WASHINGTON (MaceNews) – The lazy, hazy days of … but not this time. U.S. stocks are still setting records but a new pessimism has dawned.
About two weeks until Jackson Hole and a few more days afterward in which to likely be disappointed in how little the event added to what we already knew.
And how little the annual Kansas City Fed symposium seems to matter compared to how women and girls and NGO personnel and humanitarian workers and other of America’s helpmates and their extended families are liable to be slaughtered or enslaved in Afghanistan.
When Pentagon spokesman John Kirby Friday used the word “encircle” the world changed a little bit more. As in the Taliban are encircling Kabul, which means a decision on whether to mount a Berlin-style airlift sometime soon to supply all the things like food and oil that won’t get through. Or acknowledging even that would be futile.
U.S. consumers last month got disappointed the Delta variant is doing exactly what was forecast. It didn’t take the University of Michigan’s preliminary consumer sentiment report, an abrupt drop to the lowest level in nearly 11 years, to illustrate the change in tone after many if not most Americans figured it wasn’t going to get any better than May and June.
The UMich report historically doesn’t necessarily correlate with future consumption and it may not this time either. Yet even if strong demand continues the national tone is not irrelevant.
By Friday Aug. 27 when the final August sentiment reading is published, the Delta variant will have killed a lot more Americans and we’ll know more about how President Biden interprets our responsibility toward the encircled Afghanistan capital. The numbers will be in which will show whether August’s heat worldwide set another record as did July.
Would it have been any different had Afghanistan been redesignated as the beneficiary of an American peacekeeping mission instead of the theater of a “Forever War.”
A Kandahar veteran told Mace News of acres of U.S. military vehicles being shredded rather than turned over to the Afghan defense forces, for whom he said U.S. support was much different than in Iraq and much different than Americans understood to be the case.
Seven years ago The Washington Post reported the “largest retrograde mission history,” military speak for the scrapping of $7 billion in U.S. equipment not turned over to Afghan defense forces thanks to congressional restrictions. This time the White House has used the term “retrograde” again, and the U.S.-supplied materiel that is being sacrificed could set a new record.
In that perspective Tuesday’s July retail sales report doesn’t seem all that important either. Strong consumption in July doesn’t mean accelerating consumption in August and September and October. And it might not have been all that strong in July. Bank of America analysts see a 2.3% decline, way below the consensus expected slippage of only a couple of tenths.
Can U.S. stock market indices keep reaching new highs as European equities entice more investors, as the benchmark 10-year yield again dips below 1.3% with its attendant signals for a future less ebullient than early summer, and as headlines about children bearing the burden of vaccine hesitancy and families being evicted populate front pages and “A” blocks on the evening network news? Maybe.
The esteemed Richard Curtin, who assembles the UMich sentiment report, said there could be a snapback of optimism in future months after what he said was an “emotional” negative reaction to escalating infection and aggressive inflation.
Not to pile on the pessimism but if a September tapering announcement is in the works as a plurality of economists expect, and the Delta variant is still taking its toll and the U.S. embassy in Afghanistan is being shut down, what will fuel that optimism? And, as the front page of The New York Times said Friday, courtrooms are seeing lines of people threatened with eviction despite an extended federal moratorium.
Or maybe the sun will shine more brightly, the Taliban will permit the survival of Kabul and its refugees, at least for the time being as they have said will be the case. Maybe landlords en masse will turn to the American Rescue Plan for rent payments instead of the courts and the Delta variant will begin to fade, as it seems to be doing in some other parts of the afflicted world. Finally, cooler breezes could relieve the heat dome over much of the country. That’s the thing about the future, it only resides in the future when anything is possible but only a few things are likely.
Meanwhile President Joe Biden is tested anew. He’s currently in zip code 21788, out of site at Naval Support Facility Thurmont, otherwise known as Camp David. His statement Saturday about upping the numbers of U.S. troops to Afghanistan to 5,000 also blamed his predecessor for inviting the Taliban to Camp David. By the time the invitation was rescinded, the path ahead seemed to have been set.
But as every Sunday public affairs show patter indicated, the Afghanistan departure is now owned by this president. The precedent being repeated with another “Saigon moment” could reverberate for decades to come, in Taiwan, Ukraine and so many other trouble spots where American might is such a big factor.
A footnote for anyone who read this space last week, in which the question was posed why U.S. policymakers are not more concerned with prosperity’s bottom line, the growth rate of productivity. BLS figures were cited showing the output of the average American worked has dropped close to $100,000 in about 15 years.
Mace News repeated that question to Chicago Federal Reserve President Charles Evans Tuesday during his annual media availability. Evans said that supposition is wrong, that policymakers actually are very aware of the importance of productivity growth to the future capacity of the country to remain prosperous. How to promote that productivity growth, though, is always a question with both many answers and few clearly actionable solutions.
Fed Chair Jay Powell, though, answers questions of educators at a Town Hall Tuesday afternoon. In the recent past he has said one of the most important fonts of productivity growth would be an improvement of the country’s lagging educational outcomes relative to many other developed economies. Perhaps, in that opportune environment of academic curiosity, he’ll be asked that question again.
The upcoming week’s data points are below.
UPCOMING ECONOMIC DATA AND FEDERAL RESERVE EVENTS
Monday, Aug 16 – 8:30a ET Aug US Empire State mfg index (July 43.0)
Monday, Aug 16 – 4p ET US Tsy TICS
Tuesday, Aug 17 – 8:30a ET – US July retail sales
Tuesday, Aug 17 – 2:30p ET – Fed’s Powell Town Hall Q&A
Tuesday, Aug 17 – 8:55a ET US Redbook weekly retail activity (prvs +)
Tuesday, Aug 17 – 9:15a ET Fed’s July industrial production (+0.4%)
Tuesday, Aug 17 – 10a ET US June business inventories (May +0.5%)
Tuesday, Aug 17 – 10a US NAHB Aug home builders index (July 80)
Wednesday, Aug 18 – 7a ET US MBA wkly mortgage apps (prvs %)
Wednesday, Aug 18 – 8:30a ET US July housing starts (June 1.64 SAAR)
Wednesday, Aug 18 – 10:30a ET US EIA Wkly oil stocks (prvs -400K bls)
Wednesday, Aug 18 – 2p ET Federal Reserve FOMC minutes
Thursday, Aug 19 – 8:30a ET Wkly initial jobless benefit claims (prvs 375K)
Thursday, Aug 19 – 8:30a ET Aug Philly Fed manufacturing index (July 21.9)
Thursday, Aug 19 – 10a ET Conf Board July Leading Economic Indicator (June +0.7%)
Friday, Aug 12 – 1p ET Baker-Hughes oil rig count (prev US +9/500)
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Contact this writer: denny@macenews.com. Opinions expressed are those of the author and do not necessarily reflect those of Mace News.
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