The Defining Election of our Lives & All Eyes On the CPI – Top 3 Takeaways – August 14th, 2024
- A true sign of the times. This year’s presidential election is in so many ways the election of our lifetime. As a country do we choose to embrace capitalism or socialism? Do we embrace the principals that made the United States the greatest country on earth that were rooted in legal immigration, or do we say the heck to this country’s principals and culture and embrace open borders? Similarly, is this still a country governed based on principles that are rooted in right and wrong, the rule of law, or is this a country of lawlessness where right and wrong is only selectively applied by prosecutors? Does this country want to bring back the president that led this world to a place of relative peace and safety, spurred by an economy with low inflation, huge wage growth, creating the biggest increase in the average American’s standard of living in nearly two generations, with record low unemployment rates for all minority groups, or do we want the current vice president who’s best known for presiding over the Biden administration's border policy, word salads and cackling? Statistically as I’ve disseminated there’s an 84% difference in policy positions between Donald Trump and Kamala Harris. Does this country really want a president who’s 84% to the left of what Donald Trump’s presidency brought this county? But the reason I’m pontificating this way today is due to Kamala’s basement 2.0 campaign working. As noted in this week’s Politico Playbook: Now three weeks into her campaign, and with the Democratic National Convention just a week away, Harris has ridden a wave of base enthusiasm and swing-voter relief to put the presidency back into play. What she hasn’t done yet is settle on a plan for governing, except in the broadest of strokes. Her stump speech has framed the campaign as a “fight for the future” without saying much about what precisely that future would entail. There’s no 100-day agenda, let alone a detailed tax policy white paper. And what about the lack of espoused policy, a lack of access by reporters and journalists who might ask questions Americans might want to know answers to? Quoting an unnamed Politico source cited as a “frontline lawmaker”: Why would we start talking about policy? ... We’re actually better off just running on this real wave of enthusiasm and energy. … It’s the best thing [Harris] can do. And that is just how little they think of you. But the biggest problem of all is that...
- It appears to be working. Another week has gone by, and Harris has risen in polls across the board. In my swing state series additional states that had been in play for Trump no longer are and he’s clinging to his narrowest advantage in this election yet. The World War II generation is known as “The Greatest Generation” for a reason. If this country chooses to stand by a party and by a presidential candidate that thinks so little of you that they have no problem saying “why would we start talking about policy”, you know what they’re actually elected to do, and if Kamala Harris can run a basement 2.0 campaign and win, what would that say about this generation of Americans, as in all responsible and how exactly would we expect those politicians to govern? Representing our interests or theirs? Biden’s basement campaign due to COVID was one thing. But it cannot be successful again or this country will cease being great again for future generations. Democrats are all but openly mocking how ignorant and dumb they think the average American voter is. And if the average American votes for it they’re right. This strategy can’t win because if it does its reflective of what this country would have become. We’d still be a country governed of the people by the people and for the people...and that would be the problem. This isn’t an election that can be lost.
- Eyes on today’s CPI. One down, the most important of the monthly inflation reports to go. On Tuesday investors, and/or those who’re generally hoping that the Federal Reserve will soon begin to cut interest rates got just the news that they were looking for. In the monthly PPI, or Producer Price Index report, a measure of wholesale inflation, prices increased a bit less than expected for the month and at a 2.2% annual rate – a number that’s only ever-so-slightly ahead of the Federal Reserve’s 2% target inflation rate. That news quickly turned to green on Wall Street as investors bid up stocks in anticipation that today’s CPI, or Consumer Price Index, the top measure of consumer inflation, will likewise prove to be benign enough for the Federal Reserve to begin to cut interest rates in September. For nearly three years the most important monthly economic report has been the Consumer Price Index. Today’s report is the most important of the monthly CPI reports since the Federal Reserve stopped raising interest rates last year. According to CME FedWatch investors have placed a 100% probability on the Federal Reserve cutting interest rates next month, with a 55% probably of the Federal Reserve cutting interest rates by 50 basis points, or a half of one percent (what’s often the equivalent of two rate cuts). What’s a given is that we’ll see significant volatility in the financial markets as the number comes in at 8:30 this morning. With an exceedingly high expectation that the CPI will also be more benign having been priced into the markets, what’s implied is more downside risk if the number unexpectedly comes in high, than there is on the upside if the number comes in lower as expected. All eyes are once again on the CPI and this report will produce the most volatility of any of them in a year and signal whether the end to this 20+ year high-interest rate cycle will soon be coming to an end.