Jobs - Not like most of you will be awake for this, but the jobs report for the month of October will drop in a couple hours, at 8:30am, and Wall Street is pumped. Judging by the Fed's comments yesterday, the billion dollar question of "when will they raise rates" will become just a bit more clear.
Maintaining maximum employment and price stability, the Fed's dual mandate is a helluva lot easier said than done. Traditional economic theory says they work somewhat opposite each other - as job growth speeds up, inflation tends to as well. But, as we've learned, we can basically chuck the classic finance and economics textbooks out the window. Sorry, Adam Smith.
In the 1970s, Fed Chair Paul Volcker (PVol) demonstrated that high inflation can be reigned in by raising interest rates. That playbook has been the main tool to fight inflation ever since. But, here's the kicker, raising rates disincentives businesses to hire because the cost of borrowing becomes more expensive, meaning companies have less cash going around. So, when we're in an environment like the one right now where we want to maintain job growth but reduce inflation, raising rates is a tough call.
But, that's why we have smart people in charge. JPow and gang will assess the jobs report tomorrow and, if strong growth is present, this is likely an indication that rates can be raised sooner rather than later. There's your economics lesson for the day, you can Venmo me whenever you want.
What The Truck? - Normally, truck drivers are the unsung heroes of global supply chains. They do the hard, sometimes intense work of delivering your stuff from halfway around the world right to your doorstep. Now, they're part of the problem.
Well, I guess the ones currently driving aren't the problem, but it's the lack of drivers that's the problem. Basically every part of the global supply chain is under strain and trucking can't escape that pain. The interesting part is that if we had this problem, say 5-10 years into the future, we probably wouldn't even have this problem. As little sense as that made, hear me out. Trucking is quickly getting infiltrated by the robots. If we had competent AI that could drive like Ricky Bobby, we wouldn't be in this situation. But if anything, this shortage will only expedite the process of robotic, or at least semi-robotic, truckers.