Once again, the global economy is in the hands of the 12 members of the FOMC who are arguably more divided in their thinking than at any time in the past 30 years. The problem is stagflation, The solution is elusive.

The market has pinned its hopes on a return to easier money, which will most certainly stoke higher inflation. The cure to inflation, however, is higher interest rates which usually means a recession.

While betting markets expect a rate cut, it’s hard to see how one would make much difference to the real economy. Consider the latest ADP employment data, where small businesses (under 50 employees) lost 120,000 jobs while larger ones gained 90,000 jobs.

How many of those smaller employers which were under so much pressure that they laid people off would, instead, hire additional employees if interest rates fell by 0.25%? Exactly.

Meanwhile, the market is flat at less than 1% below all-time highs.

continued for members…

Stay tuned…