| Inflation fears haven't gone away, health check for U.S. economy, and slow progress on Biden agenda. The soaring cost of energy is the latest worry for markets becoming increasingly concerned the world may be facing stagflation-like risks where rising prices are accompanied by sluggish economic growth. The record rally in gas and power prices in Europe is already forcing some factories to halt production. For those that remain open, the higher input costs will hit profits that could undermine the stock market rally. Chevron Corp. Chief Executive Officer Mike Wirth warned that the world is facing high energy prices for the foreseeable future. The argument against the stagflationary thesis is that the spike in prices generally will be relatively brief. That idea got a small boost on Tuesday when U.S. inflation data came in slightly lower than expected. Today we get a check on the growth side of the debate, with August retail sales data and weekly jobless claims numbers due. Sales are expected to have fallen again as car purchases plunge, while claims may tick higher due to an influx of Hurricane Ida-related filings.  | While the market generally remains focused on how the Federal Reserve will react to incoming data, any significant delay to President Joe Biden's $3.5 trillion stimulus plan may hurt sentiment. While the House Ways and Means Committee approved the tax hikes to pay for the plan yesterday, it seems increasingly likely that continued squabbling among Democratic Party lawmakers will slow progress of the measures. Climate change, health care and further discussion on tax measures are among the issues where disagreement and delays are likely, according to Senator Chris Murphy, a Connecticut Democrat. Global equities maintained their divergent paths, with Asia stocks still dominated by Chinese regulatory moves and fears about the outlook for China Evergrande Group. Overnight the MSCI Asia Pacific Index slipped 0.6% while Japan's Topix index closed 0.3% lower. In Europe, the Stoxx 600 Index had risen 0.7% by 5:50 a.m. Eastern Time with travel companies rising on bullish outlook from Ryanair Holdings Plc. S&P 500 futures pointed to a decline to at the open, the 10-year Treasury yield was at 1.317%, oil was little changed and gold was lower. Retail sales and claims data land at 8:30 a.m. U.S. business inventories numbers are at 10:00 a.m. TIC flow data is at 4:00 p.m. Secretary of State Antony Blinken will hold a press conference with his Australian counterpart as some U.S. allies are furious about the defense deal signed between the countries. President Biden is scheduled to deliver remarks on the economy. Here's what caught our eye over the last 24 hours. When I first woke up the other day, and saw everyone tweeting about AOC's "Tax The Rich" dress at the Met Gala, the only thing that came to mind was that screen from War Games, where the computer advises the player not to play Global Thermonuclear War and instead play a nice game of chess. The only winning move, regardless of your opinion, was to not tweet about the dress. And yet many did. Still I couldn't resist one thought about the message itself: Tax The Rich. People love pointing out the math how if we taxed the rich more we could solve homelessness or some other societal ill. But as MMT (and perhaps even some NIMBY neoliberals) have pointed out, we don't need higher taxes on the rich to get more homes. What we need is for Congress to allocate the money to spend more homes, and we need the supply-side capacity to build those homes. Ameliorating inequality by taxing the rich might be a social good, but strictly speaking, the government can do plenty more than it does even without a wealth tax or a change to the highest marginal rate on income. If you point this out though -- that taxes don't directly fund spending -- you get accused of word games. The logic is that taxes diminish domestic demand for goods and services. This creates idle goods and services. Then when the government spends money, that money can be used to employ those idle goods and services. Ergo taxes *do* fund spending, in a kind of roundabout way. But IMO, it's that roundabout explanation that's the semantic word game. For one thing, creating capacity by reducing domestic spending power is simply not what people think when they think "x pays for y." When people think "x pays for y" what they think about is sales at a company (cash coming in) paying for employee wages (cash going out). Pretty straightforward. And cash-in, cash-out is clearly not what's described above. Furthermore, there are other ways of achieving an expansion of domestic capacity, such that it can absorb more spending, without raising taxes -- which again undermines the idea that "taxes fund spending." Anyway, this is not a comment on the dress. Remember, the only winning move there is not to play. But the "what purpose do taxes serve" is a debate that will continue past many Met Galas in the future, and it would be helpful to get over the notion that in order to introduce a new spending program, there must be some offsetting revenue source likely coming from the rich. Follow Bloomberg's Joe Weisenthal on Twitter at @TheStalwart 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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