Stocks ended the day down. Treasury yields were a bit all over the place as NY Fed's Empire State Mfg Survey showed general business conditions index falling 29 points to -43.7, it's lowest reading since May 2020 (per @NYFedResearch on X), but Waller didn't seem to see any need for many rate cuts, stressing gradual cuts as his expectation. The 10Y ended up well over 4% at 4.08%. Meanwhile Canadian inflation runs hotter than expected.
The Gov. Waller speech yesterday: referred to the recent growth, inflation and unemployment data as "almost as good as it gets"; he spoke of labor market rebalancing and how he was correct that vacancies would absorb the decline in labor demand without upsetting employment/unemployment, but that he now believes the Fed needs to proceed in a manner that avoids over-tightening; he considers current financial conditions "restrictive", stressed the need to be confident that inflation will stay on a 2% path after reaching there that level; he believes rate cuts will be warranted so long as inflation doesn't rebound and that the number and timing of cuts is "data-dependent", but nonetheless should be gradual; he's watching for the scheduled CPI revisions that will come out as part of the Mid Feb CPI release to confirm inflation is truly easing quickly.
Today has Retail Sales, Industrial Production, Inventories and Beige Book.
Thursday: Philly Fed, Jobless Claims, Bostic
Friday: UofM ask consumers about gas prices, existing home sales and Daly
I enjoy observing and writing about the economy and the market, but I refuse to pretend I have any ability whatsoever to predict the future. On top of that I have as a life goal to always be able to reply to any question about the direction of markets or the economy with a simple, yet powerful response of "I don't know and I don't care." A few years ago, I presented an economic update to the CFA Society of Philadelphia and I titled each slide with a quote from Fred Schwed's Where Are The Customer's Yachts which seemingly sums up well what I have just described.
"For a considerable time now the writer has been viewing the activities of this street each working day, usually from the vantage point of a trading table"
"Although not a deep thinker myself, I have had a thousand separate lunches with those who were"
"he would be forced to admit the sad truth that a pitifully few financial experts have ever known for two years (much less fifteen) what was going to happen to any class of securities-and that the majority are usually spectacularly wrong in a much shorter time than that."
"In this case, the notion that the financial future is not predictable is just too unpleasant to be given any room at all in the Wall Streeter's consciousness"
"For one thing, customers have an unfortunate habit of asking about the financial future. Now if you do someone the signal honor of asking him a difficult question, you may be assured that you will get a detailed answer. Rarely will it be the most difficult of all answers-"I don't know".
Despite the fact that the financial services industry makes forecast, some right, some wrong, most couched in gibberish that gives the person a way to hedge if they are wrong, the very fact that the stream of opinion is omnipresent makes it easy to get caught up in the short-term and feel pressure to react. After all, providing you with a stream of data and opinion is a business, a business predicated on a demand by investors (including speculators) to be told by someone else what to do (credit to Ben Graham's writing for this phrase). The incentives are such that adding noise, complexity and a constant pressure to do something is part of the business. Morgan Hounsel wrote about this in a blog post Trying Too Hard in which he tells the story of Jon Stewart interviewing CNBC's Jim Cramer:
"Years ago Jon Stewart interviewed Jim Cramer. When pressed on CNBC content that ranged from contradictory to inane, Cramer said, “Look, we’ve got 17 hours of live TV a day to do.” Stewart responded, “Maybe you can cut down on that.” He’s right. But if you’re in the TV business, you can’t."
All of the above is by no means to say that people don't need or shouldn't seek advice about financial matters. There are many instances where prudent advice is needed to be a steadying influence and prevent costly mistakes. Comprehensive financial planning, constructing investment policy statements, and strategic asset allocation all are differentiated from the noise of stock-tips, speculation and prediction, at least to me.
XTOD: People who don’t value their own time won’t value yours.
XTOD: “…the vision techno-optimists sell, of humanity sailing the stars, expanding ever outward to conquer the galaxy, that does sound pretty cool. Someday it may even happen, and I wouldn’t complain. But this vision is not a solution to the nihilism that has gripped our societies today; endless expansion and acquisition for the sake of expansion and acquisition is just another expression of nihilism.”
XTOD: You can think whatever you want about Milei, but taking Lufthansa flight to Davos while so many „ESG focused“ officials and executives come with private jets is exactly the right signal to send.
XTOD: First MrBeast video posted directly on 𝕏!
XTOD: $1 Car vs $100,000,000 Car!!! I’m curious how much ad revenue a video on X would make so I’m reuploading this to test it. Will share ad rev next week
XTOD: “Is the Fed falling prey to groupthink?” Peter Coy @petercoy @nytimes
is asking the right question but I beg to differ with his answer. He suggests that members of Fed Board don’t cast dissenting votes from Fed chair because they consider forward guidance a powerful tool in conducting monetary policy and wouldn’t want to send confusing market signals. But when Fed admits that it is making decisions based on incoming data, meeting-by-meeting, the value of forward guidance is already compromised. Members submit individual estimates that are published as dot-plot charts, but the chair dismisses their importance in signaling future actions. Meanwhile, Fed Board members and rotating voting members of FOMC from district Fed banks are making more speeches than ever, sending disparate, even conflicting, messages about Fed intentions using nuanced statements. Interpreting it all requires an army of market analysts. That is what presumed “consensus” delivers: mixed messages. Diversity at the Fed is needed, yes, but the kind that matters: intellectual diversity. Expecting skin color or gender to determine how someone processes data and transforms their analysis into effective monetary policy is the worst kind of stereotyping. Utterly superficial and demeaning. What’s needed is deliberate resistance to groupthink—not to be a professional contrarian but to raise issues others might be missing in an effort to avoid policy mistakes.
https://x.com/alexhormozi/status/1747281980583297442?s=46&t=D2AESCsaw42dAEzgmjXHQA
https://x.com/NeckarValue/status/1747281949712949442?s=20
https://x.com/MichaelAArouet/status/1747171518465851857?s=20
https://x.com/elonmusk/status/1747047100502999141?s=20
https://x.com/MrBeast/status/1747044525116108854?s=20
https://x.com/judyshel/status/1746964031519301652?s=20
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