Today’s employment report confirms suspicions that we are in a high neutral rate environment where responsible monetary policy requires caution in rate cutting. With the benefit of hindsight, the 50-basis point cut in September was a mistake, though not one of great consequence.     -Former Treasury Secretary Larry Summers, via X, 10/4/24 David Roche, founder and strategist at Quantum Strategy, said the nonfarm payroll figures made the Fed’s “jumbo interest rate cut look silly, populist and panicky.”    

If China or the US do anything to drive or attract Chinese capital out of the US, for any reason, the [dynamics shown] above strongly suggest that the reaction will be a significant increase in the Fed’s balance sheet or some other form of USD liquidity loosening.  What could drive the Chinese capital out of the US, touching off a response from the Fed and/or Treasury that amounts to a significant injection of USD liquidity

The US isn’t fighting a war, a crisis or a recession. Yet the federal government is borrowing as if it were. Not including interest, the U.S. government will spend $1.21 for every $1.00 it collects in revenue this year. Add interest and that climbs to $1.39.      -WSJ, 9/16/24 Both Harris and Trump have promised to protect the biggest drivers of rising spending—Social Security and Medicare. And both want to extend trillions of dollars in tax