Odd bins: Jackson Hole, Russia & Shipping
:
Jackson Hole is a pivot in the Fed’s reaction function which now under-emphasises tariff effects on inflation and over-emphasises the weakening labor market. So more cuts than I thought (3 at least). There’ll be more risk asset bubbles and a weakening US$.
Geopolitics: Putin will ignore any peace negotiations and pursue his pet war. The markets won’t care unless Trump gets really angry. Then he could put secondary tariffs on China (I doubt it) or take kinetic action against the sanctioned tankers of the dark fleet (unlikely). Interdicting Russia’s sanctioned tankers would be an escalation that could become hard to manage (see why below).
Shipping data shows continued weakness in container traffic from Asia to the US. Unless the US consumer has given up on Asian consumer goods, this means US consumption is a lot weaker than the MAGA fans would have us believe.