June hike puts Trump in White House in January

The Fed minutes from its April meeting were released yesterday. The committee sees a June rate hike “as being on the table.”

So this table they speak of, is it like the kids’ table at Thanksgiving? Short legs and wooden chairs?

The premise that the consumer is coming back to yank this economy by its bootstraps is misplaced by bogus DC data.

The new future minimum wage of $15/hour will not spur meaningful growth. Rents are increasing since there is more money in their pocket. Any aspirational retail spending miracle is pie-in-the-sky thinking. Look across the board of the largest retailers speaking on their earnings calls the last two week.

Lowered guidance with sales falling off a cliff. And as far as an Amazon miracle, its sales are still a rounding error for overall US retail sales, so let’s not attribute the death of the mall to Jeff Bezos just yet.

The 5% unemployment rate that DC proffers does not speak to the job market. If a VP at a drug company is laid off and takes a job at CVS, the job market numbers have no mechanism to recognize that as a downward spiral that it is. When a %125K job becomes a $50K job there is an economic impact on that family that they may never recover from, as my friend Jon Trugman says.

Now if the Fed believes it needs to raise rates in order to help recapitalize the bulge bank balance sheets in June that is a different story. There’s no inflation, there’s no inflation and by the way, there’s no inflation.

You need meaningful pay raises for the middle-class to even think that inflation will rise to the Fed’s 2% wish number. Look at the last eight years, growth and inflation were stamped down due to 1% wage growth for most.

Let’s be honest, given what the stock and bond markets did at the beginning of the year after the Dec. rate hike, if June is on the table, then Trump may be in the White House in January.

Now for many in Washington that’s the equivalent of the National Lampoon cover with the headline: “If You Don’t Buy This Magazine We’ll Kill This Dog.”

So let’s say June is for Dads and Grads and not Hikes.

 

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