M Notes: Mon, 9-16

LAST WEEK:  

Markets:  They rebounded last week significantly.  

S&P roller coaster last week:  Up a lot, Up, Up a lot, Up, and Up.

Debate:  Generally, Democrat Presidential candidates pledge to raise taxes (for new spending), and Republican Presidential candidates pledge to cut taxes (and lower spending).  But to quote James Carville:  “It’s the Economy, Stupid” (1992).  Neither candidate gave a lot of specifics in the debate, but Trump was able to point to his economic record while President.  Harris has not really embraced the Biden results, and her “Economic Opportunity” plan is filled with more vibe than details.  And that’s been one of my concerns of her campaign… very few details. The Moderators from ABC never asked Harris to drill down on the two key Economic Policies she has announced:  price controls on food, and a new tax on unrealized capital gains.  Both proposals have been criticized by both sides of the aisle, and the Moderators blew it by not asking for clarification and details.  To use a Basketball analogy… they missed an easy layup.   

Who won the debate?  It depends on how you evaluate it.  I broke it down into three pieces:  delivery, content, and impact.  Delivery:  Harris.   Trump got rattled, and Harris gave a better “stylistic” performance.  Content:  a Draw.   Neither was overly specific, but I’d give the edge to Trump.  Impact #1:   It’s unclear if the debate will change the direction of the race.  Impact #2:   in my view there was a very clear loser… the Moderators (and maybe Journalism overall).  I’m okay with tough Moderators, but it has to be done equally.   They fact check or editorialized Trump 6 times by my count.  They didn’t do it even once to Harris.  If Trump avoided answering a question, the Moderators made that known and asked it again.   But when Harris deflected a question, the Moderators never followed up.  My view:  If the goal of the Moderators was to focus on and attack Trump, they succeeded.  If the goal of the Moderators was to provide a tough and impartial debate, they failed (badly).  

Fed Balance Sheet:  $7.115 Trillion (last week… up +$ 2 Billion).  Reminder: their balance sheet was closer to $4 Trillion before the Pandemic.  

Inflation:  The Consumer Price Index (the CPI… consumer inflation) was up +0.2% in August, and is up +2.5% Y/Y.  The Producer Price Index (the PPI… wholesale inflation) also rose +0.2% in August, and is up +1.7% Y/Y.  

Jobless claims:  The weekly number came in at 230,000.  The four-week average came in at 231,000.

National Debt:  $35.108 Trillion (last week… up +$19 Billion).  

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THIS WEEK:

Focus of the week:  How much will the Federal Reserve lower their interest rate?  The sixth Fed meeting of the year takes place this Tuesday and Wednesday.  At 2pm on Wednesday they will release their Meeting Statement, followed by Chairman Powell’s press conference.  It’s not a question of “if” the rate will be reduced, it’s by how much.  

Calendar:   Retail sales, industrial production (Tue); Fed Meeting statement, Fed Chair press conference, housing starts (Wed); existing home sales, and jobless claims (Thu).