Well, we got a spate of good/cop bad/cop economic data out this morning.
Jobless claims were basically in-line, but if you you’re a Lael Brainaird type and you’re looking for excuses not to hike, you can probably find a reason or three in the retail data, which missed, casting doubt on the supposed “strength” on the US consumer.
Sales dropped 0.3% in August from July - that’s the first decline in five months after revisions. As data came in we could help but recall what Bloomberg’s Richard Breslow said last week about discrete data points and machines:
“Every market trading in lockstep is a legacy symptom of the financial crisis that benefits no one but computer algorithms.”
“The transmission mechanism from one piece of localized data to financial conditions all over the globe just doesn’t work that fast. If at all. And it creates false, even ridiculous, narratives purporting to describe how the world has suddenly changed. Until the next economic factlet requires an entirely different interpretation.”
Here’s the official release (which you can tell the government spent a whole lot time designing):
So let’s see. We got nothing from Draghi, nothing from Carney, and we’ve seen weak retail sales, weak ISM services, and a slightly disappointing August jobs print. So yeah, they can make a case to wait. The real chaos will come if everyone stays on hold and then Kuroda goes further into NIRP. There’s literally no telling what FX markets would do overnight.
Everyone’s just kind of frozen. It’s like one of those Spaghetti Westerns where everyone has their pistols drawn on each other and the camera zooms in on their eyes and sweaty brows while that whistling noise plays in the background.
Of course these policies have rightly been blamed for exacerbating the wealth divide in America. Earlier this week, Donald Trump told CNN Janet Yellen should “be ashamed of herself for creating a false stock market.”
And maybe she should. Or maybe someone has a better idea. Someone like our favorite Richard Breslow who thinks perhaps we should just drop the facade and make them all politicians.
“ Maybe we’re thinking about central banker independence all wrong. We like to pretend that things work best when they’re strictly independent of government interference. It’s a nice conceit, but not really practical or realistic. Even if it’s a properly sacrosanct notion.”
“Yet, everything they do is ultimately highly political. They end up picking winners and losers. Meshing with or functioning in place of more appropriate structural and fiscal policies
The mere fact that helicopter money has been laboriously discussed belies independence
On the other hand, listen to a Yellen or Draghi speak these days and it can’t be denied they’re increasingly aware of, and worried about, the inevitable limits of their power. And have pretty strong ideas on what really should be done in realms not in their remit”
“They’re just too polite, timid and, well, political, to say what they believe with enough force. Or in truly public forums. They should, however, feel the higher calling of their place in history. And a greater sense of urgency for the citizenry -- who certainly deserve their advocacy
How about pulling them out of their current roles and putting them in charge of the rest of the economy? Give them a chance to do what must be done and what traditional politicians have proven incapable of implementing.”
“Certainly they understand that pushing infrastructure spending, addressing deferred maintenance and pushing for a sensible balance of power in wage negotiations is a better response to dangerous financial inequality than populism and xenophobia.”
We mean, how much worse could it get?