Port strike on the horizon. Continued messy situation in the middle east, with Israel invading southern Lebanon. What a port strike and continued escalations in MidEast tensions might mean for inflation is something that will likely get further attention, but in the meantime crude oil prices are down over 20% from last year.
In everyone's favorite topic Fedspeadk yesterday we had the guy who used to work for Obama (Goolsbee) call for lots of cuts. Then we had the guy who runs the Fed say the Fed is data dependent and seems to think they can take their time and are in no rush to cut: "not something that we need to go fast on. It’ll depend on the data, the speed at which we actually go.” Barring bad data, whatever that actually means, I think you can pencil Powell in for 2 more 25bp cuts.
Initially stocks didn't like Powell, but they nonetheless hit new highs. Yields backed up a little with the 2Y up ~8bps to 3.65% and the 10Y up ~4bps to 3.79%.
Interesting paper out of NY Fed called "The Central Banking Beauty Contest", it kind of reminded me of a paper I wrote about here on the "Hall of Mirrors" effect of information feedback loops, but in this case it approaches "expectations" from a game involving the Fed and market participants and the impact of their beliefs about one another's beliefs. My summary, are we doing economics anymore or psychology or game theory, or a realization that the economy is dynamic and all of the above?
On the day ahead JOLTS will be the highlight, along with ISM Mfg.
XTOD: Multivariate Core Trend (MCT) #inflation increased to 2.6 percent in August from 2.4 percent in July (revised down from 2.5 percent). The 68 percent probability band is (2.2, 3.0). https://nyfed.org/3NY8FCh
XTOD: “360 substations are out… There is a high likelihood that the substations are not reparable, and replacement of the substation equipment will be necessary.” This is devastating. We do NOT have 360 substations worth of transformers and other electrical equipment sitting in stockpiles waiting to be deployed. It could take a very long time to restore power to everyone. Are we facing a Hurricane Maria-type impact on grid infrastructure?
XTOD: You’ve heard of Founder Mode, now get ready for …https://pbs.twimg.com/media/GYqY3z_bQAACp97?format=jpg&name=medium
XTOD: "Damodaran Bot has read everything that I have ever written, watched every webcast that I have ever posted and reviewed every valuation that I have made public." https://t.co/6TRwh23Pth
XTOD: The ultimate status symbol is time. Time is the new money.
https://x.com/NYFedResearch/status/1840821453622587395
https://x.com/tylerhnorris/status/1840550817603948842
https://x.com/nurijanian/status/1840451488273104982
https://x.com/trengriffin/status/1840425100677669329
https://x.com/joyofcompoundin/status/1840006736301756675
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