My Name is Bond, Junk Bond

We don't need no stinkin data!! That, in a nutshell, is The Manchurian President's view of how the Fed should do its work. Any number of pundits have been taking a swing at such nonsense (although, it has to be admitted that these missives have made the case that Policy isn't driven by data). The one I saw today is from the estimable Neil Irwin. Yes, this could be titled as the next installment in the "I Still Hate Neil Irwin" saga. But, given the nature of his text, it was too much to ignore.

But the most memorable part of the president's tweet — and one that actually is a pretty good guideline for all central bankers — was, "Feel the market, don't just go by meaningless numbers."

What Irwin, and the rest of the pundits, still ignore is that long term interest rate is determined by the worth of physical capital. The CxO class still won't or can't find new and better ways to invest in plant and equipment. So, the opportunity cost to the CxO class, and 1% individuals, (Treasuries) remains in the toilet just because that's where much of that moolah goes. As demand increases, price increases, and interest rate falls. That's Econ 101.

Well, stock buybacks, too.

Florida GOP Senator Marco Rubio said on Twitter last week that the tax code shouldn't encourage buybacks.

"When [a] corporation uses profits for stock buy back it's deciding that returning capital to shareholders is better for business than investing in their products or workers," Rubio said. "No surprise we have work life that is unstable & low paying."

Little Marco!!! How un-Republican of you.