Over the weekend SNL celebrated 50 years with some incredible performances and skits. While this blog will likely never make it to the 50 year mark (let alone 5 year mark), it has almost made it to the 50 day mark of 2025 and that’s a feat worth celebrating. I couldn’t get Sir Paul McCartney to guest write today and Bill Murray wouldn’t do a top 10 for me, so you’re stuck with my best attempt to make a mildly entertaining list of topics or narratives that define the first 50-days of 2025.
T - tariffs, duh. You can add “reciprocal” in front to make it more fun too.
A - A.I., remember DeepSeek?
R - r-star of course. I know the Fed forgets it, but I don’t.
I - inflation, did it ever really go away?
F - Federal Reserve, that last meeting, useless.
F - fiscal policy, unsustainable?
I guess Tariff is one of the best words in the dictionary.
We concluded last week’s economic data with a weak retail sales data point, which is already forgotten. The real narratives of the last week are twofold (and I’m using “everyone” the way my kids use “everyone”).
First, everyone is now an expert in the GDP equation. So current narrative number 1 is centered on how reduced government spending and reduced government employment will “automatically” reduce GDP…because math, duh…G goes down. Of course most of the thinking you find related to the current narrative stops at this first order and gives no consideration to what comes next, or in other words how the private sector responds. A person laid off from a government job, do they collect unemployment (a government spend) or do they get a job in the private sector? The bottom line is there is a lot to think through in terms of the impact on GDP. Could there be demand side contractions due to government layoffs? What does private sector absorption of those people look like? What about increased entrepreneurship as a possibility? What about the possibility that the laid off employee is way more productive in the private sector? Ultimately productivity is a major factor in Real economic growth.
Second, everyone is mapping the current inflation prints to the inflation prints of the 1970s and writing their own opinions as to whether we’ll get a second inflation spike or not. It’s fun, but since you can get the best economist in the world together in a room and it’s likely they will disagree about what caused inflation in the first place and what policies are most effective at curing inflation in the second place, the whole discussion just seems like media fodder. I say that not to dismiss the risk of inflation rebounding, but to reiterate that the whole narrative should likely be couched as a discussion about risk, not simply passing around charts that overlay two time periods on top of each other as many are wont to do.
The week ahead in data is a slow one, so you’ll have to look to the Administration and DOGE for entertainment....and they probably won't dissappoint.
Today: Empire Mfg. Fedspeak
Wed.: Housing starts, building permits, FOMC Minutes, 20Y Bond Auction
Thur: Jobless claims, Fedspeak
Fri: S&P PMI’s, Existing Home Sales, UofM Feb (final)
XTOD: NBA Player- “I can’t play in the back to back because my knee is a little sore 😖”
NHL Player- “I am willing to die for my country in this exhibition”
XTOD: 'll admit I am not sure what @riteshmjn's (or Luke's) "second derivative" is here. I will, however, point out that if the USG suddenly stops paying X% of GDP into the economy, it does not mean the US GDP is instantly and permanently downsized X%.
XTOD: Zero chance the Dimon audio "leak" is unintentional. Zero. It's the recruitment ad for the people who will replace the people who are huffy about it
XTOD: Meta stock has yet to have a down day since Zuck got caught starring at the cleavage
XTOD: “The universe wants you to be typical- in a thousand ways it pulls at you. Don’t let it happen.”
https://x.com/bigcontentguy/status/1890950449232011407
https://x.com/bauhiniacapital/status/1891075003203920039
https://x.com/HedgeDirty/status/1890263635274133550
https://x.com/allstarcharts/status/1890849977192022115
https://x.com/ImadeIyamu/status/1890628283865186717
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