This has been a week filled with many political events. I have not discussed any of them for the simple reason that everyone is talking about them. When everybody is talking about the same topic, I have learned it is the time to shut up.
Yes. I can shut up from time to time.
Ask anyone who knows me.
Okay, maybe not anyone.
I learned in college it was not always best to be the first one to speak. Even if you have the most brilliant argument, you are going to get skewered. Sometimes it is best to sit back and let someone else go first. Let them get skewered. Of course, this technique works only if someone else is willing to go first.
I’m sure by now most of you realize I am talking about the Paul Ryan budget. Donald Trump has been out there saying, or screaming, Paul Ryan and the Republicans should not have released a budget taking on the tough issues facing the country. They should have let the President present his ideas first, Trump pontificates. He feels the Republicans are going to lose big because of the plan. He is wrong.
Yesterday, I was watching CNBC waiting for the weekly job numbers and the Philadelphia Federal Index report.
What is this report?
I’m glad you asked. As defined by Investopedia:
A regional federal-reserve-bank index measuring changes in business growth. The index is constructed from a survey of participants who voluntarily answer questions regarding the direction of change in their overall business activities. The survey is a measure of regional manufacturing growth. When the index is above 0 it indicates factory-sector growth, and when below 0 indicates contraction.
It came in at -7.7. Analysts had expected a reading of 7.
Simply, put a huge miss. This followed the huge miss in the Empire Manufacturing Index.
What exactly is this index?
I’m glad you asked. Once again, from Investopedia:
A seasonally-adjusted index that tracks the results of the Empire State Manufacturing Survey. The survey is distributed to roughly 175 manufacturing executives and asks questions intended to gauge both the current sentiment of the executives and their six-month outlook on the sector.
The NY Empire State Index is a regional economic indicator published by the Federal Reserve Bank of New York and released around the middle of the month. It’s considered to be an indicator of economic conditions in one of the most populated states in the U.S.
It came in at -7.8. Analysts expected 12.
Combine this with first time jobless claims above 400,000 for the tenth week in a row, it is clear the economy it teetering.
After the surprising numbers from thePhilly Fed Index, Bob Pisani was asked if these dismal numbers were caused by the recent tragedies in Japan. His response was simple (I paraphrase): “No, something happened in April to make businesses nervous”
Take us back to April 13, the day President Obama gave his official response to Paul Ryan’s budget.
His speech was universally panned and, if I do say so myself, quite cleverly by me in “Not a Presidential Speech“. Because of his speech, the people finally saw the “emperor has no clothes.”
From that moment on, other than a brief “Bin Laden” bounce, his approval numbers have dropped. Since then, he has ignored his own debt commission’s suggestions, joked shovel ready jobs were not so shovel ready and announced he is forming more commissions to explore ways to increase job growth.
This is the domino effect of Paul Ryan’s budget. Yea, the budget has been skewered but it allowed the public to get a clear look at the President’s vision or lack of one.
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