Bill Owens: Confounding And Confusing Events 9/14/20
The Federal Reserve published its Beige Book which predicts modest growth based upon the continuing loss of jobs, (new claims), particularly with large employers which we have talked about before, like Coke, etc., the continuing level of unemployed individuals at nearly 2 million and the general slow growth of the economy. They also express fears of a resurgence of the coronavirus and what impact that would have on the economy as well. Again, as I noted last week, the stock market soars, even with a few bumps, go figure.
The debt has now exceeded GDP so that we have debt in excess of 20 trillion dollars. It is hard to discern what policymakers think of that, and whether or not they see it as either a short-term or long-term issue. Again, since most countries in the world are suffering the same problem, maybe not to the same degree, I sense a little less angst.
The aluminum tariffs are having an interesting, if unintended, consequence. It appears the cost of making beer cans is going up by at least 10% by some estimates, I assume that also applies to soda, but the article I read focused on beer cans obviously because that’s a staple for many. Mr. Trump has ignored the complaints of brewers, but I wonder how he will respond when his supporters complain.
A recent article by Liz Hoffman in The Wall Street Journal identified what she believes are the factors driving the stock market which has been somewhat of a mystery to me as I have watched this process go on since February. Ms. Hoffman indicates two factors, 1) the huge need for cash by virus hit companies and 2) the Federal Reserve’s flooding the system with money which props up market prices and nudges investors into riskier territory. This is the first cogent explanation that I have heard for the surge in the stock market given what’s going on in the rest of the economy, with millions of people out of work, the resurgence of COVID and many large companies downsizing. The downsizing may be the reality setting in that many companies need fewer workers, not good news for the long term. There was also a comparison made in the article to the NBA bubble by Yousef Abbasi, a strategist at investment bank StoneX Group, Inc., in which he asserted that the bubble was created for the market by the feds activities and that creates the disconnect between the economy and the market.
It is being reported that a species known as Lystrosaurus which roamed the world with the dinosaurs went into a hibernation like state in order to survive in what is modern day Antarctica. Lystrosaurus is a mammal-like animal from the early Triassic period covering a wide swath of territory including India, South Africa and Antarctica over 250 million years ago. The animal had tusks like an elephant and a beak similar to a turtle and was roughly the size of a pig. Not exactly what we think in terms of dinosaur size. The research indicated that these animals experienced prolonged rest, much like hibernation, and they are the oldest instance of this activity found in fossil records. It appears these animals survived the mass extinction at the end of the Permian period, which, as we know, wiped out 70% of vertebrae species on land. CNN reported these findings based upon an article in Communications Biology Journal, dated August 27, 2020.
News reports over the past week or so indicate that the English government is now prepared to exit Brexit without a deal as it appears negotiations between the EU and England have broken down. There is little reporting devoted to this I assume because of the number of ups and downs that have occurred in this process. Mr. Johnson to add to the fury supported legislation in Parliament to let the British walk from a key part of the deal involving the border between Ireland and Ulster. The EU was furious. This is interesting to me because it is the first report I have seen on Brexit in months and the British Chief Negotiator, decided to again make the statement that Britain would leave without a deal and the Irish border issue of course. The consequences to this as everyone knows, are significant, when you compound the Brexit situation with COVID, it becomes a little more complicated and that picture is not clear to me.
Fox News recently reported that scientists from Science Advance indicate that the moon is rusting. This, of course, would seemingly require the presence of water and the appropriate minerals in order for rusting to occur. The report indicates that scientists are greatly perplexed and unsure as to what the cause of the rusting is as they try and work their way through this discovery. Of course, it is a bit difficult to confirm absolutely since there are currently no humans on the moon, but it will be interesting to see what further reports indicate. Obviously, if there is water on the moon and minerals that can rust, that could be significant as the moon could become the source of natural resources for us. Science always has a surprise or two in store for us. A recent report indicated that masks may provide an added benefit that comes as a surprise to scientists. Masks are not foolproof as we know, and apparently there is at least some scientific evidence that with a mask on you are receiving exposure to the virus which in many cases may not be enough to give you significant symptoms, but may help you to create immunity. This is another example of the evolving science surrounding COVID-19. Is it possible to develop herd immunity utilizing masks and I trust the irony is not lost on you.
A couple of thoughts to end on. One of the companies testing the virus had to stop their studies because of an unexplained illness. POTUS continues to say we will have a vaccine by election day and Dr. Fauci continues to say probably not until next year.
POTUS admits to Bob Woodward – it is on tape – that he knew early on it was contagious and deadly, yet he continued to call it a hoax.
POTUS denigrates service members as losers and suckers.
The beat goes on.
Bill Owens is a former member of Congress representing the New York 21st, a partner in Stafford, Owens, Piller, Murnane, Kelleher and Trombley in Plattsburgh, NY and a Strategic Advisor at Dentons to Washington, DC.
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