Economic data remains mixed. Second quarter GDP growth was revised upward from 3% to 3.3%, following a sharp -5% decline in the first quarter. What drove the rebound? Three factors stand out: fewer imports due to tariffs, stronger consumer spending, and increased business investment possibly linked to AI adoption. Mixed Signals in the Economy While tariffs have reduced imports and boosted government revenues, companies are still largely absorbing the added costs. Consumer spending revisions show...
Are employment number revisions manipulation—or just part of the normal process? Will firing the person in charge of data collection jeopardize the reliability of economic reporting? Were the latest inflation numbers good or bad? Is bad news good, bad news bad, or good news good—and can we even trust the data? Is retail inflation more important than the Producer Price Index (PPI)? And how do these moving parts shape interest rates, inflation, and the broader...
The Top 10%, Tariffs, and the Tale of Williams Sonoma: A Week in the Economy I was struck this week by a podcast called Raging Moderates with Scott Galloway and the token Democratic member of the Fox Five, Jessica Tarlov. She asked Scott about the stock market making new highs despite the chaos and confusion around tariffs and inflation. Scott replied that 10% of Americans own 93% of the total domestic stock market value. So...
I think investors are exhausted. I think I am exhausted. There is so much information coming at us and in the attention economy, that is where the action is. Attention has become the most valued commodity in the economy. What do tariffs actually mean? Is it doom and gloom or a smart strategy? Greg Ip in the WSJ says Trump is winning the trade war. There is no doubt that NATO members are increasing their...
Budget Bill Brings Major Tax Changes—and Uncertainty With the passing of the budget bill and the President’s signature, significant changes are coming to the U.S. budget and economy some noticeable, some not. For residents of California, one major impact is the increase in the SALT deduction (State and Local Tax deduction). Previously capped at $10,000, it will rise to $40,000 for couples earning under $500,000. This increase, however, expires at the end of 2029. For...
This week marked the passage of a budget bill advocated by President Trump and Republicans, passed through a special process called reconciliation. This process has specific rules and, when followed, allows the Senate to pass legislation with a simple majority. The New York Times offers a tool to enter your own information and see how the tax provisions affect you: NYT Tax Calculator. The Wall Street Journal also provides details on the impact of the...
Markets are no longer sanguine about the whipsawing of trade negotiations, inflation, interest rates, earnings, and the usual market movers. Fear of missing out, or FOMO, is at work. Just today, inflation numbers were hotter than expected a trade deal with China was announced, trade negotiations were halted with Canada, and we were reminded of the bombs dropped on Iran's nuclear facilities. Along with the hotter inflation numbers, the Labor Department this week confirmed that...
The head-spinning pace of daily events continues as markets react but mostly hold near record highs. We are once again seeing markets driven by the same seven large growth stocks that led in 2023 and 2024. While interest rates and inflation remain concerns, current inflation numbers largely exclude the impact of tariffs. Over the next two months, we’ll get a clearer picture of tariff effects. The budget reconciliation package now in the Senate is also...
Well, we have the TACO trade and the battle of the bros—ending of the bromance—making for another exciting week. Meanwhile, the S&P 500 crossed the 6000 level for the first time since February, though not without a fair amount of volatility. The TACO trade stands for Trump Always Chickens Out. It's a Wall Street meme referring to the pattern where Trump announces harsh tariffs that cause markets to sell off, only to later reverse, delay...
The only dependable piece of news is change. Last week, it was an announcement that Apple would face 25% tariffs on iPhones and the EU would face tariffs of 50%. The market reacted with a swift sell-off that moderated during the day but still resulted in losses for both the day and the week. When I wake up in the morning, I never know what news awaits. I thought we had a break in the...
When considering the role of uncertainty in negotiations, it can be helpful to visualize it as an upside-down "U." At first, uncertainty can be a strategic asset. It creates leverage for the lead negotiator, as the opposing party is unsure how to proceed and may tread cautiously to avoid triggering a negative response. However, as uncertainty drags on, its effectiveness diminishes. The negotiator's credibility begins to erode, and the opposing side often hardens its position...
Markets movements and data/news have a funny relationship. Different data points become the focus of market movements, and those data points change over time. This relationship between markets and data also contains the layer of "good news is bad news, bad news is good news, and bad news is bad news, and finally good news is good news. In each market cycle and sometimes each cycle, which of the four choices will prevail. After market...
