I’m back from a sabbatical and ready for an interesting autumn.

Four things stand out from when I was gone:

1) Non-farm payrolls game changer

The huge downward revisions to non-farm payrolls led to a repricing of the Fed and now we have a Fed cut priced in for Sept 17 and a good chance of another one in October. For the year ahead, 96 bps in easing is priced in. Despite that long-end yields are higher then were at the start of July in somewhat of an ominous sign.

2) Trump fired the labor statistics chief

This is ominous and there is no way to reconcile that. It makes it impossible to feel confident in the jobs data as it rolls in. I guess we’re trading off ADP and some combo of initial jobless claims and the (manipulated?) NFP number now. It’s a game changer in that I don’t feel particularly confident in whatever is coming out now.

3) The Fed lost Kugler and possibly Cook

Kugler quietly resigned and it was likely due to the kind of political pressure that Cook is under. Even the change of Powell, Trump didn’t have the votes to dictate monetary policy but if he can replace Kugler and Cook with lackeys then we’re quickly on the way to a Turkey-style situation. Naturally, gold is now approaching all-time highs.

4) Courts overturned Trump tariffs

Markets aren’t really running with this theme today — perhaps due to the holiday — but it could truly be a gamechanger. Your handicap of the Supreme Court is as good as mine but if they strike down tariffs then it will go to Congress and that’s another wild card. A best-case scenario is that Trump loses that tariff card and that would lead to a big rally in growth-sensitive trades like commodities, small caps and emerging markets, along with the currencies of the US’s largest trading partners.

I’ll have a post on September seasonals coming up later.

It’s great to be back!