"Summertime and the livin's easy" I guess was the motto for equity markets yesterday. Jobless claims were much better than expected allaying some concerns about the recession word. Who knew this would be enough to send stocks rallying to their biggest gains in since last November, if indeed it was only this data that helped fuel that move. There have been some headlines that perhaps things in the Middle East may not escalate dramatically that could help too. Anyway, whatever the driver, mixed with another weak treasury auction (the 30y tailed 3.1bps), it was enough to get the 10Y back to 4% and the 2Y up to 4.05%.
Atlanta Fed GDP Now is still reading 2.9% estimate, we'll see what the NY Fed's GDP nowcast reading is today. As a reminder, the NBER definition of recession does not require and is not simply two consecutive quarters of declining real GDP. That said, it's hard to see almost 3% real GDP in 3Q as being recessionary.
As we hit a summer Friday, one with no data, will this be one of those Friday's where investors "de-risk" heading into the weekend? In the immortal words of Jay-Z "Do I look like a mind reader sir, I don't know".
XTOD (I personally have no idea who Paulo is, but I'm sure he's a nice enough guy): From my buddy @PauloMacro and his excellent blog… Don’t think guys have thought this through very far.
-If Fed cuts aggressively here, JPY goes to 120 and every CUSIP has a flash crash, as the carry trade blows up.
-If Fed cuts slowly, then it may just blow everything up anyway, cause the economy is rolling over and the ‘wealth effect’ was the only thing holding it up.
-Meanwhile, we just had a 10-yr auction that effectively failed. So if the Fed cuts at all, they blow up the bond market and the banking sector. They realistically need to raise rates aggressively here to save things (imagine that!!). That’s the EM Dilemma. Which is why DMs do not want to become EMs. Or in other words, ‘they’re fuct!!’
XTOD: To show why initial & continuing claims aren't worrying yet, here's how both (as a share of covered employment) reacted in the recessionary year of 2001 relative to the non-recessionary years of 1999 & 2000. The tiny 2024 wedge in continuing claims is nowhere near 2001 levels yet https://pbs.twimg.com/media/GUdq14lasAAJ5ED?format=jpg&name=small
XTOD: Everyone is fighting a battle you know nothing about. Everyone struggles. Take solace in that.
XTOD: To experience time travel, read. To achieve immortality, write.
XTOD: Experiences that make you grow as a person are always painful:
overcoming injuries, getting seriously sick, losing someone you love, losing a lot of money, being treated unfairly because you were different, getting betrayed by someone you trusted.
The ride isn't easy, but that's the only way to grow mentally and emotionally stronger.
XTOD: Not all disappointing outcomes are failures. Some lead to improvements in your process.
Success is about more than the results you achieve. It's also about the growth you attain.
Progress is more than how close you come to your goal. It's how far you've come from your start. https://pbs.twimg.com/media/GUeTkWGWQAM8l7j?format=jpg&name=900x900
XTOD: We face a disturbing, understanding paradox: as information has exploded, understanding has imploded. It leads people to swallow, simple slogans. These fuel polarization.
To escape, we must read, write and think deeply. The time is getting urgent. https://pbs.twimg.com/media/GUe4GXZa8AA_e1g?format=jpg&name=small
https://x.com/hkuppy/status/1821345846207611033
https://x.com/ernietedeschi/status/1821544429544726823
https://x.com/tferriss/status/1821582549120082217
https://x.com/JamesClear/status/1821604030965309830
https://x.com/orangebook_/status/1821521009046134786
https://x.com/GregoryMcKeown/status/1821628008312270959
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