June 1, 2022

Joe Biden, A Different Kind Of President.

Wall Street is all atwitter this morning, as they try to guess what happened in yesterday's meeting between President Joe Biden, and Chairman of the Federal Reserve, Jerome Powell.

Markets were all over the place, trying to estimate this or that presumed economic policy that might emerge from the Oval Office conference.

But all for naught, as in the end no clear indication emerged. And, I believe that's perfectly consistent with just the kind of Presides Joe Biden is.

And it's the kind of President that neither Wall Street nor the American Public, for that matter understand.

You see Wall Street is a very straightforward place. For the Street, there is one and only one measure of success. And that measure is profit. We listen to the billionaires, for instance, over the millionaires because they have proven to be more profitable over their life.

Show me the bottom line, say's the Street, and I'll show you the ways things ought to be.

So, using that logic. And realizing that the economy is not healthy, and his popularity is in the tank. The Street naturally assumes that Biden called Powell over to help straighten things out. Improve the economy, lower inflation, and hopefully improve his failing Presidency.

But, I believe, nothing could be further from reality.

You see, Biden is a different kind of President.

With more than a third of his term gone, it is more and more apparent that Biden doesn't give one hoot, about his popularity, or ultimately his economic record.

Biden is a totally doctrinaire President. And I'm very sure that he, and or his advisors use a very different scorecard to measure his success.

Most often we have visualized a President to be like Bill Clinton or Donald Trump. Extremely concerned about the latest poll numbers. Anxious to have the economy humming along.

Remember “It's the economy stupid?” From James Carvel, Clinton's campaign manager. The performance of the economy was central to the nation's good feelings about those Presidents. And would determine their reelection chances.

That's not the very doctrinaire Joe Biden. His objectives are also specific and measurable but they don't include such traditional measures as popularity.

Biden's goals have been clearly stated, and remain central to his new kind of leadership. They were clearly stated in his inaugural address, and now take center stage on the White House Website entitled: The Build Back Better Framework.

And it's this “Framework” that deals with the totality of his administration. In it are all the things that we've heard so often. But likely didn't realize their importance.

The number one item, the goal at the top of his list is the Climate. Does this mean that Biden will sacrifice other objectives to meet this overarching goal? Of course.

Price of gas too high? Sorry can't drill for more oil, that would violate our climate objectives.

Instead promote “environmental justice” by pouring the full energies of tax policy, and direct contributions into green energy.

In the middle of the nation's largest Real Estate boom surely we don't need subsidies for Real Estate, do we? Oh, not so. If successful Biden will indeed promote the largest government investment in middle-class housing in history. 

Within the "Build Back Better" Framework comes a laundry list of social programs, from increasing child care to promoting Obama Care to enhancing Medicare.

Put them all together and you have the complete list of Biden's economic policy...and social policy, and environmental policy, and tax policy and, and.

The list goes on and on.

But you say where is his economic policy?

Exactly.

There is no Biden Economic Policy apart from all of these social objectives. Corporations and their profits and losses are simply not something that we want to talk about in this White House.

It's social progress that counts.

And it's social progress that will be the measure of this Presidents success.

I doubt that Joe Biden wants to run again. He would be well over 80 if he did run.

No, I think that what motivates this President is the ability to promote one more overreaching social program.

How does “Biden Care” sound?

 

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In overnight economic news...Pass the Seaweed, please.

As the World Economic Forum wraps up its 2022 meeting, they leave us with a video promoting an alternative for our diet.

In an effort to curb our eating of meat, which they deem harmful to the climate. The WEF, after promoting the eating of insects last week. Today have recommended to consume algae, cactus, and seaweeds.

"Bon appetit!"

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On this first day of a new month, we are already seeing the May Purchasing Managers Index for countries around the world.

On balance, these are very positive reports with no fewer than eight of the major economies of the world, showing expansion. The eight positive reports are from Australia, Japan, India, Russia, Spain, Italy, France, and Germany. Essentially all of Europe.

The two countries reporting contraction in their Purchasing Managers Activity are China and Turkey. China continues to post some very weak numbers. And, of course, Turkey is in a world of its own, with inflation running at the stratospheric level.

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In the outlier category this morning. A couple of reports continue to surprise me. In a world of runaway inflation, the European Union continues to issue sovereign debt with a negative real yield.

This morning the EU issued both 3 and 6 months Bills at below-zero interest rates. Meaning that the purchasers are receiving a negative real rate of return of minus 9% or worse.

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While here in the USA we are seeing some relief in Mortgage rates, as the 30-year mortgage just dropped 13 basis points to 5 1/3% annual interest.

However, even that was not enough for real estate buyers, as the number of new mortgage applications continues to decline, down better than 2% again this week.

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In earnings today, all west coast companies, all reporting after New York closes.

First up, software company Veeva Systems, then Hewlett Packard, data storage company Mongo DB, pet supplier Chewy, and everyone's favorite trading stock: Game Stop.