Daily Economic Update: August 22, 2024

Target beat on earnings, perhaps showing the consumer is still alive.  The BLS benchmark revisions to nonfarm payrolls were delayed in terms of their release timing (for some at least), which of course led to some conspiracy theories. When they were reported, they showed that job creation from April 2023 to March 2024 were revised down by 30%, which was largely expected and presumably priced into markets.  The payrolls revision are again subject to debate in light of illegal immigration, so it's hard to discern exactly how much weight should be placed on these revisions (and on the original data).

Anyway, if you're interested in the history of numbers created by government agencies, may I point your attention to this 2008 article https://harpers.org/archive/2008/05/numbers-racket/

Yesterday's highlight was the minutes to the July 31 FOMC meeting.  Overall the assessment in the minutes reads as one where both the upside risk to inflation had decreased concurrent with the downside risks to employment (very Phillip's curve esque).  The minutes explicitly call out: "several observed that the recent progress on inflation and increases in the unemployment rate had provided a plausible case for reducing the target range 25 basis points at this meeting or that they could have supported such a decision."  And, "The vast majority observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting. "  There were several participants who did note the risk to inflation that could occur from easing too early.

Stocks seemed to like the minutes and bond yields continued to move lower with the 2Y trading back to levels near the lows (low 3.90's) seen during the yen-carry debacle the other week.

On the day ahead it's Jobless claims, S&P PMI's, Home Sales, J-Hole agenda released

XTOD: At least three banks managed to get advanced word on Wednesday’s hotly anticipated payroll numbers while the rest of Wall Street was kept waiting by an unexpected delay.

XTOD: Want to get people to take action? The magic word is because. 🌟 Humans crave reasons, and when you give them one—even a simple one—they’re more likely to follow your lead.

XTOD: Stupid question maybe. But if I'm an investor in a hedge fund, do I just pay the performance fees when I cash out? 

Or do the hedge fund managers collect their annual 20% take, even if my gains are unrealized?

XTOD: Huh, weird. I thought taking from unrealized gains was unreasonable and insane?

XTOD: Isn’t it crazy when something that makes sense in one context doesn’t make sense in another context?

XTOD: Being busy is not the same as being productive. The 80/20 principle, also known as Pareto’s Law, dictates that 80% of your desired outcomes are the result of 20% of your activities or inputs. Once per week, stop putting out fires for an afternoon and run the numbers to ensure you’re placing effort in high-yield areas: What 20% of customers/products/regions are producing 80% of the profit? What are the factors that could account for this?  

Invest in duplicating your few strong areas instead of fixing all of your weaknesses.

https://x.com/business/status/1826331724290183190

https://x.com/DARRENHARDY/status/1826333599718625421

https://x.com/TheStalwart/status/1826295957107114440

https://x.com/BirdGuySky/status/1826309987033121055

https://x.com/job_gyhb/status/1826326342683484656

https://x.com/tferriss/status/1826280659683291139