Unemployment and interest rates.

[786Trader]

Powell seems to be reluctantly listening to Trump, with Trump wanting super low interest rates releasing even more  cheap money into the system. 

The connect between low unemployment and inflation has shifted, as so much of the employment is very low paid or low paid, meaning one works but has no money to show for it at  the end of a week/month, bringing very little potential for growth for the majority.  The majority are now employed, but poor. Looks good for employment figures but bears little resemblance to the reality on the ground where most mortals live.

There is a sense of foreboding in the economy. A feeling that all is not as well as it would appear. It could be the unease that the President seems to inculcate generally, or the more likely being an adjustment is due.  

Next year is an election year and Trump's ace (correctly or not) has always been the economy. He needs the economy to motor on unimpeded. However, Trade wars, Oil wars, migrant bashing and his general  unpredictability (lunacy?) has stifled what should be a simple job of managing an economy that by nature grows. 

Point being, unemployment numbers are no longer as relevant as factors for growth as the numbers themselves no longer reflect the income and positive income coefficient of the working populace. The working majority are working poor living on minimum wage, who have not had the benefit of inflation plus wage increases year on year, while living with commensurately higher cost of living increases over the last decade. Strip those numbers out and there is a clearer but not necessarily prettier picture of the state of play in the USA and other OECD economies.

[Mercury]

I agree with most, if not all, of that @786Trader.  I have access to insight from UK retail through various sources who work in the sector and I have been tracking negative development in retail for over a year now.  The picture is poor and deteriorating, probably because of similar reasons to those you cite for the US (expansion of gig economy jobs at expense of traditional jobs = less security, more multiple job taking, less money in the pocket, more debt etc).  I think the consumer is jaded and concerned about the future so keeping their money in the pockets.  I also think there has been over expansion in retail (not just, property as well).

As regards Trump, I think his ace is really about tough stance against companies shipping jobs overseas.  This is how he won the rust belt, and consequently the election.  So long as he keep this pressure up and continues to challenge law makers on what his base sees as their self interest (a wide variety of subjects there) the the actual economy may be secondary.  I do think his current low interest rate stance is to pick a fight with the Fed.  He was calling for higher rates while running for office while Yellen was being Dovish, now that the Fed has turned Hawkish he is calling for lower rates.  I think we wants the fight (again taking the fight to what his base would see as the bloated bankers and left leaning academic economists - draining the swamp or whatever he said).  All he really needs to be able to do is blame Yellen and Powell for the next crash/recession due to their manipulations (and probably Obama for bailing out the banks and spending on Obamacare) and he is bullet proof.  So net I think his posturing is about creating that "get out of jail free" card, perhaps because he and his advisers see the next crash coming on his watch?

[MYK1]

Don't you think that's better as long as Trump tweets traders will get volatility  LOL

[786Trader]

On 11/07/2019 at 13:49, Mercury said:

I agree with most, if not all, of that @786Trader.  I have access to insight from UK retail through various sources who work in the sector and I have been tracking negative development in retail for over a year now.  The picture is poor and deteriorating, probably because of similar reasons to those you cite for the US (expansion of gig economy jobs at expense of traditional jobs = less security, more multiple job taking, less money in the pocket, more debt etc).  I think the consumer is jaded and concerned about the future so keeping their money in the pockets.  I also think there has been over expansion in retail (not just, property as well).

As regards Trump, I think his ace is really about tough stance against companies shipping jobs overseas.  This is how he won the rust belt, and consequently the election.  So long as he keep this pressure up and continues to challenge law makers on what his base sees as their self interest (a wide variety of subjects there) the the actual economy may be secondary.  I do think his current low interest rate stance is to pick a fight with the Fed.  He was calling for higher rates while running for office while Yellen was being Dovish, now that the Fed has turned Hawkish he is calling for lower rates.  I think we wants the fight (again taking the fight to what his base would see as the bloated bankers and left leaning academic economists - draining the swamp or whatever he said).  All he really needs to be able to do is blame Yellen and Powell for the next crash/recession due to their manipulations (and probably Obama for bailing out the banks and spending on Obamacare) and he is bullet proof.  So net I think his posturing is about creating that "get out of jail free" card, perhaps because he and his advisers see the next crash coming on his watch?

 

On 11/07/2019 at 13:49, Mercury said:

I agree with most, if not all, of that @786Trader.  I have access to insight from UK retail through various sources who work in the sector and I have been tracking negative development in retail for over a year now.  The picture is poor and deteriorating, probably because of similar reasons to those you cite for the US (expansion of gig economy jobs at expense of traditional jobs = less security, more multiple job taking, less money in the pocket, more debt etc).  I think the consumer is jaded and concerned about the future so keeping their money in the pockets.  I also think there has been over expansion in retail (not just, property as well).

As regards Trump, I think his ace is really about tough stance against companies shipping jobs overseas.  This is how he won the rust belt, and consequently the election.  So long as he keep this pressure up and continues to challenge law makers on what his base sees as their self interest (a wide variety of subjects there) the the actual economy may be secondary.  I do think his current low interest rate stance is to pick a fight with the Fed.  He was calling for higher rates while running for office while Yellen was being Dovish, now that the Fed has turned Hawkish he is calling for lower rates.  I think we wants the fight (again taking the fight to what his base would see as the bloated bankers and left leaning academic economists - draining the swamp or whatever he said).  All he really needs to be able to do is blame Yellen and Powell for the next crash/recession due to their manipulations (and probably Obama for bailing out the banks and spending on Obamacare) and he is bullet proof.  So net I think his posturing is about creating that "get out of jail free" card, perhaps because he and his advisers see the next crash coming on his watch?

I agree with you Mercury, the President likes to appear to be standing up for the "little man" and blame any woe on someone/something else, but especially the educated, professionals in finance and/or anyone who does not share his ever changing opinions. Fine politics, true enough. Not so great economics. He  could very well see the adjustment many of us feel is due, falling on his watch. Worse still before the election, (Warren would give him **** hell were it so). You are correct in suggesting he will be the first to loudly blame the Fed and probably threaten it's very existence and try and rebuild it in his image. (Not a good idea, but great politic). All very funny were it not really happening...... Have a great weekend.

[Mercury]

There is a Chinese curse @786Trader, "may you live in interesting times."  We certainly do...  Here on the forum at least we can try to keep it real, whatever that really means.  One thing I believe wholeheartedly is that the markets will do whatever they are going to do regardless of Trump, Brexit, Yellow Vests or anything else.  I am more focused on data, technicals  and price action than Trumps shenanigans.   Still it makes for good theater, you have to give him (and the British and EU politicians) that...