ADP employment rises more than forecast, which coupled with strong employment components in the ISM manufacturing earlier this week have caused the forecast for Friday's Jobs numbers to appear to be revised higher. ISM services data showed continued slowing in prices and employment, but still high levels of production.
Powell basically said the same thing he's been saying, stressing data dependence and that the it's too soon to cut. Perhaps his comments on immigration might have been the only thing of note (see XTOD's below).
The earthquake in Taiwan is a reminder of the fragility of supply chains, given the reliance on TSMC for chips. As the late Danny Kahneman said:
“Room for error is the only way to navigate a world that is impossible to predict.”
Reminds me of a guy named Ben Graham and his concept of "margin of safety"
XTOD: had coffee with the head of a large family office today, and he said something really profound that I’d never quite put together. Paraphrasing: “Capital structure ripples through management and ultimately ripples through employee experience”
If you work in a business run for cash flow, a PE-backed platform, a business run for growth or a business run for long term hold, your experience as an employee could not be more different.
The cash flow capital demands low overhead, fast ROI, had little patience for capacity building.
The growth capital spends aggressively to build the company of tomorrow, today. Nobody worries much about profitability.
The PE capital is all about the exit, and everyone is managed aggressively quarterly to maximizing strategic value and EBITDA at time of sale.
The long term hold capital worries about downside more than upside and tends to err on the side of conservatism. It’s a marathon, not a sprint.
No one right way, but it’s worth remembering that it’s the capital that ultimately designs the game that everyone else plays.
XTOD: “The price spiral in assets nurtured a shift in personal values as embodied in an increasingly commonplace tendency among individuals and companies alike to worship money above all else“
XTOD: Powell leaning in on labor supply increase via migration. This seems to make NFP prints very asymmetric - strong prints are going to be dismissed as increased supply, but a hint of weakness leads to early/more cuts. IMO everything going to surge the moment NFP weakens
XTOD: Any amount of intelligence can be overridden by ego, insecurity, immorality, bad incentives, or impatience, usually in that order.
https://x.com/XavierHelgesen/status/1775394030236598777?s=20
https://x.com/sidprabhu/status/1775391106114683169?s=20
https://x.com/FedGuy12/status/1775573621223624848?s=20
https://x.com/morganhousel/status/1775549257774399764?s=20
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