Who’s still talking?

The lack of government data releases during the shutdown has thinned out the economic calendar. But not everyone has gone quiet, and some of the remaining voices are worth a listen:

While the Federal Open Market Committee did what financial markets expected and cut the fed funds rate by 0.25% in the September meeting (later making another 0.25% cut at the October meeting), the decision was far from unanimous. One governor supported a 0.5% cut in September. More surprisingly, several members of the committee acknowledged they might have supported holding interest rates steady, if the idea had been broached. Minutes from the October meeting have yet to be released, but we will be watching for signs of continued disagreement.

 The University of Michigan’s Consumer Sentiment Index fell 3% in October to levels well below long-run norms. Such consumer pessimism flies in the face of rampant optimism among both individuals and newsletter editors. While consumer and investor sentiment don’t move in lockstep, over time they tend to follow similar paths. At some point, one or the other could snap back to unify the trend line. The longer divergence drags on, the more painful the reversal could be.

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