The last trading day of August, a month in which the crazy moves attributed to an unwind of Yen-carry trades now seems long forgotten, will end with PCE data. Yesterday, the Dow and S&P finished up despite NVIDIA dragging down tech and Dollar General hitting a 6 year low.
Yields rose some as economic data showed the economy was "resilient" and 2s10s remained inverted by 3bps with the 2y at 3.89 and 10y at 3.86. On the data front the 2nd revision to the 2Q GDP showed that the economy grew at a 3% annualized real rate which was above consensus and seemed to show continued strong consumption. Inventories grew in line with expectations and the jobless claims didn't show any major concerns, though some will note the increase in continuing claims as an indicator that those unemployed are having a harder time finding new employment.
With the soft landing narrative feeling firmly enchrenched, is there a concern that perhaps the market's pricing of rate cuts is discounting the chance that the Fed will need to keep rates a little higher for a little longer and that there will need to be more "pain" in the labor market to bring down inflation back to target? After all inflation is still above target with the market expecting PCE data in the 2.5% YoY tomorrow, of course some quarterly annualized and nowcast numbers are indicating we're at or back to running at 2% target. Time will tell.
XTOD: With this release & Q3 tracking at around 2% the economy is looking in fine shape overall. The Fed should still cut because, as Powell said, the unemployment rate is higher than it should be. But absent an (unlikely) rise in the urate in August no pressing reason for a 50bp cut.
XTOD: A story in four parts:
1) US GDP growth has outpaced all other G7 nations
2) it's outpaced pre-COVID projections
3) inflation-adjusted wages are up, and most for low-wage folks
4) wages at the bottom rose so much, income inequality is down, undoing 1/3 of its growth since Reagan
XTOD: Pretty good year so far for financial assets:
S&P 500 +19.2%
Gold +22%
Bitcoin +39.8%
Nasdaq 100 +16.8%
Russell 2000 +10.3%
MSCI EAFE +12.4%
Double-digit gains as far as the charts can see
XTOD: Dreams are fun when they are distant. The imagination loves to play with possibilities when there is no risk of failure.
But when you find yourself on the verge of action, you pause. You can feel the uncertainty of what lies ahead. Thoughts swirl. Maybe this isn't the right time? Failure is possible now.
In that moment—in that short pause that arises when you stand face to face with your dream—is the entirety of life. What you do in that pause is the crucible that forges you. It is the dividing line between being the type of person who thinks about it or the type of person who goes for it.
When I really think about it, I want that moment to be my legacy. Not that I won or lost. Not that I looked good or looked like a fool. But that when I had something I really wanted to do, I went for it.
XTOD: 1. If you had a heart attack and had to work two hours per day, what would you do?
Not five hours, not four hours, not three—two hours. It’s not where I want you to ultimately be, but it’s a start. Besides, I can hear your brain bubbling already: That’s ridiculous. Impossible! I know, I know. If I told you that you could survive for months, functioning quite well, on four hours of sleep per night, would you believe me? Probably not. Notwithstanding, millions of new mothers do it all the time. This exercise is not optional. The doctor has warned you, after triple-bypass surgery, that if you don’t cut down your work to two hours per day for the first three months post-op, you will die. How would you do it?
2. If you had a second heart attack and had to work two hours per week, what would you do?
3. If you had a gun to your head and had to stop doing ⅘ of different time-consuming activities, what would you remove?
Simplicity requires ruthlessness. If you had to stop ⅘ of time-consuming activities—e-mail, phone calls, conversations, paperwork, meetings, advertising, customers, suppliers, products, services, etc.—what would you eliminate to keep the negative effect on income to a minimum? Used even once per month, this question alone can keep you sane and on track.
https://x.com/jasonfurman/status/1829143620143944190
https://x.com/BBKogan/status/1829183972116705391
https://x.com/awealthofcs/status/1829201207891767335
https://x.com/JamesClear/status/1829225608510918993
https://x.com/tferriss/status/1828918810784739784
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