Strong dollar at 102, gold holding above $4k, long USTs in the 5s, stocks holding near all-time highs, 10-year inflation expectations 2.36% lol

So, it's not 2022 anymore.

 

LOL it's not about governing, it's about skimming the $7+ trillion which flows through their fingers

Doug is such a puppy.

If Democrats Win, Would They Be Able To Govern?

Schoen & Cooperman, The Hill

 

... if the Democrats do win, it will be from collecting protest votes, not from offering solutions. ... Voters, having cast ballots over costs and inflation, will judge the new majority against those issues, which Democrats will largely be powerless to address. ...  

 

Which will it be, Doug, a protest vote, or a vote on the economy?

 

Make up your mind. 

 

Trump's BEA under Howard Lutnick fiddled with the PCE methodology while we were at the beach this summer to get lower inflation in July and August

 Fed’s preferred gauge showed core inflation at 3.0% in August, much lighter than expected 

... While the annual increases were less than expected, they came as the Bureau of Economic Analysis changed the way it computes several components of the index. The BEA adjusted methodology for how it measures prices for legal services, software and computer accessories and portfolio management.

The revisions lowered the core July PCE level by 0.36 percentage point.

... “Even after major methodological revisions, PCE inflation is still running hot however you cut it,” said Sonu Varghese, global macro strategist at Carson Group. “The economy is running hot, policy remains easy, and the Fed’s challenge is figuring out how much restraint is needed. That’s a tailwind for stocks as we move into Q4.”

... “The PCE Inflation data – the Federal Reserve’s favorite – show no progress in August on inflation,” said Heather Long, chief economist at Navy Federal Credit Union. “And it’s inevitable that September will be higher. Meanwhile, American consumers are feeling the squeeze.” ...

 

And also today . . .

Commerce Secretary Howard Lutnick reports more than $250 million in income last year

What a cohencidence!  

 

Core pce inflation has been above 2% year over year for 65 consecutive months in Aug 2026 and range-bound around 3% yoy since Mar 2024, 29 months

Obviously the Fed is content with this, or it would actually fight inflation instead of pretend to fight it.

The Federal Funds Effective Rate has averaged just 3.3% 2021-2026 inclusive.

 

Conservatism wouldn't let this happen

I guess they hate being reminded that their 1913 dollar is worth but 3-cents. 

 Congress votes to end production of the penny after 234 years, sending a bill to Trump

 

Your reminder that your million bucks in August 2026 is worth less than $30k in 1913

 Have a nice day.

I can still make a grass-fed one at home for $1.62

 

Overall consumer prices in August 2026 are up 3.39% year over year, core up 2.44%

That's 78% worse than during Trump I, and 24% worse, respectively, mostly due to higher energy prices affecting overall prices this year but also due to tariffs which were worse last year than this year for core prices but remain an overall drag.

Not seasonally adjusted: 

CPIAUCNS January - August 2026:

2.38, 2.41, 3.25, 3.81, 4.24, 3.53, 3.36, 3.39

Trump I CPIAUCNS average 1.90

2025 Average 2.63

2026 to date 3.29 

 

CPILFENS January - August 2026:

2.50, 2.45, 2.59, 2.75, 2.85, 2.59, 2.47, 2.44

Trump I CPILFENS average 1.96

2025 average 2.83

2026 to date 2.58 

 

Trump voters be like:

 

CNBC is all about how to trade the easy money, that's all

 Inflation persisted in August, potentially locking in a Fed interest rate hike

... The report is the final major inflation indicator the Fed will see before it holds its policy meeting next week, concluding Wednesday with a vote on its key interest rate.

Traders responded to the numbers by ramping up bets that the Federal Open Market Committee will increase its benchmark interest rate by a quarter percentage point. Odds for a hike jumped to nearly 90%, according to the CME Group’s FedWatch tracker of fed funds futures prices. ...

 

Overall wholesale prices in August 2026 are up 5.4% year over year, core up 4.62%

Not seasonally adjusted: 

PPIFID January - August 2026:

3.07, 3.36, 4.28, 5.69, 5.91, 5.57, 4.84, 5.44

 

PPICOR January - August 2026:

3.71, 3.83, 3.94, 4.91, 4.49, 4.79, 4.25, 4.62

Trump I PPICOR average 1.88

2025 average 3.28

2026 to date 4.31 

 

ECB playing catch up to reality, as always

 ECB hikes interest rates to 2.5% as policymakers see risk of higher inflation, weaker growth

... Eurozone inflation hit 3.3% in August, with energy inflation spiking to 14.3%. ... 

10Y yields at this hour:

Germany 3.4777%

France 4.382%  

Expected inflation makes into the headline, not the not-expected inflation

 Wholesale prices rose 0.4% in August, as expected

... On an annual basis, that put PPI at 5.4%, still well above the Fed’s 2% inflation target and 0.1 percentage point higher than expected. ... 

NBC News: Labor share of business income falls to historic lows as corporate profits explode

American workers are getting the smallest slice of the pie on record

 

Rob Wile

 

Since 2000, the value of the S&P 500 stock index has gained about 600%. Over the same period, inflation-adjusted worker earnings have climbed just 12.5%. 

 

It is now the least rewarding time to be a worker in the U.S. economy since the government started keeping track.

The share of economic growth captured by labor in the form of compensation like wages fell to a record low last quarter, hitting 52.8%, according to the Bureau of Labor Statistics, which began recording the statistic in 1947.

In other words, even as the economy continues to grow, worker pay comprises an ever smaller slice of the pie.

The data comes as stock prices continue to hover near all-time highs, while wage growth is barely keeping up with inflation.

On Friday, the Bureau of Labor Statistics reported that wage growth slowed to its lowest rate in five years in August and remains below the broader pace of price growth.

It’s the latest data point reflecting a decades-long stagnation in returns to labor, while corporate profits have exploded.

Since approximately the start of this century, the S&P 500 stock index has gained about 600%. Over the same period, inflation-adjusted worker earnings have climbed just 12.5%.

Wages vs. inflation

Since April, the prices consumers pay are rising faster than wages.

As of April 2026, inflation has outpaced wages, spiking in May at 4.2% before falling to 3.3% in July. Wages have continued a downward trend since March 2025 when the annual change was 4.2%, falling to 3.1% in August 2026.

What’s driving it all?

Economists aren’t really certain about the exact cause, but a confluence of factors appears to be at work, according to Mike Konczal, vice president of policy and research at the Economic Security Project and a former White House chief economist in the Biden administration.

The start of the century coincided with what is known as the “China Shock,” as Beijing’s entry into the World Trade Organization massively accelerated globalization and offshoring.

The shock chipped away at the number of traditional blue-collar workers in the U.S., and it reduced the bargaining power of those who remained.

Meanwhile, technological advances have allowed the typical worker to generate larger volumes of more valuable services.

But those gains are being captured as company profits, not as wage growth.

The trend appeared to reverse, or at least stabilize, for a brief period during the post-pandemic economic reopening. But exactly why that happened is still not entirely clear.

The decline resumed after President Donald Trump returned to office in 2025.

Konczal said some economists believe corporations have sought to increase their profit margins at the expense of higher wages for workers in order compensate for the economic uncertainty that Trump’s tariff policies have created.

Regardless of the specific reasons behind the renewed drop in gains for labor, the decline has implications for all of society, Konczal said.

It stands to increase wealth inequality by putting more resources in the hands of capital owners — namely stock market investors — while the returns to workers stagnate.

It also has fiscal implications: Konczal said efforts to increase taxes on wealth or corporate profits have proved politically untenable so far, compared with the current arrangement of taxing earned income and wages instead.

“The economy can start to become unequal in a way that it’s not just the CEO who makes more, but people who own shares do, and that wealth is very, very unequal,” he said.

 

 

The nerve of these people

The rate cut in September 2024 was the real disaster because inflation was not licked, and yields now have simply retested their highs after some hopeful but ultimately failed signs of spending discipline around DOGE and of increased revenue from tariffs.   

The failure to win in the Persian Gulf just compounded the inflation problem, restoring the status quo ante, and then some. 

The Fed is the one needing the help, but it isn't going to get it from a spendthrift Congress and reckless executive branch. 

 Vance says Fed should lower interest rates: ‘Would be nice to have some help’ 

 

Bond yields and oil wars and inflation, oh my!

Global bond yields soar to multi-decade highs as Middle East turmoil reignites inflation fears

 

10-year yield hits highest since January 2025 as higher oil prices stoke inflation worries 

 

Vance suspects Antichrist 'among us'...  

 

... like I'd be not shocked if the Antichrist was walking among us ... 

 

Well . . . what a coincidence!

 

👇 

 

 

You have to go back 35 Julys to find pre-pandemic core pce inflation in July as high as it is in July 2026

3.344% year over year.

 

Adjusted for inflation, March 1994 diesel for $1.10 should have cost $2.50 in July 2026, but it averaged $4.95 instead

 And we're pushing $5.50 in August.

 

Yeah, well, the reports were "benign" but the facts weren't

 This is the problem with fake economic news, which isn't meant to inform. It's meant to shape, just like fake polls.

It's disinformation, meant to blunt the bad news every time its ugly head pops up to keep stock markets from falling.

Everybody's talking the stock market book, because everything else sucks. They're afraid that speaking the truth would be all it takes to destroy confidence in the economy, when everyone who must experience the economy on the street knows it is not booming.  

What rising Treasury yields are telling us 

... The yield on the 30-year Treasury bond ended the week at 5.26%, the highest since June 2007, despite benign reports on consumer and wholesale price inflation. (This is unusual, as long-term yields tend to move lower when inflation becomes less of a worry.) ...

Core wholesale prices have been increasing at an average monthly rate of 4.24% in 2026. Peak before the pandemic was 2.99% in August 2011. 

Core consumer inflation averaged 2.62% in 1H2026. Before 2021 there wasn't a reading that high since 2H2006 at 2.72%. Twenty years ago.

The bond market isn't blind to the facts like these reporters are, who have their heads in the sand. 

Yields are rising because of persistent inflation. 

TLT and IEF in the bond drawdown news

SPR isn't the only thing in drawdown lol, down 49.5% since the beginning of 2022. Oil. Pffft. Who needs it, right?

Long term bond investors are getting killed, if any are left still standing. The article linked says most fixed income investors have gone ultra short.

Meanwhile the personal saving rate, which includes monies being socked away in retirement accounts, has plunged to 2.7% in June 2026. A prosperous people saves. Ours is doing something else. 

 

Imagine being down 6.7% per year for five years straight in the "safe" part of your portfolio, or even 1%, when inflation has been raging at 4.5% on average. Real return is far, far more negative.

Here:

... The iShares 20+ Year Treasury Bond ETF (TLT), for example, has posted an average annual return of negative 6.7% over the past five years, while its 7-10 Year Treasury Bond ETF (IEF) has posted an average annual decline of 1%. ...

 

Experts fancy bond yields are simply normalizing higher, but yields across the board have risen in response to the oil war since March