Between the FOMC and the NFP (Jobs Report) missing expectations and all of a sudden we're back to talking rate cuts. The ISM Services report on Friday was also week, coming in below 50, though somewhat concerning was the prices paid component, coming in well above expectations. Over the course of last week the 10Y fell from a high of ~4.70% back to ~4.50% and the 2Y went from a high of ~5.50% down to 4.83%. Of course the move lower in yields was positive for stocks, for now at least.
On the week ahead it will be light economic data, so the BOE rate decision and Fedspeak will be in focus. You'll also get a whole week to read up on how immigration is impacting the economy, whether it is helping to cool inflation, and whether any post-election clamp downs on immigration could lead to a resurgence in wage pressures.
If you missed it, FinTwit was the video of Jared Bernstein attempting to answer a question on MMT https://twitter.com/i/status/1786272981058220187 Every couple of weeks MMT seems to make it's way back into view.
Separate but somewhat related, here are some quotes for thought.
Courtesy of Mark Higgins:
"Persuaded as the Secretary is that the proper funding of the present debt will render it a national blessing, yet he is so far from acceding to the position, in the latitude in which it is sometimes laid down, that “public debts are public benefits,” a position inviting to prodigality and liable to dangerous abuse, that he ardently wishes to see it incorporated as a fundamental maxim in the system of public credit of the United States, that the creation of debt should always be accompanied with the means of extinguishment. This he regards as the true secret for rendering public credit immortal." -ALEXANDER HAMILTON, first U.S secretary of the Treasury (1790)
And courtesy of George Hall:
"What a Government spends the public pay for. There is no such thing as an uncovered deficit. But in some countries, it seems possible to please and content the public, for a time at least..." - John Maynard Keynes, 1923, A Tract on Monetary Reform, p. 62.
Anyway, why does a government want a monopoly over currency, see here
XTOD: To recap this week ... On Wednesday the question to Powell was if they would hike. On Friday, we are asking if they cut this summer. Any bets on what next week brings?
XTOD: This is absolutely priceless. And probably the most frightening clip you'll ever watch on the people in charge of the US economy. Jared Bernstein is literally the Chair of the Council of Economic Advisers, the main agency advising Biden on economic policy https://twitter.com/i/status/1786272981058220187
XTOD: While the U.S. government could finance all its spending without borrowing or collecting taxes, those are two ways for it to get the public to abstain from acquiring real resources. The alternative of pure money creation, on the other hand, has the government bidding against the public for the economies scarce resources, which, depending how much the government seeks to spend, can drive prices up....Once aggregate spending suffices to achieve full employment (I use the term the usual way), the "real resource constraint" binds. At that point further money-financed G is inflationary. Borrowing becomes a non-inflationary alternative....They are, no less than money creation, devices for increasing the government's command over, or share of, the economies scarce output....So, while "mainstream" economists may not express themselves well on these subjects, especially in live interviews, it doesn't follow that there is a vast gap between the mainstream understanding of gov't funding options and MMTs supposedly distinct arguments.
XTOD: The govt is always bidding against the public (& vice versa). Taxes reduces private sector ability to bid (keeping prices lower). Bonds have similar effect.
XTOD (this guy had a lot to say in response): Lots of people chuckling but nobody suggesting an answer, at least in language that normies can understand..... lots of people will tell you this story, but they will forget to mention one important thing: there are several billion humans going to work every day working for 8 hours or so. Working. Creating value (products and services). And so total value of everything in the world is increasing every day. There are new buildings and roads and chairs and cars and noodles and milk and YouTube videos and mobile phones and computers and people are able to get back to work because someone has cured them from a disease. This is why it's not really a Ponzi Scheme. Money is circulating and new money is constantly being added, but real value and assets are also constantly being added. There is real input to the scheme, human labor.....So what is the problem then? The problem is that the world economy, specifically the US economy, is borrowing more than it is going to able to pay back and that it is producing. ..How does this end? It ends in hyperinflation and collapse of the dollar. Nobody will want to buy US debt anymore because US is irresponsible. The trust will be lost.
XTOD: I wonder how many people know these “buybacks” are mostly unpaid taxes distributed to investors in US 🤔 In the case of $AAPL profits are kept offshore in 0% tax countries like Ireland, then $AAPL issues bonds in #US to finance these buybacks and when the bonds mature they use offshore cash to repay them saving the 30% tax rate owed to uncle sam (that triggers only if profits are directly “repatriated” as cash) and all other countries involved in particular in #Europe
XTOD: Just how many people are taking the weight-loss drug Wegovy? 25,000 are starting it each week in the U.S., maker Novo Nordisk said this morning. That’s 5x as many as at the beginning of this year - and more than the capacity of Madison Square Garden. The company says it would be more - but they’re working to increase supply. https://cnn.com/2024/05/02/health/wegovy-weight-loss-drug-new-prescriptions/index.html
XTOD: "Warren Buffett thinks of cash as a call option with no expiration date, an option on every asset class, with no strike price."
XTOD: "You have to be in love with the subject," says Buffett. "You can't just be in love with the money." He adds that everyone should find out what his or her brain is best suited for — and then pound away at it. Buffett loved reading Moody's manuals. But that is not for everyone.
https://x.com/biancoresearch/status/1786375317642473554
https://x.com/RnaudBertrand/status/1786272981058220187
https://x.com/GeorgeSelgin/status/1786361683272741358
https://x.com/dandolfa/status/1786363819750531566
https://x.com/nikstankovic_/status/1786324325647233500
https://x.com/DarioCpx/status/1786221508517569022
https://x.com/megtirrell/status/1785999147184664667
https://x.com/trengriffin/status/1787185907235508357
https://x.com/kejca/status/1786836096493539741
No comments:
Post a Comment