Obama just dealt his first big blow to the US economy – Now wait for the second
US President Barack Obama may have just dealt his first big shock to the US economy of 2013.
Secretary of state John Kerry just dropped huge hints of military intervention against Syria – a "tailored response".
As Kerry spoke, we saw the VIX, an index of US equities volatility, jump from below 17.4 to over 17.75.
That's likely to be a negative shock to aggregate supply says Dankse Bank's chief analyst:
Two negative policy shocks to the US economy from Obama: Syria (negative AS shock) and Summers (negative AD shock)
— Lars Christensen (@MaMoMVPY) August 30, 2013
The next shock Lars Christensen identifies is the potential appointment of Lawrence Summers as Federal Reserve president. As a replacement to Ben Bernanke, he's read as being less open to monetary easing.
Some read that accommodative monetary policy as vital in underpinning aggregate demand, and ensuring that the US economy makes a full and timely recovery.