RenMac RenMac Off-Script: Money Illusion
Aug 15, 2025
The discussion dives into the nuances of recent economic data and its impact on retail sales, with a focus on prices. Insights on the Federal Reserve's policy shifts and their relevance to housing markets are shared. Small caps are contrasted with strong trends in Asia, raising optimism for future investments. Government intervention in the semiconductor sector, particularly with Intel, sheds light on broader industrial strategies. The geopolitical landscape, especially related to energy costs from the Ukraine-Russia conflict, is also explored.
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September Cut Seems Plausible
- Core PCE is tracking into the range that would justify a September Fed cut. Neil Dutta highlights cooling labor markets as the key constraint on aggressive easing.
Margin Expansion Matters As Much As Costs
- PPI showed benign components but expanded margins, suggesting firms may pass costs to consumers. Markets reacted to margin expansion as a signal of potential price pass-through.
Don’t Expect Aggressive Early Cuts
- Powell must thread the needle between calls for big upfront cuts and dissenters who want none. Avoid expecting aggressive early cuts until clearer job-market weakness appears.