The post-election financial fever has cooled for the moment, rates sliding slightly. Trading in markets since the election cannot be traced to changes in the economy; all have been reactions to prospective changes in policy. Most people would like markets and the economy to be separate from politics, if only to avoid annoying each other with political discussions, but we’re stuck. As this particular fever began, so it will continue and recur -- like malaria, gone for a while and then back to shaking sweats. Three signs of stability Economic stability no. 1: today’s employment report for December. Everything in it is so close to trend that there’s no daylight between trend and actual. Unemployment, underemployment, hours worked, average hourly wages, workforce.... Stability no. 2: In the first week of each month, we get the twin surveys by the old Purchasing Managers’ Association, manufacturing and service sector. These two are near the top of trend, but nothing excit...
- Employment and purchasing data for this month are almost exactly on trend.
- The Fed has indicated it will act if the economy becomes overheated due to new policies.
- More investors and businesses every day are coming to the same conclusion: nobody knows what will happen.
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