Wrap your head around this:
Jobless claims last 3 weeks: 16,780,000
+ 5,500,000 forecast today would equal 22,280,000
Total jobs created since Great Recession: 22,088,000
In one month, 10 years of job creation wiped out...
It was an astounding and depressing weekend. Trump’s assertion the US is more respected than ever around the world is 180 degrees from the truth. I was, frankly, shocked.
There is great anger and frustration around the globe that the world’s largest economy would forfeit its leadership for policies that don’t make economic sense, and that the rest of the G7 don’t understand.
“I think there was a comment out there that this was the G6+1. It was not. It was the G7...” Mnuchin said. He’s spinning. The US is more isolated than I have ever seen it in the more than two decades I have been doing this.
It’s 7pm and the whole of NYC is out cheering and applauding the health care workers on the front lines. 5 nights now. Brings chills....
#coronavirus
#doctorsday2020
You're not gonna like this post,
#Fed
pundits.
I've seen a lot of arguments the Fed is misleading investors, doing a terrible job of communicating, and that
@NewYorkFed
President Williams contradicted
@federalreserve
Chair Jay Powell on rate cuts.
You're wrong.
1/7
In fact, they do. I spoke to the finance ministers from the rest of the G7, many of the central bankers, the EC and Eurogroup representatives, and senior officials from the IMF. Unanimous that the US is mistaken and will pay a big price.
*No Red Wave; Democrats May Hold The Senate
*Russia Says It's Withdrawing From Kherson
*CPI Inflation Slows More Than Forecast
Joe Biden's Wonderful, Excellent, Good, Very Good Week
Lots of talk about Xi Jinping calming markets. Reality: investors are hearing what they want to hear. We're months away from the possible imposition of tariffs. We're years away from implementation of Xi's promised reforms. THREAD
I asked Secretary Mnuchin his reaction. He told me the US, because of tax cuts, still leads the global economy. But he acknowledged the rest of the G7 may disagree.
You can criticize policy. But listen to what they actually say, not what you think you heard.
*Except for when the Chair wants to send markets a message through the WSJ Fed reporter. 7/7
How to think about today's
#jobs
report: 4.8 million people went back to work. These are not jobs created, these are jobs restored.
But (a big "but") 14.6 million people did not go back to work in June. And now we are seeing states shut down parts of their economies again. 1/2
This is fascinating: total retail sales through July have recovered and are back on trend. Will that continue without pandemic assistance to the unemployed?
Wait! Jobless claims are a head fake. When NY schools go on break, school workers can file for benefits. Guess what happened last week? NY claims rose by 16,000 over the prior week. A nice "Fed tightening is starting to work" narrative unravels...
(h/t Stephen Stanley, Santander)
China can’t match Trump’s new threat to raise tariffs to $150 Bln. Total US goods exports to China were only $130 Bln last year. China would have to put a tariff on everything it buys from the US.
*CHINA TO IMMEDIATELY TAKE MEASURES OF SAME SCALE AGAINST U.S.
*CHINA SAYS PREVIOUS ECONOMIC, TRADE ACHIEVEMENTS LOSE EFFECT
*CHINA SAYS DOESN'T WANT TRADE WAR, BUT WILL HAVE TO RETALIATE
*CHINA TO IMEPLEMENT MEASURES OF SIMILAR SIZE AGAINST U.S.
USTR Lighthizer on today's tariff announcement: "Our hope is that it doesn't lead to a rash reaction from China. I'm hoping that they view this as an opportunity to move to the next level. We hope this leads to further negotiations and to China changing its policies."
Powell said rate cuts were not a focus of discussion. Williams said that rate cuts were not a focus of discussion. They both characterized the meeting the exact same way.
3/7
President George W. Bush imposed "temporary" tariffs of 8%-20% on steel imports in 2002. By the time he ended them, one study showed the US economy had lost 200,000 jobs.
Bottom line: the Fed has shifted to a peak rate regime. That raises the question of rate cuts. They had to make forecasts and some said 3 in 2024, up from 2 in September. They presented those forecasts. That was the sum of the discussion, say BOTH Powell and Williams. 6/7
There's no contradiction there. Same explanation.
Additional points: Fed officials aren't sent out to "mop up" comments from the Chair. The interviews are scheduled well in advance*. And for Powell & other FOMC members, their comments are a function of what they are asked. 5/7
What I read into Powell's answer to me: barring a surprise, we're done. But we can't say that, so we leave another move on the table.
@federalreserve
#Fed
Finally! Trump admits he did not broker an
#oil
deal between Russia and Saudi Arabia. Just “hopes” they will make a deal. Says he “was told” they might do more than 10m barrels. (which means they each cut their output by 45%.) Doesn’t say who told him that.
THREAD:
For traders excited by the continuing claims decline, a more pessimistic take:
1) Don't forget Pandemic Assistance for gig workers not normally eligible for benefits. Add them to regular initial claims and 3,107,574 people filed last week; 1/5
Said the man who just publicly admitted lying about the trade deficit figures to PM Trudeau.
Said the man whose own Council of Economic Advisers says we have a trade surplus with Canada.
We do have a Trade Deficit with Canada, as we do with almost all countries (some of them massive). P.M. Justin Trudeau of Canada, a very good guy, doesn’t like saying that Canada has a Surplus vs. the U.S.(negotiating), but they do...they almost all do...and that’s how I know!
China does not pay tariffs to the US. We have not collected billions of dollars from China. We have collected billions of dollars from Americans, who pay tariffs on Chinese imports. Then we take the money from those Americans and give it to farmers.
TOMORROW'S Washington schedule:
Early AM - time is running out stories
Noon - things are looking bad stories
2 PM - Wall St gets the flu
4pm - Hill reporters call spouses to say they expect to work all weekend
6pm - Deal announced; Biden talks on South Lawn heading to Camp David
The game's not over, but Team Transitory with a big win in this set:
*DEC. ISM FACTORY PRICES-PAID INDEX FALLS TO 68.2 FROM 82.4
#Fed
#FederalReserve
#inflation
But did rate cuts come up? Yes, both said. But both said only when some individual members of the Open Market Committee presented their SEP forecasts and mentioned the topic. 4/7
This is kind of IMPORTANT: the
@federalreserve
is NOT holding an emergency meeting tomorrow. The Board (not the regional bank presidents) is holding a meeting (that was announced Friday) to discuss any recommendations from regional bank boards for raising the discount rate 1/2
Ironic humor from
@ClevelandFed
President Loretta Mester, who has reached the Fed's mandatory retirement age of 65: ""I'm too young to be president (of the US) but too old to be president of the Cleveland Fed."
Why economics is better than politics today:
1) Nobody is saying the payrolls numbers are fraudulent
2) Nobody is going to sue
3) BLS will do a recount next month automatically
4) Economists can go home tonight and not work tomorrow
How to think about what
@federalreserve
Chair Powell is saying: strong economy, sticky inflation mean it will take more time for policy to work. What he doesn't do is say how long that will be. So it sounds new, but really isn't. They don't know what they are going to do. Or when
People are proud to be saying Merry Christmas again. I am proud to have led the charge against the assault of our cherished and beautiful phrase. MERRY CHRISTMAS!!!!!
Mexico’s Chief Nafta negotiator, Ildefonso Guajardo, tells me on
@BloombergTV
Mexico hasn’t decided whether if it would proceed with a bilateral agreement if Canada doesn’t sign on. Mexico wants trilateral agreement.
Pro tip: remember in reading the breakdown of the Biden Build Back Better plan that the administration is talking about spending $3 trillion over 10 years. A lot of money but not the same as shoveling $1.9 trillion out the door in 2021/22.
@burgessev
For every dollar California and Illinois send to Washington, they get $1 back. For every dollar New York sends to Washington, it gets 90c back. For every dollar Florida sends to Washington, it gets $1.12 back.
The pandemic widens inequality:
The US unemployment rate is 10.2%. If you have a college degree, however, it's 6.7%. If you have a high school degree, it's 10.8%. If you dropped out of high school, it's 15.4% 1/2
Tracking the US economy in real time:
@NewYorkFed
puts together a new index combining high frequency data series.
It's ugly, as you'd expect. On your Bloomberg: {FRNYWEI7 <Index> GP <GO>}
You know nothing happened overnight when the first graph of every story includes "could."
A government shutdown could...
The UAW strike could...
High oil prices could...
7% Interest rates (???) could...
It tells you something about how
#COVID19
has changed the world when people can call 1.6 million people filing for initial jobless claims "good news"
#economy
Powell says there's always a possibility of a recession in the next year. But "there's no reason to think the economy is in a recession or at the edge of one."
@federalreserve
#Fed
ADP (-2,760,00 jobs) is a major surprise. Forecast was for -9,000,000. Don't take that as a sign Friday's NFP number will necessarily be better than forecast -8,000,000. There are a number of methodological differences in the surveys. This one is huge, however: 1/3
After close thought: every single (non-White House) economist would preface analysis of any economic data with “never draw a conclusion on one report, one report doesn’t make a trend.” Equity traders, however, seem to be saying “one report is all I need. V-shaped recovery it is.”
Attn:
@Delta
and Ed Bastian. I've been trapped at JAC for 14 hours now, along with hundreds of other travelers. I have never seen the kind of cool, calm, cheerful effort your gate agents have shown today. 1/2
And to those arguing here about how to protect your portfolio from "the ravages of inflation," as one tweet had it: Consumer price inflation is 5.8% year to date. The S&P 500 is up 23.8% year to date.
2) If that many people are still filing 10 weeks into the pandemic, it probably means companies are starting to give up and close permanently. Consequences to come; 2/5
After 20 years and many conventions, I gave up covering politics for economics in 1997. I've not missed it. But I admit a twinge of jealousy for today's DC crowd, which may reach the political reporter's holy grail: an open convention. Last one was in 1952.
#Biden