Are we *sure* we need this rate cut?

[Bloomberg]( Today’s Agenda - Maybe we don’t need a [half-point Fed]( rate cut, or [any cut at all](. - Iran keeps falling back on its old [hostage-taking habit](. - Trump’s [disavowal of “Send her back](” rings hollow. - The U.S. and France should [cool their little trade war](. Second-Guessing the Fed In “Jurassic Park,” chaos theorist Ian Malcolm says of the insane dinosaur theme park, “Your scientists were so preoccupied with whether or not they could, they didn’t stop to think if they should.” You might say the same thing about today’s Federal Reserve. Everybody and their grandmother currently expects the Fed to cut interest rates later this month. Fed officials have all but promised it, and markets demand it. In fact, markets, true to form, now demand even more: They seek a half-percentage-point rate cut, instead of the quarter-point cut most economists expect. Mohamed El-Erian, playing the role of Ian Malcolm in this production, [doubts such a dramatic cut is necessary](. In fact, like cloning dinosaurs from old DNA, it could have some unintended downsides. The idea that a rate cut of any size is necessary hinges on a highly strained reading of economic data, argues Brian Chappatta. He looks at recent payrolls, prices, manufacturing and retail-sales numbers and [sees better arguments for standing pat](. Some observers suggest the Fed might hold back on a half-point cut to declare its independence from President Donald Trump, who routinely complains it should go further. (He did it again [today](.) But a cut of any size might be evidence Trump has already pushed the Fed too far. Trump aside, though, there’s no doubt economists have grown cautious about the outlook. They’re so consistently awful at predicting recessions that it’s easy to dismiss their anxiety. But Stephen Mihm suggests this very consistency hints [economists convey useful information, even in their wrongness](. They usually start to slightly downgrade their forecasts when, in hindsight, it turns out the recession has already begun. By that measure, we might be in a recession now and not even know it. Rate cuts, uh, find a way. How to Take Hostages and Influence People Tensions in the Strait of Hormuz approached stratospheric levels today as Iran’s Revolutionary Guard Corps [captured]( a British oil tanker. This is the latest in a series of back-and-forth actions between the U.K. and Iran in recent weeks, including the transfer this week of British-Iranian prisoner Nazanin Zaghari-Ratcliffe to a psychiatric ward. In keeping with a long, shameful tradition, Iran keeps showing that [hostage-taking is a key part of its diplomatic toolkit](, writes Bobby Ghosh: "Give us what we want, or we’ll do to your people what we do to ours.” Trump’s Racism Goes Way Back Just before tweeting about the Fed this morning, Trump also tweeted about his rally where the crowd chanted “Send her back” about Rep. Ilhan Omar of Minnesota. He defended the crowd and himself, attacked Omar again, and for good measure retweeted some of his own, earlier tweets attacking her. This muddled, to put it mildly, his statements last night disavowing the “Send her back” chants. His disavowal rang hollow anyway, writes Tim O’Brien, when you consider how Trump had prepped the crowd with earlier racist tweets and statements, [not to mention his very long history](, dating back to at least the 1970s, of stoking racial animosity for personal gain. Further Racism Reading: Racism has [long been the glue binding democracies]( together. – Pankaj Mishra French Redressing Lots of people are mad at Big Tech, and France last week decided to do something about it, in the form of a Big Tax. This tax makes no sense, unfairly singles out American tech firms and won’t even raise much money, writes Bloomberg’s editorial board. The U.S. is right to object to it. Then again, “the U.S.” in this case is “the Trump administration,” which has naturally aimed its own dumb blunderbuss, filled with tariffs, at France. [Launching yet another front in the Forever Trade War]( is not helpful either, the editors write. A WTO complaint should be just fine. Further France Reading: France’s Lobster Scandal says a lot about [its growing inequality problem](. – Lionel Laurent Telltale Charts [Air-conditioning demand is on the rise]( across the U.S., Justin Fox notes, as the planet heats up, raising demand for air conditioning, etc., etc., until the Apocalypse. Soaring [costs of health care and education]( are kind of a mystery; Noah Smith explores some possible solutions. Further Reading The market cheered [Boeing Co.’s optimistic new timetable]( for getting the 737 Max back in the air, but it has been overly optimistic throughout this debacle. – Brooke Sutherland Reminder: Hey, remember earlier this week, when I gave you [a link to sign up]( for Brooke Sutherland’s new newsletter, Industrial Strength? Did you do it? What are you waiting for? This was a huge week in industrials, as you can [see in this week’s]( newsletter. [Sign up]( so you don’t miss next week’s! Trump’s cheap insurance plans, [which just got a courtroom win](, are bad for Obamacare, insurers and patients. – Max Nisen A little-noticed congressional debate suggests[Medicare for All is doomed]( before it begins. – Ramesh Ponnuru One way to cut drug costs: Inform patients about [which drugs actually work](, to cut through the industry hype. – Faye Flam We’re approaching the debt ceiling again, with all the peril and chaos that entails. The [ceiling is a pointless relic]( and should be abolished. – Karl Smith ICYMI China built Kenya a [railroad to nowhere](. New York faces [record power demand]( this weekend. Divorcing after 50 really [messes up your finances](. Kickers Science still can’t agree on [the universe’s expansion rate](. (h/t Scott Kominers) How to [dress for space](. The [superhero industry hates]( children. 66 questions about [the “Cats” trailer](. Note: Please send air-conditioning and complaints to Mark Gongloff at mgongloff1@bloomberg.net. 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