Morning David. But it's a real mixed bag on University of Michigan. Now remember this is a final read.Couple weeks ago we had the initial numbers and there's been a lot of changes. The initial number for headline was 58.6%. It moves down four basis points to 58.2%.Wrong direction. Sequentially lower weakest since well just May of this year. But current conditions exact opposite.61.7% replaces 60.9% sequentially higher best since July expectations sequentially lower and we lost ground from 57.5% to 55.2%. So ...

Monetary Policy & Inflation - The former Kansas City Fed President suggests the court should sort out the authority of the president to fire someone, emphasizing the need for due process [2] - The analyst observes that inflation is at 3%, one percentage point above the target, while the Fed is considering cutting rates [7] - The PCA inflation has tipped up slightly, and unemployment remains at 42% [9] - With inflation at 3%, real interest rates are approximately 15%, which is close to neutral [10] - There is no case for cutting rates in a rising inflation environment [11] - The recent budget reconciliation bill is expansionary, adding another $2 trillion of debt [12] - Cutting rates in an environment of rising inflation and low unemployment poses a risk to the Fed's appearance [14] Labor Market - A Fed governor suggests the labor market is weak and about to turn negative based on extrapolations of revisions [8] - Initial claims were down, indicating a relatively stable labor market [10] Fed Actions & Considerations - The Fed may be facing pressure from elsewhere on the FOMC to cut rates [13] - It may be time for the Fed to wait and see rather than signaling rate cuts [11]

US consumer spending rose in July by the most in four months, indicating resilient demand in the face of stubborn inflation https://t.co/EKfOeVJiTD ...

Labor Market & Inflation - The labor market is slowing down, potentially due to headwinds from tariffs and trade wars [2][7] - PCE inflation is at 29%, the highest level since February, while the Fed's target is 2% [3] - Inflation expectations one year out are predicting 34%, significantly higher than the 2% target [9] - A quarter of a million less jobs than previously expected in May and June [6] Monetary Policy & Economic Outlook - The Fed faces a dilemma: whether to focus on the weaker labor market (suggesting rate cuts) or rising inflation (suggesting rate hikes) [4] - Chris Waller suggests focusing on the labor market [4] - The market is pricing in more rate cuts than the Fed may be able to deliver due to persistent inflation [8][10] - GDP on the second read came in at 33% [5] Market Dynamics - The stock market's performance is largely driven by the AI story and the "Magnificent 7," which constitute 40% of the index [11][12] - Nvidia alone accounts for 8% of the S&P 500, an unprecedented concentration for a single stock in the last 50 years [12][13] - The bond market narrative is focused on inflation and the labor market, presenting an inconsistent picture compared to the stock market [13] - The yield curve is steepening, partly due to inflation and fiscal challenges, raising concerns that the Fed might accept permanently higher inflation [9][13]

Inflation Outlook - Fed's Waller 表示对通胀的看法回到“暂时性通胀”阵营 [1] Market Sentiment - 市场对美联储官员的言论反应敏感，可能影响市场走向 (UP or DOWN?) [1]

Market Reaction to Fed Policies - The market initially reacted to news regarding the Federal Reserve with slight rate increases and dollar softness, but these movements reversed quickly, indicating a strong focus on potential Fed rate cuts [2][3] - The market is closely watching for signals from the Federal Reserve regarding potential rate cuts, particularly focusing on upcoming jobs and inflation data to guide the Fed's direction [5][6] - The bond market presents opportunities for various perspectives: the front end of the curve suggests rate cuts, while the back end reflects concerns about longer-term implications [7] Treasury Supply and Yields - Increased supply of treasuries, coupled with a potentially dovish Fed policy amid uncomfortable inflation levels (above the Fed's target), could lead the bond market to penalize Treasury issuance [9] - While the Treasury Secretary aims to lower the 10-year yield, market forces beyond their control are influencing it [9] - The Federal Reserve could attempt to control the back end of the curve through yield curve control and quantitative easing, but this may not be a great policy when market forces go in the opposite direction [10] Global Bond Market and Diversification - While the UK offers attractive yields, the rest of the world is converging towards the US, and the UK has its own fiscal issues [12][13] - Double Line has started to invest in local currency emerging market bonds, which offer yields around 7% without currency hedging, but with associated risks [14][16] - Developed world interest rates have been highly correlated, with Japan being the primary exception due to its reluctance to hike rates [18][19] BOJ and Global Sovereign Debt - The Bank of Japan (BOJ) is known for unpredictable policies and a lack of forward guidance, making Japanese Government Bonds (JGBs) less appealing [21] - High global sovereign debt levels and uncontrolled inflation suggest that rates, particularly at the back end, should be at or above current levels [22]

Fed Independence & Monetary Policy - The markets are currently focused on the short run, particularly the upcoming Fed meeting in September, while the long-run economic effects of current events, such as potential higher inflation and long-term bond yields, are being overlooked [2][3][4] - Maintaining an independent monetary policy is crucial because monetary policy affects the economy in the long run, and an independent central bank focuses on long-term price stability and maximum employment goals [4][5] - Concerns exist that the government is pressuring Fed members, escalating from earlier instances like considering firing the chair, potentially undermining Fed independence [5][6] - The public nature and vitriol of the attacks, based on allegations and innuendo without due process, are unprecedented and could lead to the removal of officials based on arbitrary reasons, jeopardizing Fed independence [7][8] - Undermining Fed independence could negatively affect the American economy, households, and businesses, even if policymakers remain unbiased, as the mere perception of political influence can impact markets [9] Political Influence & Board Composition - There is concern about the possibility of a political majority on the Fed board influencing the reappointment of the 12 Federal Reserve presidents, potentially leading to a significant shift in the Fed's composition [10][11][12] - The reappointment process involves an objective performance evaluation by the boards of directors of each reserve bank, but concerns exist that political considerations could override this process [13][14] - In a normal case, Fed governors would not refuse to reappoint someone based on a whim or policy views; there would have to be a substantive issue [15] Lisa Cook & Due Process - Lisa Cook is listening to her legal counsel, and it may not be the right time for her to publicly defend herself [19] - The situation has moved beyond a normal internal investigation process and has become a legal case, circumventing standard procedures [20][21] - If a president can remove someone based on allegations without facts, Fed independence is lost, highlighting the damaging nature of the situation [22]

Tariffs and Trade Policy - Trump's 50% tariff on India, due to its continued purchase of Russian oil, has taken effect [1][10] - A key tariff exemption for international shipments worth $800 or less is expiring, leading to postal service suspensions from at least 20 countries [1] - The expiration of the "de minimis" exemption will result in taxes on previously cheaper, low-value goods imported from overseas, potentially increasing inflation rates [2] - The average tariff rate is well in excess of 15%, the highest since 1934, which is expected to lead to higher prices for consumers and increased inflation [3] - Small business owners face uncertainty due to shifting trade policies, moving manufacturing locations only to be met with new tariffs [11] Inflation and Economic Impact - Inflation is a major concern for consumers, impacting their financial well-being and potentially influencing political outcomes [4][5] - Cutting interest rates when stocks are at an all-time high and the money supply is up 45%, with nearly $7 trillion in money market mutual funds, is an unusual economic environment [12][13] - The economy is still growing, and the unemployment rate is still down, while inflation is moving higher [13] - Increased inflation is expected to follow policies similar to those of Nixon in 1972, as well as authoritarian leaders like Erdogan in Turkey and actions taken in Argentina [23][24] Federal Reserve and Political Influence - There are concerns that Trump is attempting to influence the Federal Reserve for short-term political gains, potentially leading to a surge in equity prices but ultimately backfiring [6][7][8] - Trump is trying to "gerrymander the Fed" by appointing governors who will support his policies, potentially impacting the reappointment of Federal Reserve presidents in various districts [16] - CEOs should be concerned about Trump's attacks on the Federal Reserve, as they can become complicit in the erosion of core American values by remaining silent [16][17][19]

Legal & Ethical Concerns - Lisa Cook面临因涉嫌在两周内为两处房产申请抵押贷款时提供虚假永久居住地声明的指控，这可能构成不当行为 [4] - 总统有权以正当理由解雇联邦储备官员，本案中的理由可能是渎职 [3][6] - 类似的不当行为指控过去曾导致政府官员离职 [5] - 对于与丽莎·库克类似指控的人，可能会面临牢狱之灾、资产没收和赔偿 [11] Federal Reserve & Monetary Policy - Lisa Cook 此前曾投票支持维持低利率，导致通货膨胀 [8] - Lisa Cook 被指责在担任美联储理事期间将美联储武器化 [10] Geopolitics & International Trade - 印度对俄罗斯石油的购买行为，尽管享有折扣，但实际上帮助俄罗斯资助了对乌克兰的战争 [17][18] - 印度对俄罗斯石油的购买量约为每天 150 万桶 [21] - 印度被指责在关税问题上不诚实，并且不愿停止购买俄罗斯石油 [16][17] - 如果印度停止购买俄罗斯石油，可能会促使俄乌战争结束 [20] - 印度对进口商品征收高额关税，损害了美国的企业、工人和消费者 [19] - 对印度征收 80% 关税的可能性正在谈判中 [15]

WATCH: Dave Smith tells Joe Rogan how wars fuel inflation. 👇 https://t.co/xnrNKH4JjB ...