Biden Was Good Enough; Powell Wasn’t
Author: Greg Valliere
August 1, 2019
IT WAS A CONFUSING MESS: Plenty of disagreements and a lack of certainty over where we go from here. But enough about the FOMC meeting, let’s talk about the Democrats’ debate.
THERE WAS ONE CLEAR TAKE-AWAY LAST NIGHT: Joe Biden survived, putting to rest whispers that he has lost a step or two. Biden gave as good as he got, and solidified his front-runner status despite a battering from nine other candidates. Now there’s a respite, mercifully, until debates resume on Sept. 12-13 in Houston.
RATHER THAN FOCUS on winners (Cory Booker) and losers (Kamala Harris), let’s look at the status of three major issues after two days of debate:
Impeachment: What happened? Virtually no one dared to utter the “I” word, for good reason — the public is disinterested. House Democrats haven’t given up on their dream, but let’s be blunt: the impeachment drive didn’t end with the Mueller hearings, it ended with this week’s debates.
Health Care: It’s the marquee issue but there’s utterly no consensus. Most Republicans are afraid to address the topic (the White House may focus on incremental regulatory reform, sure to be litigated), and Democrats appear
hopelessly deadlocked on who should be covered, who would pay more taxes, etc. Yes, everyone hates the drug industry and health providers, but the threat to them still appears to be largely headline risk. “Medicare for all” is years away from enactment.
Right-left: On immigration (naive), the economy (is it really that bad?) and the environment (spending trillions), the Democrats still appear to be well to the left of the American electorate, giving Donald Trump a huge opening in the general election. Biden gets this, and is the one Democrat who can shake the “socialist” label. Despite his flaws, Biden is the party’s best hope.
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A WORD ON THE FED: Just asking — what if tomorrow’s nonfarm payroll number is 190,000 with an uptick in wages? What if CPI and PPI data continue to look a little warmer? Since when did global economies dictate Fed policy? What if a perception grows that Trump is having an impact on interest rate decisions?
YESTERDAY’S FED DECISION pleased no one, and exposed serious divisions among the central bankers. In addition to the two dissents, there are non-voting members who have issues with rate cuts, and the Fed cacophony will only
increase between now and the next FOMC meeting, on Sept. 17-18. The Jackson Hole conference on Aug. 22-24, hosted by one of the dissenters, will keep the markets on edge.
WHILE BIDEN SURVIVED LAST NIGHT, a perception may grow that Jerome Powell, a decent and likable man, has committed the one unpardonable sin for a central banker — he has consistently confused the markets for nearly a year. The Fed has created its own economic headwind.
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