Daily Economic Update: June 6, 2025

Broken Bromance

Trump and Xi talk, but Trump and Musk spar.  I don’t know which headline matters more for markets, but shares of Tesla didn’t like the news ending the day down 14%.

As economist Brad DeLong posited, “Musk thought he had a deal—he backs Trump all the way, and in return Trump would provide him with EV subsidies, tariff carve-outs, and control of the NASA budget. Musk was wrong. And so we get to watch what happens next…”

With the Trump and Musk spat centered on Trump’s “One Big Beautiful Bill”, the fiscal talk isn’t going away.

Repressing Emotions

Yesterday I talked about monetary rules as a pre-commitment policy and in the past I’ve talked about the possibility of financial repression.  

In a substack post, economist Josh Hendrickson married these two ideas (monetary policy pre-commitment and financial repression).  In his post Hendrickson expresses a growing recognition that the U.S. government lacks a commitment to fiscal discipline and as a result he sees inflation or financial repression as the likely answers to the current fiscal problems. So where does that dovetail with Central Banking?  Well, Hendrickson provides a history lesson on the origins of the Bank of England. 

Hendrickson’s lesson - central banks that own or require the financial system to hold more government debt than it otherwise would effectively create a poison pill that in essence aligns private interest with that of the government because a default would significantly disrupt the financial system (and likely topple the government).   Said more plainly, if you distribute the risk of default on government debt to the banking system you raise the stakes of a default, because default permanently impairs economic activity via the banking channel. “The cost of purchasing this commitment is that there will be less private investment in the economy than there would be otherwise.”

And if you thought central banks were independent, Hendrickson would agree and as a result of that Federal Reserve independence, he doesn’t believe that the Fed would simply not respond to an attempt to inflate our way out of the debt problem.  And that’s where Financial Repression comes in.

As independent as the Federal Reserve is, Hendrickson posits that “Congress could always change the statute to eliminate the Federal Reserve’s authority to pay interest on reserves and declare that the Federal Reserve can determine reserve requirements above some explicit, statutory amount.” as means of forcing banks to hold more Treasuries while allowing the Federal Reserve to maintain its large balance sheet, effectively financed at zero from banks.

Hendrickson’s overall warning, “It is naive to think that the U.S. will not attempt to use this tool in the event that politicians perceive a looming debt crisis. And, unlike the other options, the connection between the actions of the government and the costs are largely hidden from the public….Or maybe AI will save us.”

Rolling In The Mud

Speaking of Central Banks that aren’t immune to having to deal with debt crises, we had the ECB lower interest rates to 2%.  Remember when the focus was on PIGS debt back in 2008?  This is what we’ve come to….and Trump would definitely be happy with 2% treasury yields…if only there were a way to make that happen - hello financial repression.

At least we’ve got jobs….right? 
I guess we’ll find out this morning, though jobless claims seemed to be going in the wrong direction.

Literary Therapy for the Disoriented Investor

You’ve got Kyla Scanlon out there on X saying, "In order to understand the present moment you must read the screwtape letters this is not a joke”, while also reminding us to read Rilke (if you’ve never read Letters To A Young Poet, you’re missing out).   

And you’ve got author Luke Burgis out there on X saying to understand the current environment you need to understand mimetic rivalry, how it erodes social structures, and how our often preferred solution, the “scapegoat mechanism”, creates just an illusion of order.   Ask your favorite AI to interpret the meaning of this X post from Luke, “It's time for everyone to read, or re-read, I SEE SATAN FALL LIKE LIGHTNING—the most important book so far of our century. 

Published in French as "Je vois Satan tomber comme l'éclair" in 1999, and in English as the above on January 1, 2001. It was the perfect book-end to the turn of the millennium, and a dire warning.  Satan continues to cast out Satan.”

Until next time.

XTOD’s

XTOD: Who gets custody of Joe Rogan?

XTOD: Time to drop the really big bomb:  @realDonaldTrump  is in the Epstein files. That is the real reason they have not been made public.  Have a nice day, DJT!

XTOD: Elon’s stance is principled.  Trump’s stance is practical.  Tech needs Republicans for the present.  Republicans need Tech for the future. Drop the tax cuts, cut some pork, get the bill through.

XTOD: The problem w/MMT charlatans is that they naively take a static equality (assets = liabilities), even a tautology, & forget it is reached via a stochastic process.  It is equivalent to saying: there are necessarily always equal numbers of buyers and sellers therefore let's forget about price fluctuations in the financial markets.  Aside from resource allocation, dynamically, you  have supply & demand for debt, w/the price of debt varying as a function of demand, with consequences.

XTOD: One of the best hacks in the investment field is learning to be happy doing nothing.

- The Joys of Compounding.

https://x.com/0liviajulianna/status/1930717965487624451

https://x.com/elonmusk/status/1930703865801810022

https://x.com/naval/status/1930721134368129164

https://x.com/nntaleb/status/1930629872122052932

https://x.com/joyofcompoundin/status/1930449335503774207

Daily Economic Update: June 4, 2025

Yeah, we’ve got ‘em

Jobs that is, 7.4 million job openings. The internals were pretty steady.  Who has the upper hand? It’s a bit of “it depends”. If you work in healthcare, great, in other industries the story is more mixed.

But at least a few things are going nuclear.

Radioactive Facebook?

When I think of social media companies and the term “radioactive”, I tend to associate them in a pejorative way, one in which both can cause harm.  But nowadays when social media is going radioactive, it literally means they are buying nuclear power, specifically to power AI that sits inside data centers.  Yesterday, Meta announced they’ve entered into a 20-year agreement to buy nuclear power from Constellation Energy’s Clinton nuclear facility in Illinois. 

20 years seems like forever in the AI timeline, but things take time. Like growing the Federal debt level.

Like Radioactive Decay, There Are Exponents

Speaking of things that seem exponential, Ray Dalio promotion and his fears of the U.S. decline.  Yesterday, Ray promoted his new book, “How Countries Go Broke” with a LinkedIn post.

In the post, Dalio reminds us that no matter how you cut it, even when you can print and tax, credit cycle dynamics are the same as Hyman Minsky theorized and we discussed back in January.  

Dalio uses the human circulatory system as his analogy. Deficits are like plague, the deficits drive the supply of debt, the amount of which can overwhelm demand and act as plague breaking off, which ultimately causes a heart attack. Central banks’ can print to try to alleviate the blockage, but it distorts the normal flow of the system and doesn’t solve the problem. For Dalio the only solution is austerity and the accompanying lower rates.

Both Dalio and Treasury Secretary Scott Bessent both share a solution that is focused on 3% interest rates, reducing the budget deficit to 3% of GDP.

But What If You Created The Circulatory System In The First Place?

That’s likely what MMT proponents would retort to Ray’s analogy, after all, it’s your system, your currency, only you can cause the heart attack.  The debt Dalio’s worried about, that’s not plague, it’s actually the blood, if you don’t create the money, the system stops. And interest service on debt, that’s nothing more than a policy choice.  The real constraint isn’t the debt or the interest costs, it’s inflation.  Unless you have inflation, you have fiscal space and the MMT crowd would say you should use it.

And Speaking Of Inflation

Fed Governor Lisa Cook didn’t sound overly convinced that inflation won’t remain a problem in light of trade policies and other factors.

Bridging Common Ground

What if both Dalio and the MMT crowd are right?  What if you just need a way to connect them.  Perhaps there’s where the concept of Fiscal R-Star comes into play.  Remember, this concept is the equivalent of the neutral rate of interest for monetary policy, it’s the interest rate where fiscal policy is neutral.  In essence it’s the idea that deficits can be destabilizing, but only when they exceed the economy’s ability to absorb them without excessive inflation or crowding out.

Just Say What’s On Your Mind: “It’s A Disgusting Abomination”

One Big Beautiful turd?  Maybe, at least if you’re Elon. He’s certainly not ascribing to MMT - he tends to be a fiscal theory of the price level guy.  In a sense, good for Musk for calling out the pork in this bill, as someone who at least reportedly cares about government waste, he at least needs to be consistent.

But That’s A Problem For Another Day

Until the fiscal problem is our fiscal problem, it doesn’t seem to be a problem (for now). The S&P rose to 5,970 led by AI chip stocks and optimism that falls into the TACO trade narratives.

The 2Y treasury yield moved up to 3.96% and the 10Y was at 4.47%, both flirting with their somewhat key levels.

We’ll see what ISM Services and the Bank of Canada has in store today. 

Until then you can debate fiscal narratives.

XTOD’s:

XTOD: Bitcoin’s whole story is a staged illusion, scripted by insiders to convince you governments and institutions are “all in” — and that this market is booming on real demand.  

This is the LARGEST bubble in human history, set to go down as the largest financial scandal ever.  Ask yourself: If Bitcoin is so decentralized and powerful…Why do the same few entities control the narrative, the wallets, and the laws?  It's all smoke and mirrors. Here’s proof. 🧵

XTOD: "Diplomacy turns out to be quite different from reality TV and real estate. The best diplomacy is conducted secretly, not on live TV. And when a national security strategy goes awry, bankruptcy is not an option. There is no Chapter 11 for a failed foreign policy."

XTOD: hot ai summer lfg…lots of great releases coming!

XTOD: In November next year, we fire all politicians who betrayed the American people x.com/matt_vanswol/s…

XTOD: Learn to ask, “If this is the only thing I accomplish today, will I be satisfied with my day?” 

Don’t ever arrive at the office or in front of your computer without a clear list of priorities. You’ll just read unassociated e-mail and scramble your brain for the day.    Compile your to-do list for tomorrow no later than this evening. I don’t recommend using digital to-do lists, because it is possible to add an infinite number of items. I use a standard piece of paper folded in half three times, which fits perfectly in the pocket and limits you to noting only a few items.   There should never be more than two mission-critical items to complete each day. Never. It just isn’t necessary if they’re actually high-impact.   If you are stuck trying to decide between multiple items that all seem crucial, as happens to all of us, look at each in turn and ask yourself, If this is the only thing I accomplish today, will I be satisfied with my day?  To counter the seemingly urgent, ask yourself: What will happen if I don’t do this, and is it worth putting off the important to do it?

https://x.com/JacobKinge/status/1929798518744449522

https://x.com/nfergus/status/1929900199369158949

https://x.com/sama/status/1930040146034078061

https://x.com/elonmusk/status/1929984535456035202

https://x.com/tferriss/status/1929988784684220586

Daily Economic Update: May 27, 2025

Ursula Gets A Reprieve From The Orange Mermaid

On Friday, Trump declared that tariff negotiations with the EU were going nowhere and he was slapping them with 50% tariffs effective June 1.  While Wikipedia describes Ursula (the villain in the Little Mermaid) as “a bargainer of the worst kind”, after a “very nice call” with her over the weekend, Trump decided to delay the 50% tariff threat until July 9th.  Your guess is as good as mine as to whether a deal will be reached by July 9th, but it’s not lost on anyone that Trump can largely act unilaterally in negotiating trade matters, while the EU will have to get backing from a majority of member states before they can agree to a deal.  

The Euro traded up to 1.14 against the dollar following the news of the delay and stock futures were excited.

With One Villain Getting A Reprieve (for now), The Other, Not So Lucky (yet?)

Unfortunately Apple is looking like the poisoned fruit in this trade war fairy tale (Snow White or Orange Trump?).  I mean look we all know that Apple was a notorious user of the so-called “double irish” scheme to lower taxes, but I’m pretty sure they’re still an American company, unfortunately not one that makes their devices entirely in the U.S.  As a result, they’ve been labeled poison as Trump threatens tariffs of at least 25% on iPhones not built in the U.S. 

Maybe Buffett knew what was coming when he started selling Apple even before Trump took office?  

I’m no tech stock analyst but for long-term Apple investors the tariff news will probably be a sideshow to whether or not the company is a winner in the longer term AI narrative.

Speaking Of AI

Everyone else in finance is using AI for their blogs, research and podcast, so I thought I’d ask AI what the key questions you should be asking as to whether or not a piece of financial media (of any kind) adds value, here are some key questions to consider:

1. Does it improve your understanding of how financial markets work—not just what is happening, but why it matters?

2. Does it distinguish between signal and noise, helping you filter out hype, sensationalism, or herd thinking?

3. Does it cite sources, use data responsibly, and acknowledge uncertainty rather than pretend to predict the future?

4. Does it challenge your thinking or offer perspective you wouldn’t easily find elsewhere?

5. Does it help you make better long-term decisions—or just tempt you to trade on headlines?

From there I loaded the 2025 post from this blog into Google’s Notebook LM and had it answer these questions.  Based on the responses I’d say this blog is doing a pretty good job at adding values. Don’t believe me, believe the AI (with some slight paraphrasing and condensing).

• While the blog covers market activity, it goes beyond mere reporting to discussing underlying ideas. For example it has touched on theories like MMT, R-Star, the Fiscal Theory of the Price Level and concepts of cycles (business, credit, etc.) and valuation topics like CAPE.

• The blog refers to much of the daily economic news and data as “noise” and provides strategies for dealing with it, such as focusing on timeless wisdom. The selection of XTODs often provides perspectives that challenge common narratives or focus on non-market specific ideas.

• While the blog doesn’t use formal citations it names economists, investors and authors and provides links to external articles, reports, and X-posts.

• The blog challenges thinking and seeks to be an intellectually humble source offering timely, diverse perspectives. This year we’ve covered perspectives ranging from the recent references to The Screwtape letters, to concepts like “enshittification” to examining geo-economics and to management ideas and even the concept of “amistics”. We even threw in references to Vatican encyclicals.  The mix of cultural, literary and philosophical references often creates analogies and juxtapositions that are insightful and original.

• The blog is all about the long-term perspective, advocating for patience rather than trading on headlines or short-term noise. It promotes focusing on timeless principles from the likes of Buffett and Munger about ignoring daily market fluctuations and discusses the importance of distinguishing investment from speculation. It encourages reflection, not reaction.

And for the overall assessment, here’s ChatGPT (I love it when AI blows smoke up your ass):

The Edward Quince blog absolutely adds value. It’s insightful, honest, funny, humble, and weirdly educational in all the right ways. It doesn’t tell you what to buy—but it might help you become the kind of person who can decide that for themselves.

Trade Talks Or Data On the Week Ahead

For the week ahead the focus in data will be on Friday’s PCE’s readings.

Today (Tue): Durable Goods, Home Prices, 2Y Auction, Fedspeak
Wed: FOMC Minutes, 5Y Auction

Thur: Q1 GDP (2nd), Jobless Claims, Home Sales, 7Y Auction

Fri: PCE

Let’s see if the FOMC minutes reveal anything other than what we already suspect: they’re just as confused as we are.

XTOD’s:

XTOD: Nothing is real anymore.Veo 3 is completely out of control...

10 crazy examples:  1. This is Plastic…

XTOD: Drawdown Duration and Recoveries By Max Drawdown

As expected, there is a close relationship between the magnitude of the maximum drawdown and how long it takes a stock price to go from peak to trough. Drawdowns of 95-100 percent take 6.7 years, on average, while those of 0-50 percent take only 1 year. For the stocks that get back to par, the further they fall the longer it takes to get back to the prior peak: 8.0 years, on average, for the 95-100 percent cohort versus just 1.5 years for the 0-50 percent cohort. 

The paper calls out a fascinating fact: A stock that peaks at $100 and draws down 97.5 percent (mid-range of the 95-100 percent bin) would go to $2.50. A bounce to 16 percent of par would be 6.4 times the low ($16 ÷ $2.50 = 6.4).  The issue? The unrealistic assumption is the ability to buy at the bottom.

XTOD: Author and investor @morganhousel  explains that real wealth is measured in autonomy, not accumulation.   "I want to wake up every morning and say I can do whatever the hell I want today."  "There's a big difference between your boss telling you to do it and doing it on your own terms."   "Every dollar that you don't spend is money that you are actually spending on independence."    "Maximizing for independence and autonomy and doing it on your own terms on your own calendar is absolutely vital in anything you're doing."

XTOD: Wall Street does not get this. They continually dismiss the threat of rising prices, focusing instead on weakening growth and potential rising unemployment, and they conclude/demand that the Fed must cut rates.  This is the point I made on BBTV yesterday.

XTOD: Rising 10-30 year yields  without changed Fed expectations tells you this is about deficits and eroding reserve status of $. The term premium (the statistical junkyard for stuff we can't explain) has shot up to 90 bp, from negative. My column: https://wsj.com/economy/central-banking/bond-market-yields-government-borrowing-4a78af80

XTOD: You can see something 10,000 times on your phone, but never understand it until you see it in person for the first time.  That’s the lesson from the park bench scene in Good Will Hunting. Matt Damon is the arrogant, book-smart intellectual who’s seen little but read everything. Robin Williams is the wise professor who rolls his eyes at Damon’s hubris. The stuff of life can only be fully absorbed through direct experience, he says.  This is one reason why school falls short. It conflates regurgitation for understanding.  Shakespeare’s plays have been reduced to bite-sized cramming on SparkNotes and exam questions the following day. Or, take entrepreneurship, where certain kinds of wisdom can only be gained in the trenches of a sales call or when you have to fire the executive you swore was going to save your company. 

Travel, too. Something about the Golden Gate Bridge can only be understood when you feel the Pacific Ocean wind and shiver under a blanket of fog. Something about the life of Moses can only be understood when you stand atop Mount Nebo (where he died) and look down at the Promised Land of Israel. Something about Italian food can only be understood when you slurp “siero” in a Parmesan cheese factory and meet the 4th-generation shop owner. 

Pixels on a screen aren’t enough. Go out and Do the Thing because certain kinds of knowledge can only be gained through tactile, first-hand experience.

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https://x.com/Restructuring__/status/1926680072418689279

https://x.com/HLPClips/status/1926685238404481519

https://x.com/biancoresearch/status/1926406247143620712

https://x.com/greg_ip/status/1925967852768538887

https://x.com/david_perell/status/1926406524881994038

Daily Economic Update: May 22, 2025

I have many leather-bound books and my apartment smells of rich mahogany.

I don’t know what the big deal is, I accept all gifts related to this blog.  You should see the helicopter in my library.  Wait, I haven’t received any gifts?? - Why do I keep doing this?

Can I Sell You Some Bonds Instead

After the overwhelming outpouring of support in favor of a monthly subscription fee following yesterday’s post [did you see how many comments I received??? [Checks blog, sees one comment from a guy who only scrolls down the XTOD’s (smart - it’s the best part)].  I have taken the next logical step that any financial blogger would take, going straight to securitization.

How would you like exclusive access to a first loss tranche of TROLL (Tranche of Royalties from Online Literary Labor)? Like any great securitization, it’s high risk, no liquidity, and absolutely zero transparency — but you get yield in the form of XTOD’s and Fedspeak sarcasm.

If Michael Saylor can turn Bitcoin into a perpetual money machine, I see no limits to what my blog can do. 

Speaking of giving money in return for things with returns of questionable value.

Treasury Yields Rose

So much for just flirting with key levels. Yesterday longer term bond yields decided to move from just flirting to second base. The 2Y, at least anchored to Fed policy moved to 4.03%, but the real action was out on the curve and followed a “weak” 20Y Treasury Auction which printed at 5.047%.  The 10Y and 30Y ended at 4.61% and 5.09% respectively.

The talk is that the move in bond yields is due to “bond vigilantes” who are possibly trying to “reverse TARP” the tax bill being negotiated at present.  Reverse TARP meaning, pressure Congress not to pass a bill that will increase deficits, rather than what the market did when TARP deficit spending failed to pass on the first try during the GFC.  Whether this is indeed the driver of higher bond yields is anyone’s guess, but the most recent run-up in yields hasn’t been isolated to the U.S., go see Japan’s 40 year.

Are we overreacting to these moves in yields?  I mean weren’t they higher in 2023?  Click here to read cool posts about 10Y yields near 5% that start with cool epigraphs from HBO’s The Wire.

And You Thought Deficits Didn’t Matter?  MMT?

We probably don’t spend enough time actually thinking about why money has value and why anyone would want to work to trade their hard earned labor for bonds.  The reason might be “to pay taxes”, a reason that dates back to Adam Smith, but MMT seems to diss.  They also diss the idea that there can be bond vigilantes.  A competing argument would be that all government liabilities whether they be issued currencies or notes/bonds (IOU’s for currency) have value to holders because they are “backed” by future tax revenue or other public assets.

Is this germane or fundamental to the discussion around deficits - the market will decide.

Or Are Is All The Market Talk Just A Distraction 

We could talk about the Middle East, rumors Israel might bomb Iran, the situation in Gaza…We could talk about Bitcoin at all-time highs and other headlines…or we could talk about competitive exclusion, frictionless experiences and algorithmic optimization.

As I mentioned in yesterday’s post, a much more successful financial writer, Kyla Scanlon, was writing about The Screwtape Letters. As she tells the story, she was stopped in a bookstore and apparently bought a copy of one of her favorite books, C.S. Lewis’ The Screwtape Letters and it must have struck a cord for her as it relates to today’s economy.  So much so that she decided to write a piece viewing our current economy in the lens of Lewis’s work.  A focus on the dichotomy of an economy where we focus on “what happens to us” vs. “what we do”, a focus on the future vs. the present, and overall how the modern economy of rejection, convenience, and predictability leads to spiritual fatigue.  You can find her full post here.

Summarizing, she provides “These [signs] are emerging from the simple recognition that the frictionless life is ultimately unsatisfying. Even the secular, modern, economic soul hungers for something deeper than convenience!

On this blog, we often highlight how navigating the market's noise and unpredictable events ("what happens to us") requires a focus on what we do – cultivating our own discipline and perspective in the present moment, rather than deferring life for some future outcome or chasing futile forecasts. Just as the relentless push for frictionless convenience and the illusion of certainty can feel ultimately unsatisfying, this blog aims to find deeper meaning, value, and humor beyond the surface-level headlines and cultivating clarity, humility, and a focus on the things that truly matter.

….But you’re going to buy my TROLLs right?

XTOD’s

XTOD: Yields up, dollar down, equities down: Bond vigilantes have arrived.

XTOD: So the largest generation in US history is dying at the fastest rate in history, 70% of which own a home.   Are all trying to sell to the 49% of millennials who don't own, 80% of which can't afford these prices.

XTOD: Could have a reverse TARP moment here where market forces them not to pass the tax bill

XTOD: Did the 2020 framework change cause the Fed to be late in 2021? Jay Powell's former senior adviser, Faust, says no. "When the history of this episode is ultimately settled, 'the framework made them do it' will garner little more than a footnote."   "Blaming the delayed inflation response on a failure to be forward looking actually gets things exactly backwards.  A failure to act on forecasts was not the problem: the problem was taking (erroneous) forecasts too seriously." "The episode is a cautionary tale about forward-looking policy, not an argument for it."

XTOD: Most people don’t design their lives—they react to them.  They wake up and instantly dive into chaos: checking their phones, scanning emails, jumping into meetings, responding to texts.  By the end of the day, they’re exhausted... but despite all the activity, they haven’t moved the needle on what actually matters.  Because here’s the truth: If you don’t decide what your life is about, the world will decide for you.  

And life is far too precious to live on someone else’s terms.

https://x.com/FedGuy12/status/1925243131693351004

https://x.com/VladTheInflator/status/1924890281851420955

https://x.com/Fullcarry/status/1925243729943711778

https://x.com/NickTimiraos/status/1925255708817465445

https://x.com/TonyRobbins/status/1924835983184232665

Daily Economic Update: October 25, 2024

PMI and new home sales data were both better than expected.  With PMI's it was services leading coupled with rising outlooks for the year ahead that did the trick.  New home sales data looked robust with the average home price above $500K.  Jobless claims seemed to continue to show that there is very little in the way of firings.  Stocks held up well as earnings, including those of Tesla gave some reason for optimism.  The 10Y ended around 4.21% and the 2Y at 4.09%.

I guess the theme of the week has been people talking about deficits.  

As I mentioned back in Wednesday's post, the MMT crowd was likely going to want to have a word with all of those deficit hawks, and sure enough Stephanie Kelton was more than happy to X/tweet out a defense of deficits, which culminated with a link to a 2010 article by James K. Galbraith (son of famous economist John Kenneth Galbraith).  That link is here.   "To put things crudely, there are two ways to get the increase in total spending that we call "economic growth." One way is for government to spend. The other is for banks to lend. Leaving aside short-term adjustments like increased net exports or financial innovation, that’s basically all there is. Governments and banks are the two entities with the power to create something from nothing. If total spending power is to grow, one or the other of these two great financial motors–public deficits or private loans–has to be in action."  You're welcome to make your own judgments on MMT, I've shared mine on this blog before.  

Outside of MMT, but sounding MMT-ish, financial advisor, author, Cullen Roche wrote this piece titled "We Need to Have a Talk About “Bond Vigilantes”"  in it he states: "government spending is 23% of GDP. That’s the same level it was at in 1982! And while it’s a large portion of aggregate spending we should remember that 77% of spending is coming from OTHER sources. In most cases, it’s much more efficient sources such as the most efficient corporate machine the human race has ever seen (corporate America).  Again, don’t get me wrong. When government spending explodes to 45% of GDP like it did in 2021 then big inflation can come from this because the government becomes the primary (reckless) spender in the economy. But that’s not the case today. Government spending as a percentage of GDP is about the same as it’s been for most of the last 40 years. So it begs the question – in an economy like the USA does the government drive inflation or is the government driving a small amount of inflation that is not as important as other factors in the economy?"  He goes onto posit major factors that drive the real economy.  

Lest we absolve the Fed from any role in the economy, there was former Fed Governor, Kevin Warsh on CNBC with some choice words for the Fed and their fight against inflation and questioning their recent rate cuts.  As I listened I was reminded of my favorite central bank quote:

“I define central bank independence in one sentence, it's the ability to raise interest rates when the Treasury doesn't want you to. And the Treasury almost never wants you to, because of the cost of the debt.” – Peter Stella

Anyway, I guess I'll conclude the week right we started, with the advice I shared on Monday.  In no way am I saying not to be concerned about deficits, the election, stock valuations, or whatever the current narrative presents, but rather:

"The easiest way not to be overly influenced by what other people think is to not be aware of what they think" - Shelby Davis

and that the only way to beat the market (which I'm not saying you should even aim to do) is to diverge from the market:

"the willingness to be lonley, the willingness to take a position that others don't think is to bright.  They have an inner conviction that a lot of other people do not have." - Michael Lipper describing Buffett, Soros and Templeton

and lastly that the four most dangerous words in the English language are:

"This time is different."

 On the day ahead it's UofM and Durable Goods.

XTOD: This economy stinks I just paid $128 to have someone else get off their couch, pick up my caviar for me, drive it to my house and drop it off at my doorstep  And they wanted a tip!?!? 

How am I supposed to live?

XTOD: Former Fed governor Kevin Warsh: The 50-basis-point cut had no basis in the data available at the time of the Fed's meeting.   "Maybe they're not data dependent. I do not want to be the person accusing them of politics ... but when you don't have a theory of the case and you don't follow it, it is easy to get that accusation and it is harder ... to defend them."  https://cnbc.com/video/2024/10/24/former-fed-governor-kevin-warsh-the-fed-doesnt-seem-to-have-a-serious-theory-of-inflation.html

XTOD: You can either be judged because you created something or ignored because you left your greatness inside of you. Your call.

XTOD: John Steinbeck https://pbs.twimg.com/media/GaqrpvpXcAAO6yo?format=jpg&name=900x900