When the kids were little, we tried a 1-2-3 warning system to get them to stop biting or yelling, or juggling the cats. But there were 7 of the little monsters, and too often, we just got exhausted at the thought of actually having to follow through. Once 2 ½ gave way to 2 ¾, it became clear we’d lost. In time the system decaying to: “I’m going to count if you don’t stop it!” That was occasionally followed by the oft-wagged, but never swung over-sized wooden spoon.

 

But they can all juggle cats blindfolded, while driving, so that’s nice.

 

After they all became adults, the stories came out. We learned how the older kids interpreted the big-threat, never follow-through style of discipline. When mom and dad were out, and the Comrade Stalin’s took over the house. They simply turned on the oven and threatened to eat the younger children if they misbehaved. (I’m not making that part up.). What’s terrifying here is that the little kids were too afraid to tell us about the whole oven thing until they were in their 20’s.

 

Of course that brings us to the Fed, the mother of all banks, also prone to sending financial markets to their room to “think about what you’ve done,” but with a history of occasionally not following through. Aware of its credibility gap, this summer the Fed actually got to 3, so to speak, and continues signaling further rate hikes. At first, the pre-spank, no-spank scuttlebutt pushed markets higher over the summer – but when the Fed repeatedly said, “I mean it,” eventually markets pulled back. This is a simplistic, but not inaccurate parallel of market moves over the past few days.

 

More technically, here’s this week’s Global Insights analysis (written by people whose parents actually spanked them): Global Insight Weekly

 

Have a great week ! 

 

Mark