The Buzz on Business for August 21st, 2024

If you place a ceiling on the price of a good or service, below the clearing price, you get a shortage of that good or service. A shortage results in an increase in the price of that good or service.

If you subsidize the purchase price of a good or service, you increase the demand for it. That increase in demand results in an increase in the price.

And this is the long and short of Vice President Harris’ economic plan, at least her plan to fight high prices in groceries and housing. We believe it would be profoundly counterproductive and would inevitably result in higher prices for food and housing.

This is not partisan politics. It’s Mathematics. Actually Arithmetic. There is a reason, the axioms and corollaries of Economics are called the Law of Supply and Demand.

We don’t believe it is possible to “manage” a market. The managers have an information problem: information is provided by price, and it is price they intend to manage. We don’t think it is possible to manage a market, but we’re prepared to be wrong about that. We don’t think we are but we might be.

But we are not and cannot be wrong about price controls and subsidies, no more than we can be wrong about the sum of two plus two.

The essential value proposition of the Progressive movement is that markets are sometimes wrong and often unfair, and that experts applying knowledge to the facts can ameliorate these problems and generate better outcomes.

There is no expert, there is no honest expert, who believes that bureaucrats dictating the prices of groceries could possibly result in lower grocery prices. There is not a single historian who can point to one time, in all of human history, where they have. Indeed, in both theory and practice, price controls and subsidies are absurd.

And yet, Kamala Harris, a progressive, a politician who believes in the power of government to improve the lives of its citizens proposes them despite the experts.

Stock Market Report

Stocks opened higher, bounced around a bit throughout the day before finishing with modest gains. But volume was again, very low, suggesting a lack of conviction among traders.

• The Dow Jones Industrials were up 56 points, that a bit more than 0.10% and they closed at 40,891
• The S&P 500 was up 0.40%, that’s 24 points on the S&P and it closed at 5,621.
• The NASDAQ Composite was up 0.60% or 102 points, and it closed at 17,919.
• The small caps had a pretty good day. The Russell 2000 was up 1.3% and closed at 2,171 for a 28-point gain.

Bond Market Report

Interest rates were lower, pretty much across the board on Wednesday.

• The yield on the 2-year treasury was off 5 basis points and closed at 3.935%.
• The 20-year was basically flat, and it now stands at 4.180%

Oil, Gold, and Bitcoin

• Oil had another bad and broke through some support. It was down another $1.29, and a barrel now changes hands at $71.88.
• Gold was down a minuscule $3.70, and a troy ounce will now set you back $2,549.50.
• And Bitcoin was up $1,285.36 and at 4:00 PM ET stood at $60,842.64.

Economic Calendar Heats Up, Jackson Hole on Tap

Both the earnings and economic calendars continue to provide little in the way of news. Six companies reported earnings during the day on Wednesday. All six exceeded expectations for the bottom line. All but one exceeded expectations for the top line. None are likely to move the markets one way or the other.

Today is Thursday, so the Initial and Continuing Claims for Unemployment Report is on tap. Expectations are claims have ticked up a bit from last week’s numbers.

The Existing Homes Sales Report is set to be released along with some data out of the manufacturing sector. We’ve all got our fingers crossed here at the Ministry of Truth.

Also, the Jackson Hole Conference gets underway today. This meeting of Business, Economic and Political leaders often makes news. Federal Reserve Chairman Jerome Powell is set to address the conference tomorrow.

We’ll be watching this and all of it, so you don’t have to. All you’ve got to do is keep it right here on the Buzz.