The E-System…

Over the next 10 days, a lot is going to fall in place.

First, we have the FED meeting which should have few surprises, another 0.75 hike in the FED funds rate, to get it in line with market forecasts.

Second, we have the election which could have big surprises. Moderate Republicans and women are the swing factors. We all know the Trump followers, roughly 2/3 of Republicans are an unrepentant faction, whose driving force is a fear that whites are going to become less in charge. Moderate Republicans are however embarrassed with what the party has become. This is based on my informal poll of the two types, of which I have many as I was a Republican for 40 years before making the switch in 2003.

If as I suspect, the Dem’s pull off a surprise, I look for the Biden administration to move forward aggressively on the climate-change issue, something like what Eisenhower did with the national effort of redoing the highway system using the name “Interstate System“. It could be named the E-System, for Energy-System as climate change is really about how we get the energy to run the economy.

On Friday we will post our major review of the economic numbers and how the economic inputs could affect outcomes going forward. One big surprise we see already is that QT is not being employed very aggressively so far, will see what Powell’s comments on Thursday are, but anyway the FED Balance sheet is only down about one percent for the year to date.