| Initial jobless claims due, stimulus talks stall, and a vaccine warning for markets. Labor market Ahead of tomorrow's much anticipated payrolls data, economists are expecting another week of disappointing claims. The median estimate from those surveyed by Bloomberg is for 1.4 million new claims to have been filed, with continuing claims dropping slightly when the data is released at 8:30 a.m. Eastern Time. Tomorrow morning's employment report may show a 1.5 million increase in nonfarm payrolls in July, but forecasts range from a 600,000 decline to a 3.2 million gain. Talks deadline Time is fast ticking down to lawmakers' self-imposed deadline to reach a new stimulus deal before the weekend with both sides seemingly no closer to actually reaching an accord. Treasury Secretary Steven Mnuchin said a plan would be hard to reach without "agreement on the major issues" after meeting leading Democrats yesterday. White House Chief of Staff Mark Meadows said that President Donald Trump was prepared to use executive authority to extend some measures such as supplemental unemployment insurance. Vaccine warning Goldman Sachs Group Inc. warned that a successful coronavirus vaccine could upend markets, sparking a sell-off in bonds and a rotation out of tech stocks. A vaccine could be approved by the end of November, the analysts wrote, which would mean it could spark disruptive rotations just as investors are digesting the results of the U.S. election. In virus news today, Germany recorded the highest number of new cases in more than three months, cases in the Philippines surged and California threatened to cut off power to homes hosting house parties. Twitter Inc. and Facebook Inc. blocked a video shared by accounts linked to President Trump for violating their policies on coronavirus misinformation. Markets mixed Global equity investors are reacting to another slew of earnings, while they await news on a stimulus package from Washington. Overnight the MSCI Asia Pacific Index added 0.2% while Japan's Topix index closed 0.3% lower. In Europe, the Stoxx 600 Index was 0.5% lower at 5:50 a.m. as both Glencore Plc and ITV Plc announced they were ditching their dividends. S&P 500 futures pointed to a slightly higher open, the 10-year Treasury yield was at 0.531% and gold was close to $2,050 an ounce. Coming up... Dallas Fed President Robert Kaplan discusses the economy at 10:00 a.m., while at the same time acting Secretary of Homeland Security Chad Wolf testifies in the Senate on recent actions in Portland. Stimulus talks are set to continue. President Trump speaks at three separate events in Ohio. Among the companies reporting earnings today are Uber Technologies Inc., Bristol-Myers Squibb Co., ViacomCBS Inc. and TripAdvisor Inc. What we've been reading This is what's caught our eye over the last 24 hours. And finally, here's what Joe's interested in this morning When Tracy Alloway and I record episodes of our Odd Lots podcast, guests keep coming back to the same question: Is this a turning point for macroeconomic policy? Specifically, the question is whether fiscal policy (which has played a major role lately) continues to be part of the landscape, or whether major economies go back to relying on central bank-led actions to fight every downturn.
On our latest episode, we spoke to Viktor Shvets, an analyst at Macquarie who has been anticipating this turn for awhile. His basic argument is that that the existing approach essentially relies on ever-increasing asset prices to keep growth going. Thus you get into this trap, or cycle, where every time there's a little bit of volatility the Fed has to act. And it's not just about appeasing investors. If they don't act, that volatility translates into real economic losses, and costs people jobs.
Last week the legendary investor Seth Klarman accused the Fed of "infantilizing" markets by intervening everytime it throws a tantrum. This is a pretty common claim. You often hear it from veterans like Klarman and many others, that the Fed should just let the market take its lumps, and let capitalism do its thing. There will be winners and losers and life will go on.
Again though the problem is, as Shvets argues, there are real economic consequences from the volatility. People's lives get ruined. It makes people poorer. His view offers a way out and a new path. A more sustained role for the public sector in investment and household income support, he argues, gets us out of this trap of booming asset prices and Fed intervention everytime there's a tantrum. The whole conversation is fascinating, and well worth a listen. 
Joe Weisenthal is an editor at Bloomberg. Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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