With consumer fears front and center, the 2nd read of 4Q2024 GDP showed consumers hanging in there. The personal consumption component came in at 4.2% with solid spending on durable goods. Overall the 2.3% real GDP was in line with expectations, but the PCE read in the report showed inflation to be as stubborn as my mother-in-law. Speaking of durable goods (not mother-in-laws), orders appeared to rebound with vehicles and machinery driving it. Everyone gets a car, even though auto loan delinquencies are expected to continue to rise. Don’t worry, we’ll get an updated read on the 1Q2025 GDP estimate when the Atlanta Fed releases their updated estimate today and we’ll see if it confirms what the vampire squid (aka Goldman) believes which is a 1Q2025 GDP under 2% (1.8% is GS current estimate).
In the markets Nvidia and the latest tariff talk weighed on markets. Remember yesterday when Nvidia didn’t move too much after earnings, well, it decided to move down ~8% today. The Nvidia vibe shift seemed to be something like cool, you killed it, but not as much as you used to kill it, can the insane growth continue? Microsoft seemed to weigh on some of the AI sentiment for sure, what does Satya know? Maybe those who say that history shows the companies that spend early and often in most historical technology infrastructure booms don’t end up being the winners will be proven correct.
Chips and tariffs seem to go hand in hand and today Trump confirmed that 25% tariffs on goods from Mexico and Canada will go into effect next week, but why stop there, we’ll add another 10% on top of the existing 10% tariff on Chinese imports, and the EU is next in line for a 25%. One minute it’s tariffs come April, the next it’s March, and there’s still “reciprocal tariffs” being floated as well. Is the uncertainty around and the actual imposition of tariffs going to lower growth and demand and is that driving oil lower? It’s probably part of the answer, along with a strong dollar and expectations for continued U.S. energy output.
We talk about AI everyday, so I asked Grok what I should do in the face of a wobbling job market, looming tariffs and oil prices acting like demand is falling and markets expect the Fed to cut in June. Grok’s advice: “Buy a toaster, hoard some oil, and pray the tariff fairy leaves us a tax cut under the pillow. Tomorrow’s another circus—bring popcorn.” I love quoting AI - it’s less unhinged than most economic commentators.
The Fed’s preferred inflation gauge PCE is on the docket today, along with Income & Spending data, but the real action likely comes from Pennsylvania Avenue. We’ll start the action with the S&P at 5,861, the 2Y Treasury yield at 4.07% and the 10Y Treasury yield at 4.27%.
In a world where tariffs drop faster than Nvidia stock and AI advice is as good as any economist’s, the only safe bet is to keep your popcorn stockpile high.
XTOD: This guy gets it https://pbs.twimg.com/media/Gkv6AFoW8AAOueS?format=png&name=900x900
XTOD: Pam Bondi: "We're releasing the first of the Epstein files tomorrow."
Americans: "Cool! Then we'll get to read them?"
Bondi: "Well actually you'll get to see fun little photo shoots of conservative personalities & influencers holding a binder!"
XTOD: Meta plans to release standalone Meta AI app in effort to compete with OpenAI's ChatGPT
XTOD: ok fine maybe we'll do a social app
XTOD: TSLA symmetry 280 to 480 to 280 as glorious as any memecoin chart
XTOD: The best career advice I ever followed. At every job you have you either earn or learn. Ideally both. The second you stop... you quit.
https://x.com/AlpacaAurelius/status/1894882961582919722
https://x.com/TheTonus/status/1895187052070682729
https://x.com/CNBC/status/1895221160733790348
https://x.com/donnelly_brent/status/1895206568951717953
https://x.com/sama/status/1895230925753233763
https://x.com/Codie_Sanchez/status/1895193948924072018
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