What we’re reading (1/12)
“Inflation At 40-Year High Pressures Consumers, Fed And Biden” (Associated Press). “Inflation jumped at its fastest pace in nearly 40 years last month, a 7% spike from a year earlier that is increasing household expenses, eating into wage gains and heaping pressure on President Joe Biden and the Federal Reserve to address what has become the biggest threat to the U.S. economy.”
“Inflation Means Interest Rates Could Rise. Higher Interest Rates Will Make The National Debt More Expensive.” (Reason). “With today's higher inflation and rising interest rates (perhaps with more to come), the Congressional Budget Office (CBO) estimates that the interest cost of public debt is $413 billion in 2021, stated in current dollars. Obviously, any dollar spent on interest cannot be spent on government benefits or services.”
“If Prices Keep Rising, A Nightmare Scenario For The US Economy Is A Real Possibility” (CNN Business). “‘There's always the risk of a policy error. The Fed is carrying a monetary policy nuclear football with them, so there is a potential for a mistake,’ said Kristina Hooper, Invesco's chief global market strategist.”
“No, Dollar Strength Doesn’t Mean Weak Stocks” (Fisher Investments). “Arguing pending rate hikes create material upside in long-term yields from here is tantamount to arguing markets aren’t efficient at all. In our experience, that is usually the losing side of the debate. With that said, range-bound long-term rates might still attract overseas capital, but here, too, currency markets are extremely liquid and efficient—and Treasury yields’ premium over their European and Japanese counterparts is also well known and likely priced in. That doesn’t preclude short-term swings, but we think it argues against a sustained move higher.”
“Congress Could Finally Rein In Its Own Controversial Stock Trading” (Vanity Fair). “[S]ome lawmakers have called for a Congress-wide trading ban. House Minority Leader Kevin McCarthy recently expressed interest in ‘instituting new limits or an outright ban on lawmakers holding and trading stocks and equities if Republicans take the majority in November,’ according to Punchbowl News. While McCarthy’s plan is still in its infancy, he’s considering forcing lawmakers ‘to hold only professionally managed mutual funds’ or banning lawmakers ‘from holding stocks in companies or industries their committees oversee,’ the news outlet reported.”
