Weekly Newsletter 8/23/24
Good afternoon and thank you for checking in.
The major US stock market indexes traded higher Friday which comes after yesterday’s pullback. Thursday witnessed the biggest down day in over two weeks. One could say the markets were due considering the tear they have been on when just two weeks ago the big concern was recession, a down-and-out consumer and possible contagion from a funky foreign “investment” scheme.
Fed Chair Jerome Powell speaks on the economic outlook today at the Jackson Hole Economic Policy Symposium. Powell is expected to signal the Fed is getting closer to easing amid heightened confidence on inflation outlook and pickup in concerns about labor market risks. However, not too much expectation for any explicit policy commitments and he is likely to reiterate the data dependence dynamic. Feb committee member Raphael Bostic said this morning the Fed can't wait until inflation is back to 2% to begin cutting, though also noted the inflation dashboard is "still flashing red." (whatever that means). Otherwise, it was a fairly quiet on the economic calendar with just July new home sales reported.
This week I was reintroduced to the philosophy and ideas of economist Milton Friedman. Born in 1912 he spent his early twenties working in Washington D.C. While he “regarded the job-creation programs such as the WPA, CCC and PWA appropriate responses to the critical situation (the Great Depression), but not the price and wage fixing measures of the National Recovery Administration and the Agricultural Adjustment Administration.” Foreshadowing his later ideas, he believed price controls interfered with an essential signaling mechanism to help resources be used where they were most valued. Friedman later concluded that all government intervention associated with the New Deal was “the wrong cure for the wrong disease,” reasoning the Federal Reserve was to blame and that they should have expanded the money supply rather than contract. He felt the Great Depression was caused by a severe monetary contraction due to the banking crisis and poor policy on the part of Fed Reserve. Why retell 90-year history? I see too many similarities to today. We have a Federal Reserve trying to thread the needle of an economic “soft landing” narrative when just a few years ago we heard this same group tell us the uptick of inflation was temporary…”transient” in their fancified lingo. We have politicians preaching price controls, random minimum wage requirements, tax increases, attacks on business (all the while they lobby these same companies for donations). Do not take my comments as some sort of political endorsement. I am a registered independent and I can point out the flaws of any major candidate…just ask. I invite you to take a few moments and watch the clip below of Milton and Phil Donahue’s interaction on the concept of capitalism from 1979.
The link below has additional articles for your reading pleasure.
https://www.raymondjames.com/evangelista/resources
“Nothing is so permanent as a temporary government program.”--Milton Friedman
Thank you,
Kyle
KYLE CHRISTIANSON, CFP®
Financial Advisor
Raymond James & Associates, Inc.
1421 Pine Ridge Rd, Ste 300
Naples, FL 34109
Toll Free (800) 843-2025 | Direct (239) 513-6525 | Main (239) 513-6500 | Fax (239) 596-5474
Kyle.Christianson@RaymondJames.com
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