evening wrap, august 10
market vibes
Since very little happened today let’s take a quick look at Cleveland Fed President Beth Hammack’s statement in a Yahoo Finance interview a few hours ago: “[the central bank] needs to raise rates by more than 25 basis points, and it’s better to get an early start on that to avoid having to make bigger adjustments later.” Neel Kashkari, Lorie Logan, Chris Waller and Lisa Cook are in public agreement.
Last Friday the BLS said the economy lost 23k jobs vs an expected gain of 80k. According to RJO’s Alex Manzara, “Wage growth was only 3.2%. Excluding the covid dip, wage growth hasn’t been this low since early 2020...though from 2010 to 2015 it ranged 1.6% to 2.3%.”
I will add in those post GFC years Fed Funds were zero and the FOMC constantly complained how hard it was to lift inflation up to 2%. Manzara continues: “Labor participation hit a new low of 61.4%.” I will add: Month over month CPI has been flat at 2.6% for 2 months. I noted on Friday that Productivity rose 1.4% in July which I think indicates the very disinflationary development AI is promising.
Last week Bessent said casually, “All the gold is there” in reference to Fort Knox. In my opinion the more often they “doth protest too much” the more suspicious the markets become. If it is there prove it.
Charts are OK, the wars are simmering. The bond market is either under full attack or teetering at the brink and the yen gambit was a very expensive dud (so far). Pretentious declarations that “the gold is there” don’t matter to the multitudes who don’t own it and ring hollow to the few who do.
Meanwhile leverage and margin debt rip the roof off, “the S&P 500’s Dividend Yield has moved down to 1.04%, the lowest level in history,” via Charlie Bilello on X.
in the markets
Gold is up 11% in August and just now testing its June 17 high.
