Post by Marron's Inverse Index

Libby Cantrill, CFA with PIMCO today, Oct-07, on Bloomberg: The current economic situation is defined by a significant government shutdown that has paused the release of official data and created uncertainty, while the President's industrial policy, which is "nibbling around the edges," relies on broad national security justifications and a willingness to "pick winners and losers," a break from past norms. Presidential Industrial Policy ..Current president supports industrial policy and has no issue "picking winners and losers," diverging from traditional Republican stance ..Presidential authority has limits - significant investments require congressional allocation ..Current initiatives ($35 million mentioned) described as "nibbling around the edges" compared to larger policy ambitions ..Question raised about whether current approach is moving toward a sovereign wealth fund National Security Justifications ..Discussion about limits of using national security to justify economic policies ..President has used Section 232 of the 1962 Trade Expansion Act for many tariffs ..Concern expressed about normalizing certain powers while in office that could be used differently by future administrations ..Participant expressed being "sympathetic with the objectives" but uncomfortable with "central planning" Government Shutdown Assessment ..Current shutdown feels different from previous ones - less urgency and more comfort with political positions ..Republicans described as "digging in" and claiming they've already "done their work" ..October 15th identified as a key inflection point when military members and government workers won't get paid ..This is a full shutdown with no appropriations bills passed, affecting agencies like BLS and Department of Defense Economic Impact Concerns ..Conventional wisdom suggests minimal impact for a two-week shutdown, but significant concerns if extended ..Lost GDP activity described as "sunk costs" if shutdown is prolonged ..Current shutdown could exceed the previous longest full shutdown of 16 days ..Questions raised whether government furloughs will become firings, especially concerning in a "fragile" labor market ..Some economic indicators described as "pre-recessionary," with similarities to 2008 or 2000 Market Reactions ..Wall Street currently comfortable with shutdown situation, viewing it as "growth delayed, not derailed" ..Caution expressed that a prolonged shutdown could challenge the current bullish market ..Labor market fragility highlighted as a particular concern if shutdown continues