Daily Economic Update: March 26, 2026

Consumer Confidence: Recession Bells or Just My Tequila Blues?

Consumers are not exactly brimming with confidence - just ask them.  The Conference Board “Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—dropped 9.6 points to 65.2, the lowest level in 12 years and well below the threshold of 80 that usually signals a recession ahead.”  

Turns out people don’t like declining stock prices paired with inflation.  Inflation is so solved that survey respondents increased their 12-month ahead inflation expectations from 5.8% to 6.2% - hold my tariffed tequila.

Tariffs, Inflation and the Demand Puzzle

Survey data always comes with paradoxes. If consumers expect their income, wealth, and prospects to decline, why do they also expect inflation to rise? Tariffs, duh—imports taxes juice prices - right?

But if consumers are tapping out and demand is shrinking, can tariffs really drive inflation the way people expect?  Typically, when consumers feel increased uncertainty around their income and wealth, they tighten their wallets - shifting the aggregate demand curve left. Higher taxes, like tariffs, usually cause the same shift. So if demand is cooling, could supply side constraints still push inflation higher?  That’s the stagflation scenario in a nutshell. 

Two weeks ago, I sniffed it - now it’s a whiff I can’t un-smell. My TRASH ETF’s popping popcorn.

Expectations: Where Psychology Meets My 401k

Expectations sit at the crossroads of psychology and finance.  As author Morgan Housel puts it: “The valuation of every company is simply a number from today multiplied by a story about tomorrow.” Strip away the narrative, and you’re left with cold, hard valuation models like the Gordon Growth Model - where the future is just a set of assumptions out to Judgment Day, just waiting to be discounted.

This is why Warren Buffett is the G.O.A.T. He can simultaneously remind us that "The most that owners in the aggregate can earn between now and Judgment Day is what their business in the aggregate earns.”  and “Be fearful when others are greedy and greedy only when others are fearful.” 

What’s Priced In? The Eternal Market Question - Just Ask Mr. Market

The most important question in investing: “What’s priced in?”Markets are a constant tug-of-war between rational optimism and collective delusion—which is exactly why differences in opinion make a market.

The parable of ‘Mr. Market’ is a lesson worth remembering.  None of this thinking is new -  just refer back to our discussions the week of January 21st when we started every day with a Jesse Livermore quote from Reminiscences of a Stock Operator.  

Owners vs. Lenders: The Fundamental Trade-Off

The question of what’s priced in, what do investors believe, and what are they willing to risk is fundamental to Howard Marks’ thinking on asset allocation—the decision to own vs. lend.

Owners have no promise of return; lenders have a contractual fixed outcome—assuming, of course, the borrower makes good.

Risk vs. reward. The oldest trade-off in the book.

Final Thoughts: Narratives on Fumes?

Markets, like expectations, are built on narratives. The line between collective delusion and rational optimism is a blurry one—it’s why “differences in opinion make a market.” The key is knowing when the story still holds... and when it’s running on fumes.  

My tequila’s narrative? Tariffed to oblivion—hold on or sell?

The Day Ahead: Durable Goods or Durable Pain

The S&P at 5,776, 2Y at 4.03%, 10Y at 4.33% —stocks crawled up, yields yawned. Durable goods, home prices, 5Y note auction—at this stage data is just a tariff on our sanity.

XTODs

XTOD: The White Sox have been eliminated from playoff contention

XTOD: Following the arrival earlier today of 2 B-2 “Spirit” Long-Range Strategic Stealth Bombers, with the 509th Bomb Wing from Whiteman Air Force Base in Missouri, at Diego Garcia in the Indian Ocean. Communications between the bombers and ground stations in San Fransisco have confirmed that another flight of 2-3 B-2s from Whiteman are currently crossing the Pacific Ocean destined for Diego Garcia. This is seeming like a much larger buildup than would be needed for strikes just against the Houthis in Yemen.

XTOD: Shell CEO discloses some more colour about the company's vast in-house commodity trading business, which includes oil, gas, LNG and others: the unit hasn't had a single loss-making quarter in at least 10 years

XTOD: *AT&T SAID IN EXCLUSIVE TALKS TO BUY LUMEN’S CONSUMER FIBER UNIT (BN)

*AT&T DEAL SAID TO VALUE LUMEN UNIT AT MORE THAN $5.5 BILLION (BN)

AT&T showing the classic telecom playbook: Buy assets from distressed competitors, incorporate them poorly, repeat

XTOD: If you work in PE and one of your portcos came into ur office in NYC today.  They’re at the bar and they hate u and think you’re retarded. Not divulging specifics here because I’m not snitching but this is very real and I am doing my best to not crack up at these blue collar dudes shitting on the finance bros they met with today and how they “don’t understand how the company works”

XTOD (some interesting replies to this one): For folks who left banking, PE or similar finance roles, what was the exact moment you decided to leave?  Would love to hear more stories of people who left behind the golden handcuffs  What caused you to make the jump and what did you pursue instead?

https://x.com/MLBONFAX/status/1904261374265717207

https://x.com/sentdefender/status/1904587565123985753

https://x.com/JavierBlas/status/1904523965453750491

https://x.com/junkbondinvest/status/1904598522453713134

https://x.com/GordonGekko420/status/1904311634815783333

https://x.com/BoringBiz_/status/1904585856255427041

Daily Economic Update: March 25, 2025

The Atlantic, Bottled Water, and Words Starting With “T”—Oh My

I realized I included the editor of The Atlantic in my Signal group chat that discusses ideas for this blog—no wonder The Atlantic steals my best ideas.

I’ve also been recording Tik-Toks of my morning routine for years and I still can’t get anyone to buy my bottled water.

Why is winning in 2025 so hard?

Tariff Apocalypse? More Like a Selective Spanking

Trump’s so-called Liberation Day (4/2) is turning out to be less of a tariff apocalypse and more of a selective spanking—so your 401(k) survived… for now. Markets celebrated by rallying hard. Even Tesla got a break from the hate parade, jumping >10%. The S&P 500 closed up 1.7% at 5,767, with other major indexes in the green. The S&P PMI’s added to the optimism, with services crushing expectations (54.3 vs. 51.0 est.) and accompanying strong internals.

Investors liked stocks so much they even dumped bonds—pushing the 10Y yield up 8 bps to 4.33% and the 2Y back over 4%, landing at 4.04%.

Tariffs: Misunderstood, But Still Happening

Trump didn’t suddenly go soft on tariffs. Just ask Venezuela’s Maduro—Trump announced a 25% tariff on any country buying gas from Venezuela to pressure Maduro into stopping migrant shipments to the U.S. And that’s not all—he’s also eyeing billion-dollar levies on Chinese-built ships docking in America.

But hey, maybe tariffs are bringing back manufacturing. Hyundai just announced a $5.9B investment in a steel plant in Louisiana.

Inflation? See You in 2027

Forget about 2025 rate cuts, maybe even 2026. Atlanta Fed President Bostic made it clear—the Fed’s 2% inflation target isn’t happening anytime soon. His latest forecast? One rate cut this year… maybe.

What’s Next?

Between now and Liberation Day, expect more twists and turns. Today brings consumer confidence, housing data, a 2Y note auction, and—of course—more Fedspeak.

Say what you want about U.S. markets, but at least we’re not Turkey.

XTODs

XTOD: How to be successful:  • Wake up at 4am • Drink Saratoga Spring water • Rub bananas on your face • Inherit $10 million

XTOD: "The name of the company is Saratoga water. It is a cutting edge high-tech bottled water company out of the Midwest awaiting imminent patent approval on the next generation of morning routines"

XTOD: So we buy 23andMe out of Chapter 11, then we sell $0.99/mo subscriptions to NOT release your genetic data publicly... $ME

XTOD: Miran telling you exactly what Bessent telling you  Going to be bumpy and painful transition from Government to Private Investment   And it's not just the government spending, it's all the downstream, non-government jobs that feed off it  Chose not to believe them at your own risk

XTOD: fading this little alt rally  macro outlook is still cooked, crypto market structure is still broken   may the odds be ever in your favor

XTOD: Is there a some kind of special term for an investment strategy that is only capable of paying out current investors' returns by raising money from new investors? https://pbs.twimg.com/media/Gmz-1yUXAAAwtGf?format=png&name=900x900

XTOD: When we lack real problems, we create imaginary ones; when we lack meaningful work, we perfect the unimportant.

https://x.com/dougboneparth/status/1904162701841981527

https://x.com/DerivativesDon/status/1904225865413628306

https://x.com/CramerTracker/status/1903950293722861713

https://x.com/BarbarianCap/status/1904146639419269139

https://x.com/Melt_Dem/status/1904208222530978246

https://x.com/ShaneAParrish/status/1904169655289118971

Daily Economic Update: March 24, 2025

The Real Headline This Week? Burrito-Backed Bonds.

We finished a week that featured the FOMC and the Bank of England, and yet the most important financial development wasn’t Powell’s “dot plots” or musings on inflation. No, it was burrito-backed loans. Tell me you didn’t miss this historic moment in the evolution of finance: consumers now taking out loans to buy DoorDash orders through Klarna.

Fast forward to 2030—picture this: we’re in a full-blown financial crisis, scrambling to unwind the latest iteration of CDOs. Not Collateralized Debt Obligations. Collateralized DoorDash Obligations. Some analyst on CNBC explaining why the market is seizing up because people defaulted on their Chipotle bowls. You can’t make it up.

Eat Now, Pay Later: The Endgame?

It’s been said that “a given culture reveals its overall understanding of life through the choices it makes in production and consumption.” Is “Eat Now, Pay Later” solving a real problem, or is it just another mutation of consumerism—fabricating new needs and exploiting old weaknesses?

Feels like a deal that fosters intemperance. A new twist on the old game: immediate gratification over future responsibility. But hey, I’ll reserve judgment. At least until 2030 when my burrito-backed bonds come due. Hopefully, with extra guac.

Everything Is Noise (Including This?)

The fact that social media cared more about Klarna and DoorDash than tariffs or central banks is just more proof that everything is noise. “You need to be wired not to believe the bullshit. To not be listening.” Legendary investor Nick Sleep said that. I’d add: he was right.

What We Were Reading Last Week

If you enjoyed last week’s quotes, here’s where they came from:

March 17 - Lords of Finance

March 18 - Fed Up

March 19 - The Price of Time

March 20 - Slouching Towards Utopia

March 21 - Infectious Greed

You’ll learn more from any one of those books than from the daily deluge of financial “news.”

Markets: Still Hungry for Rate Cuts

We start the week with the S&P at 5,667, now down 3% on the year. The Magnificent 7 are down ~12%. The 2-year Treasury sits at 3.97%, and the 10-year at 4.26%. Markets are still pricing in two rate cuts, even as inflation continues to gnaw at the edges of the growth narrative.

April 2nd looms as the most important date on the calendar, as we wait for more clarity on tariffs. Investors are still wrestling with stagflation—though it only seems to be a crisis if DoorDash stops delivering.

What’s on the Plate This Week

Here’s what’s cooking:

Today: S&P PMIs

Tuesday: Home Price Index, Conference Board Consumer Confidence, New Home Sales, 2-year note auction, Fedspeak

Wednesday: Durable Goods, more Fedspeak, 5-year note auction

Thursday: Final 4Q24 GDP, Jobless Claims, 7-year note auction

Friday: PCE (the Fed’s favorite inflation flavor)

XTODs

XTOD: “This is the Brownfield Fund. I’m wanting to offload my credit default swaps.”  “Alright, whatcha got?”  “20 double-A tranches of BBS CDOs”  “These are pretty bad?”  “Complete shit. Burritos underlying these didn’t even have extra guac.”

XTOD: "They're called Chimichanga Default Swaps"

XTOD: You are telling me these loans are backed by consumers who ordered burritos on DoorDash?

XTOD: Warren Buffett: "Go to work for whomever you admire the most. You can't get a bad result. You'll jump out of bed in the morning."

XTOD: “I wished I commuted to the office to provide maximum shareholder value more often.” https://pbs.twimg.com/media/Gmljc5lXsAAjeYa?format=jpg&name=900x900

XTOD: Optimization kills organic connection.  When someone starts optimizing everything - time, relationships, conversations - they start treating people as "inputs" rather than companions.  Friendship isn’t efficient. It’s built on shared inefficiencies.  Wasted time. Deep talks. Pointless laughter.   The moment someone treats friendship like a cost-benefit equation, they’ve already checked out.

https://x.com/Larryjamieson_/status/1903199915431563416

https://x.com/EffMktHype/status/1903126157232656881

https://x.com/BoringBiz_/status/1903067850522186039

https://x.com/kejca/status/1902375995123921148

https://x.com/randomrecruiter/status/1903161669921931369

https://x.com/nayanmanihazra/status/1900574149350981703

 

Daily Economic Update: March 21, 2025

The Red Roulette and the Rate Shock of 1994

Remember your job is to identify the book and post your answer. You can also simply share any thoughts in the comments.

Today’s Quote/Passage:

Imagine a casino full of gamblers betting on a roulette wheel. Spin after spin, the ball lands on a red-colored number. The gamblers bet on red numbers and win, doubling and feverishly redoubling their bets. As the cheers grow louder, they begin ignoring the fact that the wheel has just as many black numbers as red. They believe they have entered an incredible new world where the roulette ball only lands on red numbers. They bet everything on the next spin.

Substitute “low interest rates” for “red numbers” and you have a description of the early-1990s financial markets.

…On February 4, 1994, Alan Greenspan and the Federal Reserve raised overnight interest rates from 3 percent to 3.25 percent.

…But behind the scenes, it was pure panic. 

…Most individual investors did not yet know of the swaps Bankers Trust had done with Gibson Greeting and Proctor & Gamble, or the complex financial strategies First Bost and Salomon Brothers had engineered.

…By early 1994, hundreds of money managers and treasurers-from..Orange County, California to..Piper Jaffray - had secretly bet hundreds of billions of dollars -..bets that interest rates would stay low..When the Fed raised rates on February 4, 1994, they lost.

We’ll wrap this series up today and be back next week with the usual take on whatever madness the Fed (or markets) deliver.

Daily Economic Update: March 20, 2025

Inflation: It’s All in Your Head… Until It’s Not

Remember your job is to identify the book and post your answer. You can also simply share any thoughts in the comments.

Today’s Quote/Passage:

People make all sorts of decisions based on their expectations of what year’s price level will be: decisions about how much to demand, in terms of cash to hold on to and prices and wages to charge. An episodic excess supply of money can cause unexpected inflation. But when people look back on the half decade or so and see that there has been an excess supply of money during that time, they will expect inflation in the years ahead.

FOMC Recap: March Madness Fed Edition Redux

March Madness, Fed Edition: Same Playbook, New-ish Opponents

Another March FOMC meeting. Another round of Powell & Co. holding rates steady at 4.25% to 4.50%. And another tip-off to March Madness likely stealing the headlines by tomorrow morning.

Sound familiar? It should. The Fed is sticking to its game plan—slow the runoff of Treasury holdings starting in April, stay patient, and hope the economy keeps playing along. But, as every coach knows, no matter how good the scouting report looks, the game rarely goes according to plan.

Last year, I asked what lessons the Fed could take from March Madness—impossible perfection, the need for constant adjustments, and the reality that the future is always uncertain. If you missed it, you can catch that post here. Spoiler alert: those lessons still hold.

Today, the Fed’s projections show slower growth, stickier inflation, and a higher-for-longer rate outlook. Call it a defensive adjustment against inflation, that “streaky shooter” Powell warned about. Meanwhile, tariffs are back on the floor, pressing inflation higher and crowding growth into the corner.

But as in the tournament, surprises happen. Powell admitted “unusually elevated” uncertainty. Translation? The Fed’s ready to call timeout and change defenses if needed.

Plans are worthless, but planning is everything. The Fed’s bracket isn’t perfect. Neither is yours. Survive. Adjust. Advance.

Daily Economic Update: March 19, 2025

What Good Economists See (That Others Don’t)

Remember your job is to identify the book and post your answer. You can also simply share any thoughts in the comments.

Today’s Quote/Passage:

In the sphere of economics, a habit, an institution, or a law engenders not just one effect but a series of effects. Of these effects only the first is immediate; it is revealed simultaneously with its cause; it is seen. The others merely occur successively; they are not seen; we are lucky if we foresee them. The entire difference between a bad and a good Economist is apparent here. A bad one relies on the visible effect, while the good one takes account of both the effect one can see and of those one must foresee.  

The bad economist, says Bastiat, pursues a small current benefit is followed by a large disadvantage in the future, while the good economist pursues a large benefit in the future at the risk of suffering a small disadvantage in the near term.

Daily Economic Update: March 18, 2025

Arctic Wisdom

Remember your job is to identify the book and post your answer. You can also simply share any thoughts in the comments.

Today’s Quote/Passage:

On September 21, 2011, in the face of a declining stock market, the FOMC announced what the financial press would dub “Operation Twist”...Fisher again dissented, explaining why in a speech on September 27…He showed a photograph of the sign outside Jan Mayen Arctic weather station…Subject to brutal winters, the station was described by writer Tom Clancy in The Hunt for Red October as “Loran-C”...The sign greets visitors in the Norsk language, which translated to English reads: “Theory is when you understand everything, but nothing works. Practice is when everything works, but nobody understands why. At this station, theory and practice are united, so nothing works, and nobody understands why.”