey sure seems to really be correlated with gas prices, gas prices down sentiment up and inflation expectations down.

The week ahead features the some major Treasury auctions, CPI, Retail Sales, FOMC, BoE and ECB.  The main action with this week's FOMC will likely market participants scrutinizing the number of cuts implied in the "Dots" and if there are any changes to where the Fed believes the long-run neutral rate is estimated.  The other term you'll probably become familiar with, or hear more of this week, is "normalization cuts".  These are rate cuts that are necessary to keep the real interest from becoming overly restrictive as inflation falls

On the week ahead:

Monday:  NY Fed survey of consumer inflation expectations, 3Y and 10Y Auctions
Tuesday: CPI, 20Y auction

Wednesday: PPI, FOMC

Thursday: Jobless claims, Retail sales, BoE, ECB, SNB

Friday: is it the weekend yet? It's been a lot of central bank meetings to hear about

XTOD: 'Even if inflation declines, soaring debt levels, deglobalization, and populist pressures will keep rates higher for the next decade than they were in the decade following the 2008 financial crisis.' https://project-syndicate.org/commentary/era-of-low-interest-rates-has-come-to-an-end-by-kenneth-rogoff-2023-12 by  @krogoff

XTOD: Here’s what the economists don’t get about the vibes in the economy. People hate inflation. Inflation turns the economy into a war of all against all. When the government prints and spends money it in turn raises the price level and creates winners and losers. One then has to expend effort in order to not become a loser. Asking for raises, switching jobs, speculating with savings etc. it requires a lot of effort and frankly feels dishonest because it is in fact somewhat dishonest. Savvy, lucky and advantaged people come out ahead while less savvy, less lucky and disadvantaged people fall behind. That is why people hate the economy - despite the average being the same the distribution is different and redistributed in a way that feels arbitrary. As Keynes puts it “The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

XTOD: Hey, I thought Biden always said he respected the Fed’s independence. What gives?

“Biden said the Federal Reserve should be discouraged from raising interest rates, in rare comments from the president on central bank policy making” https://bloomberg.com/news/articles/2023-12-08/biden-says-jobs-numbers-should-deter-more-fed-rate-hikes?utm_source=website&utm_medium=share&utm_campaign=twitter via 

@bpolitics

XTOD: If you change your mind too frequently, it suggests that you do not think carefully and responsibly before formulating an opinion & don't know when to remain silent or neutral. 

If you never change your mind on anything, it indicates that you are an intellectually dishonest.

XTOD: The Media Is Hyping Up "Carbon Passports" To Restrict Travel

XTOD: Curb Season 12...February!   “Curb Your Enthusiasm” Season 12 will return to HBO in February.   Network CEO Casey Bloys announced the premiere month during a Thursday media event in New York.

XTOD: NEW: President Joe Biden announces a remarkable "billion 300 million trillion 300 million" dollar infrastructure plan.   I'll admit, that's impressive!   In the same breath of saying Donald Trump doesn't know what he's talking about, Biden appeared to claim that America is having an "infrastructure decade" with a price tag of "over a billion 300 million trillion $300 million dollars."  Very cool!

XTOD: $700 Million: What the Dodgers just agreed to pay Shohei Ohtani.  $667 Million: Total Oakland A's Payroll, Last 10 Seasons

XTOD: Time, diversification, and compounding are the only friends you’ll ever make in investing.

XTOD: Steve Jobs on leadership   “The greatest people are self-managing. They don’t need to be managed. Once they know what to do, they’ll go figure out how to do it… What they need is a common vision, and that’s what leadership is. Leadership is having a vision, being able to articulate that so the people around you can understand it, and getting consensus on a common vision.”

https://x.com/jessefelder/status/1732439005596352810?s=20

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https://x.com/judyshel/status/1733281900158943450?s=20

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https://x.com/zerohedge/status/1733214919527420136?s=20

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