Daily Economic Update: December 1, 2023

Hard to believe it's December.  It's been one of those years where certain months felt like years for markets.  Treasury yields moved higher by 6-8bps yesterday (in volatile trading), but have reversed some of that move and are down 2-3bps to start December.  The 2Y is yielding 4.68% and the 10Y is yielding 4.33%

Yesterday's PCE data came in largely in line with expectations, with headline PCE increasing ~3% year over year and flat month over month, the weakest print since mid-2022. The move higher in yields seemed somewhat driven by NY Fed Williams who said “I expect it will be appropriate to maintain a restrictive stance for quite some time to fully restore balance and to bring inflation back to our 2 percent longer-run goal on a sustained basis,” while noting the improving inflation situation.

We get 2x Powell today before the Fed begins their blackout period ahead of the next FOMC meeting. Will Powell push back on the easing of financial conditions.  If you recall Fed officials including Powell made a big deal about how tighter financial conditions were doing some of the work for them, especially if they were being driven by exogenous factors. We'll see if there is any push back on the recent easing of financial conditions.

Aside from Powell there is some manufacturing PMI data and construction spending data on the calendar. 

XTOD: Republican Lawmakers Call CDC Attention To "Suspicious" Virus Outbreak In China

XTOD: Russia’s Naval-Defense Dolphins May Have Escaped.

XTOD: Major League Pickleball asks players to take 40% pay cut on the back of rapid growth

XTOD: The 10-year Treasury yield will rebound to 5.5 percent, predicts market forecaster 

@biancoresearch  He argues that the current move is a head fake.

XTOD: You get recessions/sharp slowdowns when businesses/households get caught out over their skis & are forced to cut back quickly, and the speed triggers a self reinforcing dynamic. We've spent the last 18m in pre-cession. And you can't commit suicide jumping out the basement window

XTOD (Remember LIBOR transition, Remember ARRC?...good times): #ARRC, convened by the Fed, released its Closing Report & announced the group’s conclusion, following a successful transition from USD LIBOR. The report highlights forward-looking focus areas to maintain robust reference rates: https://nyfed.org/47Uri0Z

XTOD (If you don't know what PODS are in the Hedge Fund space you should google): BLOOMBERG ARTICLE ON SYSTEMIC RISK FROM PODS  Some interesting points in this Bloomberg article on multi-manager funds.   A couple points stood out to me, and there were a couple points I would add. What stood out:....

XTOD: Let me be clear to any corporation that hasn’t brought their prices back down even as inflation has come down: It’s time to stop the price gouging.  Give American consumers a break.

XTOD (Reply): Where to start?  A) Inflation is a change in the price level. Inflation slowing but still positive doesn’t bring down prices it brings them up less quickly. Math is hard.  I now actually believe JoeB may be writing his own tweets as a C- donor kid intern would’ve caught this.

B) Corporations try to maximize profits. It’s governments job to set conditions that lead to or away from inflation. Biden and others find this very confusing feeling if you they can only catch corporations maximizing profits it’s a smoking gun. Then sometimes they use the word “fiduciary” in other contexts and don’t notice the irony.

XTOD: A billionaire minimum tax of just 25% would raise $440 billion over the next 10 years.  Imagine what we could do if we just made billionaires pay their taxes like everyone else.

XTOD (Reply): The dude who just spent $6,130,000,000,000 this year is talking about collecting more taxes again like revenue is the problem. 

XTOD: Voluntary disregard for history's lessons has brought us crises and cul-de-sacs. We know how to contain inflation and restore containment when it fails. We know how to govern great cities. We know how to compete in the eternal contest between nations. But we decided to forget.

XTOD: Every day you face battles—that is the reality for all creatures in their struggle to survive.  

But the greatest battle of all is with yourself—your weaknesses, your emotions, your lack of resolution in seeing things through to the end.  ― Robert Greene, The 33 Strategies of War

XTOD: It was a useful phase, and I think that it’s important for most people to dedicate a chunk of time to learning the basics of productivity.  But you have to learn to let go of your task list or you will end up being shunted to the side of your own life.  If you’re not careful, you become so blinded by your obsession with work that you forget there is a world outside of it.  You literally forget the things that you used to love, and forget that you’ve forgotten them.  Your life becomes flattened down to the single dimension of your hustle.  You can learn to love the grind but it’s crucial that you don’t get parasitised by it.  Your work can crawl inside your skin and start to stare out through your eyes.  Then before you know it, even when you’re not working, you’re still working.

https://x.com/zerohedge/status/1730386257815990517?s=20

https://x.com/Forbes/status/1730383765854142699?s=20

https://x.com/CNBC/status/1729931782668116375?s=20

https://x.com/CNBCFastMoney/status/1730351598918885871?s=20

https://x.com/mark_dow/status/1729880150244995218?s=20

https://x.com/NewYorkFed/status/1730303150328787010?s=20

https://x.com/FundamentEdge/status/1730368241401528513?s=20

https://x.com/JoeBiden/status/1730247565537390998?s=20

https://x.com/CliffordAsness/status/1730288798204866907?s=20

https://x.com/POTUS/status/1730211325383434419?s=20

https://x.com/thelykeion/status/1730388958159446217?s=20

https://x.com/NoahCRothman/status/1730377632745767002?s=20

https://x.com/MasterLife101/status/1730202956211933364?s=20

https://x.com/ChrisWillx/status/1730271476828320145?s=20