Submitted by Jared Dillian via MauldinEconomics.com,
The FOMC recently held its first meeting since Trump took office. But before I get to that, I want to talk about the backdrop to the meeting… Trump’s relationship with Yellen and Yellen’s relationship with Trump.
Trump
As noted this morning, there are three drivers to today's action: i) last week's Trump promise of "phenomenal" tax cuts, ii) tomorrow's Janet Yellen testimony before Congress in which she is expected to sound hawkish, and iii) the overnight end of China's reverse repo drought which injected CNY100 billion in liquidity in the banking system after a 6 week pause. It is these three that prompted a return with a vengeance to the "Trump Trade" euphoria, which as RBC's Charlie McElliggott writes in his intraday note, is why the "reflation trade is back with a vengeance."
The key economic releases this week are CPI, retail sales, and industrial production on Wednesday. In addition, there are several scheduled speaking engagements from Fed officials this week, including Chair Yellen’s semi-annual Monetary Policy Report to Congress on Tuesday and Wednesday (Humphrey-Hawkins).
For 50 years - until Greenspan's exuberance in the 90s - it took the average American around 26 hours to be able to afford to buy the S&P 500. In the Trumpian utopia in which we find ourselves now, however, the average American worker will have to work four times longer to join the 'wealth-builders' in equity market land.
The last time it cost this much (in terms of hours worked) to buy stocks, it seems the average American decided enough was enough and buyers went on strike asthe DotCom debacle collapsed.
h/t @jtepper2
Bloomberg is out with a fictional piece this evening -- asserting that creditors are selling treasuries because of Trump.
(adjusts microphone)
WRONG!
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