● The Drift: Stopping America’s Slide to Socialism
Kevin A. Hassett
Q&A with author via The Washington Post
Q: Let’s start with the premise of your book, that America’s on a path to socialism. I’d like you to just give us what you see as the evidence of that. From what I read, we still have what sure looks like the most dynamic capitalist economy in the world. Our growth has been above 6 percent recently. Interest rates are low. Investment seems to be picking up. That looks like a pretty resilient capitalist economy to me. But you’re obviously concerned. Explain why.
A: Yeah, that’s right. And you know, we certainly aren’t all the way there yet. But I think that the key observation is that, you know, Joseph Schumpeter back at the 20s, looked forward to America he was writing about it in the 70s or 80s, where he basically saw an America in the future that would be very prosperous but that would sow the seeds of its own–the destruction of its capitalist system. And if you look at–and I go to this quite a bit in the book–if you look at Schumpeter’s idea of what the world would look like, you know, it very, very much looks like the world of today…basically, what he said was, as we get richer and richer, that Americans are going to send their kids to colleges and universities much more, and colleges and universities are going to be hotbeds of socialism.

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The US economy downshifted sharply in the third quarter, based on last week’s initial estimate of gross domestic product (GDP). Is that a warning sign for Q4? No, at least not yet. The early estimates for Q4 suggest a rebound may be brewing.

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* House vote expected today on infrastructure bills
* Global food prices rise to 10-year high, UN says
* OPEC rejects US request for more oil output; sticks to modest production plan
* Will transition away from carbon-intensive energy derail economic recovery?
* US trade deficit reaches a new record in September, driven by slumping exports
* US productivity fell to a 40-year low in Q3–probably due to temporary factors
* US jobless claims continue to ease, falling to new pandemic low:

Total return expectations for the Global Market Index (GMI) continue to hold at 4%-plus, or roughly half the level of the index’s 10-year performance.

Today’s update of new total return forecasts for GMI through October show the benchmark’s ex ante performance ticked up to a 4.4% total return for the long term, slightly above the 4.3% estimate in last month’s outlook.

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The Federal Reserve yesterday confirmed what it’s been hinting at for months: it will start winding down its bond-buying program. It’s still a long leap to launching interest-rate hikes, Fed Chair Powell suggests. But the first baby step has been taken for laying the groundwork for a post-pandemic policy regime.

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* Federal Reserve says it will start tapering bond purchases this month
* Fed Chair Powell offers no hints interest-rate hike in near term
* Does the Fed risk a policy mistake by letting inflation run hot?
* Inflation debate lurks behind stock market’s bull run
* US private employment rose more than expected in October via ADP data
* Eurozone growth slows to six-month low via PMI survey data
* Factory orders in US unexpectedly increased in September
* US services industry activity surges to record high via survey data in Oct
* US 10-year Treasury yield rebounds to 1.60% as Fed dials back bond buying:

It had to end eventually. The recent run higher in the Sharpe ratio for the Global Market Index (GMI) finally reversed in October. The decline marks the first time in eight months that this popular risk metric eased for GMI, an unmanaged, market-value-weighted portfolio that holds all the major asset classes (except cash).

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* Republicans score win in Virginia governor’s race
* GOP may win NJ governor’s race in the still-too-close-to-call election
* Fed expected to announce that it will begin tapering bond-buying program
* Zillow shuts down house-flipping division after forecasting model fails
* China’s service sector posted solid growth momentum in October via PMI data
* Global Manufacturing PMI steady in October, reflecting moderate expansion
* US regular gasoline edges up to 7-year high — $2.45 a gallon:

The long-run risk premium forecast for the Global Market Index (GMI) rebounded in October, edging up to 6.1%, based on revised numbers through last month. The new estimate is calculated in terms of the projected return over the “risk-free” rate, according to a risk-based model (detailed below).

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* More than 100 countries pledge to end deforestation by 2030
* US to announce tougher regs on methane emissions for oil, gas production
* Drug companies aren’t liable for opioid crisis in California, says state court
* Supply-chain risk for US economy remains close to two-decade high
* Shortages that are slowing auto output are a risk for the world economy
* Don’t expect stocks and bonds to provide protection from inflation, AQR warns
* 82% of S&P 500 firms have beat Wall Street’s profit expectations
* Is surging bond-market volatility a warning for stocks?
* US construction spending fell 0.5% in September
* US Mfg PMI for October: softer growth but new orders “remains sharp”
* US ISM Mfg Index edges lower in October but still indicates strong growth: