Jackson Hole Buzz
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Market Snapshot
Banana Bits
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Macro Monkey Says
Harris-onomics
Don’t freak out.
Everyone knows we don’t get political at the Peel. But this is the first election year since The Daily Peel was born back in June 2021.?
So, as the largest and most trusted new organization in the world (obviously), we need to discuss the economic policy proposal by our esteemed, dearly beloved, totally non-psycho Presidential candidates.
We’re not giving opinions on policy—just going over the proposals. Tomorrow will be Trump’s turn, but today, we’re gonna focus on Harris. Let’s get into it.
What Happened?
On Friday, U.S. Vice President and Democrat Presidential nominee Kamala Harris unveiled her economic policy proposals if she were to win the election.
For starters, we should state that both sides of the political aisle broadly want the same things for the economy, like lower prices, higher incomes, more jobs, reasonable spending, etc. Disagreements emerge only in methodologies.
With the last 5yrs of inflation data picture above seared in the back of American’s minds, it’s no surprise prices are at the top of the list.
Branded the “Opportunity Economy,” Harris’ proposals carry a violent echo to that of her boss, President Biden. It’s as if she’s sitting at a poker table, saw Biden’s bet, and said, “I’m gonna double it.”
For example, some of the key pillars of her policy initiatives include:
In addition to being her “key” policies, the above are some more… unique… proposals.
For instance, an additional 3mn housing unit is approximately double the current annualized rate of home completions. Plus, not that they would all come on the market at the same time, but adding 3mn units would more than double the number of active listings in the US.
But, with housing as a primary concern for many young Americans, just like inflation, it’s no surprise to see candidates come out swinging with ambitious proposals to try to solve these issues.
Speaking again of inflation, one of Harris’ most “unique” proposals centered around what she and her campaign view as corporate-driven inflation across crucial industries.
In Friday’s speech delivered in North Carolina—a state that’s recently been flooded with young new residents hunting for apartments in cities like Charlotte and Raleigh—Harris promised to “crackdown” on what she views as collusive behavior.
According to Harris, large apartment operators collude via rent pricing algorithms, which she believes to be unjustly driving up prices.
Further, Harris capitalized on a popular but misleading trope that the disgustingly expensive housing market is primarily due to investment firms like BlackRock buying up homes to turn around and rent them out, promising to ban this practice.
Saving the best for last, Harris’ most controversial proposals centered around prices at the grocery store.
She began by highlighting stricter merger requirements for big food companies. But, she went further, implying the potential for price controls on food and groceries.
Harris didn’t outright call for price controls, but she did strongly allude to it, seemingly not wanting to tie herself to that policy but wanting to create the image of a $4 limit on gallons of milk or something.
Universally, economists warn against price controls outside of extreme circumstances, like war. But the campaign trail is the time to f*ck around. It’ll be months before anybody’s forced to find out.
The Takeaway?
“Aggressive” is a great word to describe some of Harris’ goals.
Raising the corporate tax rate to 28% appears to be the main (maybe only) plan to pay for these aggressive ideals. According to the CBOE, way back in 2018, a 1% corporate tax hike would allegedly increase federal income by $96bn annually.
That sounds great, but per the same organization, Harris’ full proposals would rack up an additional deficit of $1.7tn over the course of 10yrs.
Whatever happens, it promises to be interesting.
What's Ripe
领英推荐
Hawaiian Holdings (HA) 11.34%
Palo Alto Networks (PANW) 7.18%
What's Rotten
Boeing (BA) 4.20%
Bank of America (BAC) 2.47%
Thought Banana
Deciding Everything in the Middle of Nowhere
It’s a quiet week for macro news.
So, it only makes sense for every professional nerd to meet in a quiet location to discuss the economic fates of… everyone on Earth.
The Fed’s annual meeting in Jackson Hole, Wyoming, begins tomorrow. Every sentence, word, stutter, grunt, cough, and fart from Fed Chair Jerome Powell will be poured over as if he was giving us the Ten Commandments 2.0. Let’s dive in.
What’s Happening?
Jackson Hole is more than just a beautiful place meant to distract from the mindnumbing monotony of talking about interest rates for days on end.
Discussing boring, I mean interest rates will include fellow Central Bankers from around the world, like the UK’s Andrew Bailey, the EU’s Philip Lane, and Japan’s Kazuo Ueda, among many others.
All eyes are locked in on what’s to come at this week’s meeting, with Fed Chair Powell’s Friday morning speech as the primary focus.
At the 2022 Jackson Hole conference, JPow declared war on inflation. Given the current transitionary period in monetary policy, everyone with a WSJ subscription expects him to outline a plan for loosening policy.
Many expect to get guidance for plans at the September FOMC meeting, despite the fact that there’s almost no doubt at all about what the Fed will do.
Less than a month away, the only question is how much JPow and the gang plan to cut. The market’s odds favor a 25bp cut, but given that Powell is a man of conviction, don’t be surprised if he continues to go hard in the paint.
However, Jackson Hole is usually the Fed’s equivalent of a shareholder meeting.
It’s where central bankers outline longer-term visions, hyping up apes and analysts alike for all the gains to come while strategically avoiding commitments to any explicit policy actions.
But, given that we’ll get two inflation reports, an updated Q2 GDP growth estimate, and a new jobs report between Jackson Hole and the September meeting, take it all with a heaping pile of salt.
Stay tuned.
The Big Question: What else will we learn from the Jackson Hole conference? How aggressive will Powell be in loosening policy?
Banana Brain Teaser
Previous
What is the greatest number of blocks, 8cm by 6cm by 9cm, that will fit into a storage space that is 60cm by 72cm by 96cm?
Answer: 960cms
Today
A certain company that sells only cars and trucks reported that revenues from car sales in 1997 were down 11% from 1996, and revenues from truck sales in 1997 were up by 7% from 1996. If total revenues from car sales and truck sales in 1997 were up 1% from 1996, what is the ratio of revenue from car sales in 1996 to review from truck sales in 1996?
Send your guesses to [email protected]
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