Morning Report: Quits rate signals wage inflation ahead

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S&P futures 4,693 14.2
Oil (WTI) 79.72 -1.03
10 year government bond yield   1.58%
30 year fixed rate mortgage   3.27%

Stocks are higher this morning on no real news. Bonds and MBS are flat.


The upcoming week won’t have much in the way of market-moving data, although we will get some important housing data with housing starts and the NAHB Housing Market Index. The biggest day for non-housing data will be tomorrow when we get retail sales and industrial production.


Mohammed El-Arian says the Fed has a credibility problem when it comes to inflation. “I think the Fed is losing credibility,” El-Erian said Monday. “I’ve argued that it is really important to reestablish a credible voice on inflation and this has massive institutional, political and social implications….We are in this transition of central banks mischaracterizing inflation. The repeated narrative: ‘It is transitory, it is transitory, it is transitory.’ It is not transitory,” El-Erian said, warning the Fed risked making a major policy mistake….We have ample evidence that there are behavioral changes going on….Companies are charging higher prices [and] there’s more to come. Supply disruptions are lasting for a lot longer than anybody anticipated. Consumers are advancing purchases in order to avoid problems down the road — that of course puts pressure on inflation. And then wage behaviors are changing.”


The Atlanta Fed’s GDP Now estimate has fourth quarter GDP accelerating to 8.2%. Much of this will hinge on consumer spending for the holidays and whether supply chain issues work themselves out.


There were 10.4 million job openings at the end of September, according to the JOLTS jobs report. The quits rate, which tends to lead wage growth, rose to a series high of 3%. This will alarm the Fed as we have the pieces in place for a wage-price spiral.



31 Responses

  1. “The repeated narrative: ‘It is transitory, it is transitory, it is transitory.’ It is not transitory,” El-Erian said, warning the Fed risked making a major policy mistake”

    Larry Summers agrees. I’m not sure if that’s good or bad.


    • Summers is operating from the assumption that the economy is overheating.

      It might not be. We might have engineered stagflation.


      • And of course, he has to include this disclaimer:

        “First, let’s not compound errors that have already been made with far too much fiscal stimulus and overly easy monetary policy by rejecting Build Back Better. The legislation would spend less over 10 years than was spent on stimulus in 2021. Because that spending is offset by revenue increases and because it includes measures such as child care that will increase the economy’s capacity, Build Back Better will have only a negligible impact on inflation.”

        I think your point is well taken. It would be worthwhile to see what happens if all the remaining COVID restrictions were just lifted.


  2. But trust the science you fucking rubes!


    • Well it’s kind of an admission that we don’t know much about what we’re doing (but, indeed, “trust the science”). And it’s probably fine, but treating skeptics like heretics is very medieval Catholic church on the part of the left.


  3. This is good:


    • And he’s probably right. I liked this reply:

      I agree, Zaid – Republicans DO cynically use reactionary people of color to further white supremacy. Thanks for telling the truth on this one. It’s been a while since you last did that.

      This idea makes zero sense. If white supremacy would love a person of color shooting white antifa folks, then it’s about ideology or class or something else–not race. If it’s actually white supremacy you wouldn’t be supportive of black people no matter how much they agreed with you on law and order, crime, vaccinations, taxes, etc.

      But words don’t mean anything anymore.


      • It’s the Uncle Tom argument. See the reaction to the Virginia Lt Governor elect, Winsome Sears.

        Scott Adams also gets it:


        • Yeah, I know, but Uncle Tom suggests self-serving collusion or unprincipled betrayal. While “black face of white supremacy” is disruptive—it creates cognitive dissonance that for a lot of people—including minorities—they will hear that and go: “What? That’s stupid.”

          I also feel like it’s an admission that they think their own arguments are weak so they’ve got to go full bore on character assassination.


  4. Interesting read:

    “It’s Not Just White People: Democrats Are Losing Normal Voters of All Races

    Democrats fear they are losing white swing voters over racial politics. Three studies suggest that the party’s elite culture may be the real problem.

    Ryan Grim
    November 15 2021, 2:01 p.m.”


    • I think the premise should be a real concern for the Democrats. And it is the Democrats who are costing themselves their lock on minority voters–it’s certainly not the Republicans doing anything to appeal to them, make their case to them, or win them over in any way.

      Although I have some problems with some of the unquestioned assumptions regarding the focus groups:

      “What Barefoot found is that while the women agreed with Democrats on policy, they just didn’t connect with them.”

      But do they? Was that a question like, “Do you agree with the Democrats on policy”? Or was that a careful and detailed explanation of Democrat policies, especially current ones, followed up: “Do you agree with that? Is that what you want? Is that something you would vote for?”

      I don’t know how many quasi-informed voters actually agree with much of the policy of their chosen party.

      When asked which party had better policy proposals, the group members overwhelmingly said Democrats. But when asked which party had cultural values closer to theirs, they cited Republicans.

      At worst, neither party has great policy proposals. Often they lack much in the way of policy proposals that aren’t bullet-pointed wish-lists of outcomes that they make unfounded assumptions about accomplishing with government magic.

      yet later Terry McAuliffe, the Democratic nominee and former governor, would insist that parents should have no input in their children’s education. (That’s not exactly what he said, but that’s how it played.)

      How else would one think “I don’t parents should be telling schools what they should teach”–in the context of a bill that would simply inform parents of what was being taught to their children, if I recall–would play? It was an awful response, politically and practically. What about the bill said that parents would be determining curriculum, exactly?

      Casting about for an issue that could win some of them back — recall that this is a game of margins, not absolutes — the party landed on schools.

      Eh, I’d argue that in Virginia the Democrats handed it to the Republicans on a silver platter and then continued to campaign–for Republicans–on the issue. I won’t say the Republicans “just showed up” but I don’t feel like it’s far from that.

      Around the country, the conservative media apparatus, unrivaled by Democrats, gave air cover to the schooling issue — handing local activists language to use, a story to tell, and the resources and platform to tell it.

      That anyone believes this mystifies me. I recognize Fox has a lot of viewers and have argued in the past (and would still make a modified argument in this respect) that the MSM’s bias doesn’t matter, because there are avenues for conservatives to get news and shape narratives and so on. So I know that conservatism and Republicans have a way to reach the voters, and to get news out. Even when the media bands together to suppress a story–like Hunter Biden’s laptop–a lot of the news still gets out. Though it never gains the cultural momentum it would if it had been Donald Trump, Jr.’s laptop. So it’s not perfectly balanced.

      But it argue that the Democrats–which own every historically significant news pipeline, from WaPo to the NYT to CNN to MSNBC to the Big Three networks to NPR–the idea they have no liberal media apparatus that equals what Republicans have is just . . . it just delusional. The Republicans would kill to own the NYT and MSNBC and CNN and WaPo and NPR and, you know, all of Hollywood the way the Democrats and the left do.

      This is another area where the left’s completely unawareness of reality, and what things look like to the other side, could potentially seriously bite them in the ass.

      After McAuliffe’s debate gaffe, in which he delivered up the perfect sound bite to Youngkin — “I don’t think parents should be telling schools what they should teach” — he took weeks to respond, initially not recognizing the danger.

      Indeed–and I think it’s the authors point–the fact the Democrats didn’t see the problem with the initial soundbite and that they could just ignore it (not to mention what they did when not ignoring it) is a huge part of the Democrat’s problem, going forward.

      And lots of talk about Biden’s margins in NoVA but nothing about how Biden ran like a middle-of-the-road moderate–when he ran at all.

      “Everybody clapped when I said it,” McAuliffe insisted later.

      The only thing that surprises me is that McAuliffe didn’t lose bigger. Anybody seen the number on voters with kids in the public schools that went to Youngkin?

      Even where Republicans spent heavily against outmatched Democrats

      This really misses the point, IMO.

      National Democrats have no coordinated response yet, leaving school board members — unstaffed, underfunded, borderline volunteers — hung out to dry, with nothing to rely on but mainstream media assertions that there’s actually nothing to see here

      Given how the Democrats handled Virginia, I’m sure the Republicans are hoping they come up with a strategy to “defend the school boards”.

      Properly understanding how different voting blocs understand the terms of the debate, however, unlocks the contradiction: The culture war is not a proxy for race, it’s a proxy for class. The Democratic problem with working-class voters goes far beyond white people.

      This seems like super-obvious to me but thus far it doesn’t seem the Democrats or the pundits are willing to listen to that argument. They feel like their response to a black woman becoming Lt. Governor in Virginia is to call her a white supremacist.

      The party loses about a third right out of the gate: hardcore right-wing people who would never consider voting for Democrats and think even a Democrat like Senate Majority Leader Chuck Schumer — known for much of his career as “Wall Street Chuck” — is a flaming socialist and a traitor.

      I still don’t think this is paying attention to what’s going on. It starts with a kind of assumption that Republican voters are happy with Wall Street and big corporations and I feel like that’s becoming less and less true by the day.

      At the same time, they don’t want the government to destroy their IRAs. So there’s that.

      And the author kind of doesn’t touch on the general cultural orientation on the left that racism is something that white people do or just are, while there is no other kind of racism or bigotry except that done by white people, and any racial animus or hatred of white people from minority groups is understandable and even laudable. While a focus group of suburban women probably wouldn’t ever mention that, the idea that none of them notice that and don’t like it seems naive.

      They believe in patriotism and the “American way of life” but also believe that diversity, pluralism, and tolerance are essential characteristics of that American way of life.

      Which—it is worth noting–is not the position of American progressives. They also don’t believe in patriotism or an American way of life, but specifically they are opposed to diversity and pluralism and tolerance. Or these things are only for people politically aligned with them. Which is going to alienate some voters who used to be Democrat-or-die.

      “understanding, or concern for ordinary white working people like themselves.”

      How about ordinary working people, period? Vax mandates aren’t just for white people. Making it illegal to drive an Uber or be a Doordasher without being an employee of some larger company doesn’t just impact white people. Energy prices and inflation don’t just impact white people. Riots don’t just or even primarily impact white people.

      Which he goes on to acknowledge.

      But, Levison adds, there are a number of cultural issues on which cultural traditionalists and extremists align, and Republicans have become adept at exploiting them. He defines them as: pride in their culture, background, and community; respect for tradition; love of freedom; belief in personal responsibility, character, and hard work; and respect for law, strict law enforcement, and the right of individual self-defense.

      It’s fun that values like freedom and hard work and personal responsibility and a right to self-defense are things Republicans are exploiting.

      Let the right lose its mind attacking Frederick Douglass.

      The problem is that won’t happen organically and lots of folks–like, say, the Lincoln Project–know this. They will either have to fake it or pretend it happened. Nobody serious, with any cachet, would be attacking Douglass on the right. It would be more likely that woke progressives on the left would be the one’s attacking Douglass’s words.

      And not one more word, for the love of God, from Robin DiAngelo.

      I can definitely agree with that.


    • The matrix on extremists versus traditionalists is the biggest exercise in projection I have ever seen:

      Substitute “wokeness” for “Christian” and “white” and it perfectly describes the cultural left to a T


      • Pertinent to the topic of the article is: how does that stuff sound to moderates and independents and center-to-center right voters?

        Some may find it credible but some may well find it bizarrely delusional


    • The argument that slavery was essential to the development of capitalism in the United States is well-established scholarship by this point.

      This is absolutely ludicrous. Capitalism existed in Europe before the US. What system would the US have created absent slavery?

      how is it well-established scholarship when it sounds like nothing more than a 3-bong hit idea combined with seal clapping from the peanut gallery?


      • It’s amusing that even when they get the top line analysis right, the writers in the media still don’t see that they are part of the elite culture that’s the problem in the first place.


        • Or more specifically *what* it is that *they* do. He can see that worshipping at the altar of Robin Diangelo is a strategic problem but not the other alienating things he was saying in his own article.


      • Slavery was part of capitalism—indeed, any form of commerce—from pre-history because slavery was a part of *everything*. It was also an essential part of monarchy and feudalism and theocracy and …


  5. Levison, meanwhile, argues that Democrats need to lean into the kind of patriotic rhetoric that makes many progressives recoil. Democrats have the potential to split “extremists” off from “traditionalists” by couching Democratic values as truly American, and extremists as “un-American.” As an example of such possible rhetoric, he offers, is, “I love the American flag as much as any American but I would never use a flagpole flying our flag as a club to assault other Americans that I call my ‘enemies.’ That is not the American way.” Or: “The values I grew up with are good values and I want them to endure. But the values of the people who want to turn Americans against each other and divide our country are not my values.”

    Another exercise in gaslighting.. The left has been on a mission to tar people who disagree with them as sick or unamerican since the Wilson Administration.


  6. Worthwhile article by David Harsanyi:

    One of the most effective ways to prevent criticism of an idea is to deprive people of the language in which to name it. Political propagandists understand this, which is why they are now objecting so loudly to terms such as “Critical Race Theory,” “woke,” “identity politics,” and “cancel culture.” The point is not that these terms are imprecise in what they mean — they can be, as are many other terms in common use in American political discourse. The point is precisely that they are understood to have a distinct meaning. The propagandists of wokeness want to prevent that meaning from being communicated among ordinary citizens who have long lacked the words in which to express things they see and know to be wrong.

    Also worthwhile is the link to the Freddie DeBoer substack piece. I don’t know who he is, but I have the sense that he is a Taibbi-like leftist.


    • I think the left came up with all those terms except cancel culture. So they come up with new terms and people start using those instead—then what?


      • KW:

        So they come up with new terms and people start using those instead—then what?

        Then, when the new terms come to be tainted by association with the idea they represented, they just do it again. Wash, rinse, repeat.


    • “Also worthwhile is the link to the Freddie DeBoer substack piece. I don’t know who he is, but I have the sense that he is a Taibbi-like leftist.”

      Yep. He’s in the Greenwald camp. He actually self identifies as a Marxist. He just can’t stand the identity politics that the left has devolved into.

      When you’ve lost the Marxists….

      Here’s a good interview with him about his book.

      His Substack is worth reading too:

      Like Taibbi and Greenwald, I view him as part of the left that is still honest which is the real divide these days, between those who still make real arguments and those who just lie.

      Prime example:

      “I can’t tell you how many times I’ve seen liberals saying online that CRT just means, for example, that slavery was bad, or that racism still exists, etc. But that’s just… not true. They taught that stuff to me in public school in the 1980s. I assure you that the antiracism activists pushing CRT go much further than that.”


      • I think it’s a division between serious leftists/liberals who are ideologically driven and are thoughtful enough that they could come up with a cogent explanation for their positions and have a relatively deep well of knowledge to draw on (even if they do–as I think all statists do–ignore important facts about human nature) . . . it’s a division between those guys and the cultists. So much of progressive activism and heart-on-their-sleeve lefties in the culture is simply “progressivism as religion”. It’s pieties, doxologies, faith, priesthoods, invocations and ceremonies. The hypocritical or pathological Christians that C.S. Lewis complained of are now most all “progressives”.

        The primary way to tell the difference that gives them away is that serious, legitimate progressives will debate and disagree but are fine confronting right-wing or conservative or libertarian ideas in all their forms, while the cultist consider any dissent heresy, refuse to debate it, and demand it be censored and those who dare speak it punished.


  7. If I were Steve Bannon, i would be repeatedly asking why Democrats like Lois Lerner can refuse to testify without getting indicted, but he can’t.

    Politicization of the DOJ? Never!


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