Through The Hype

In today's issue of Barron's Gene Epstein, one of their in house economic data jockeys, writing about October's employment report, concludes: "With the labor market at or near full employment, it's past time for the FOMC to start hiking interest rates back to normal levels."

The key two words in that conclusion is "past time."  Forget normal levels. Nobody knows what that really is. In the simplest terms, past time should tell you the Fed is already behind the inflation curve. That's just one of the reasons you can count on these bureaucrats to do the wrong thing at the right time.  So much talk has preceded this rate hike--just follow the mixed market reactions of on again, off again Asian investors of late--that most of any reaction other than the expected initial one is already in the market.

In fact, after a brief perhaps sharp slump, you might see a full steam ahead rally. Such are the vagaries of markets, especially those not tampered with by central bank bureaucrats. But danger always lurk in the shadows. One such is former Treasury Secretary Larry Summers who now wants to end Fed independence by ushering in his fellow academics and politicians to help things along.

There are at least two things wrong with that. First, it's a phony pretense that the Fed is independent. Equally suspect are those seemingly good Bureau of Labor Statistic numbers, especially right before this election. The second thing wrong with it is genetics. Homo sapiens. The people Summer would turn this nonsense over to are, last time we checked, humans. And humans are biased by nature and the world literally has hundreds, if not thousands of years of history and research to prove it.

The attempt by many, as is frequently the case, to put lip stick on a pig is nearly always present, but most especially after this global establishment rattling long recession. Elites are scared. Next Tuesday is another fear evoking event, quite possibly one only a Mother Theresa would believe will satisfy everyone.

As one commentator noted: "Once again it’s not the data per se that drives either forecast, rather, it’s the data vs. what the model predicted."  For a slightly different interpretation of these BLS numbers see mishtalk.com/2016/11/04/unemployment-4-9-establishment-survey-jobs-161000-employment.

In the meanwhile, look for the Fed to create opportunity for those astute enough to see through the hype. Inflation could surprise more than many think.