This week’s most closely watched data releases were the slightly hotter than expected CPI and the much stronger than expected retail sales, both of which reinforced investors expectations that the Federal Reserve would continue to tighten – but at the December meeting, rather than just ahead of election day. We completely agree – but we found the spike in the less closely watched PPI, and the blowout in the Chinese trade surplus told us much more about the state of the global

Despite a weaker than expected payroll employment report – which gets outsized attention from financial markets -- the preponderance of the evidence this week suggests sustained strong growth as we move through the peak of the manufacturing cycle. The revised GDP data show that the economy has been running hotter than earlier reported. The ISM data confirmed we are still running hot in August. The ADP data said hiring remained strong. The personal income data confirms that em

The preponderance of the evidence is that the US economy is running hot due to the AI boom. The explosion in demand for certain products has caused bottlenecks, which naturally result in substantially higher prices – and profits – for select producers. The current and expected future returns to these firms are so high that they are essentially insensitive to prices and interest rates, leading to strong borrowing, and -- as a result of the Federal Reserve defending too low an