Jane Shaw Stroup, writing for the American Institute for Economic Research (AIER), captured the mood perfectly this morning: “Even those who know history get stuck repeating it, and historical remembrance does not bring enlightenment.”
We know where high tariffs, deficit spending, and military adventurism lead.
And yet, here we are, living through the cycle again. As Jane laments, “My hopes that remembering the past can guide domestic or world politics have been dashed again and again.”
Ms. Stroup’s words feel especially pointed today, as markets soar and the nation’s institutions creak under political pressure. The most terrifying bull market in history continues, built on hope, liquidity, and perhaps, Legos.
Markets Scale New Heights
The S&P 500 crossed above 6,500 for the first time yesterday — its fifth 100-point milestone this year.
Five years ago, it stood at 3,500. A decade ago? Just 2,100. The Dow also notched a record close, and the Nasdaq nearly joined the party.
Fresh GDP data — the Commerce Department revised Q2 growth upward to 3.3% — fueling the rally. Investors cheered the “Goldilocks” read: strong enough to keep the music going, not hot enough (at least on paper) to derail hopes for a Fed pivot.
Even the oddball tickers joined in. Perhaps as fittingly as Lego, Build-A-Bear Workshop popped after beating earnings forecasts, on track for its fifth consecutive record year, thanks to digital expansion.
Neither represents a bellwether of industrial might — but in this market, even teddy bears roar.
GDP Up, Consumers Tapped
The GDP revision looks good on the surface: business investment surged 5.7% in Q2, and consumer spending ticked up 1.6%.
Surprisingly, given the stock market’s persistent tear, “investment” as a category has declined during Trump’s tariff bonanza. The number refers to investment in productive capacity, not money flowing into Wall Street’s coffers. (Source: U.S. Bureau of Economic Analysis)
Andrew Zatlin reminded us yesterday on Grey Swan Live!, much of this reflects tariff timing. Imports were front-loaded in Q1, dragging numbers down, then slowed in Q2, creating the rebound.
Zatlin’s bigger point: don’t fight the Fed, don’t fight the American consumer. A debt-fueled economy keeps spending until it can’t. Participation is optional, but opting out means living like a homesteader.
Underlying demand remains weaker than the headline suggests, complicating Powell’s calculus ahead of the Fed’s likely rate cut on September 17th.
Cooked at the Fed
The institutional drama continues at the nation’s “independent” central bank.
Lisa Cook, fired by President Trump earlier this week, sued in federal court yesterday, arguing her ouster was “illegal” under the Federal Reserve Act.
Her lawsuit leans on precedent: Fed governors can only be removed “for cause,” and mere allegations of mortgage fraud — which she dismisses as a “clerical error” — don’t meet the standard.
The case could reach the Supreme Court. In the meantime, the Fed’s seven-member board remains in limbo. Do they honor Trump’s dictates? Do they defy him? The precedent could redefine Fed independence for generations.
Vice President J.D. Vance has been working overtime on the spin: “Do we want a person who makes a mistake like that to sit on the Federal Reserve Board?” he asked USA Today. “POTUS is much better able to make these determinations.”
Measured central banking by executive fiat? History has also shown where that leads. See: Turkey, 2018–2022.
Either way, we see the Fed moving to increase market liquidity, which should help push asset prices higher – irrespective of their current valuations.
In the Grey Swan Trading Fraternity, Andrew Packer has identified a company with a bullish trend – and it could soar even higher in the coming weeks as interest rates start to trend lower again.
Chaos at the CDC, Perhaps Rightly So…
“You’re fired” remains a Trump mantra well after his peculiar foray into broadcast TV.
Fallout from Trump’s firing of CDC director Susan Monarez spread fast. Three senior officials resigned yesterday in protest, warning that her ouster clears the way for changes in vaccine policy at a September 18 meeting.
Monarez’s lawyers called her removal retaliation for refusing to follow “unscientific, reckless directives.” Public health officials whisper fears of politicized medicine. In the middle of flu season prep, no less.
Crypto Takes a Breather
Crypto funds saw their third-largest weekly drain this year.
Bitcoin products alone lost $1 billion, while Ethereum shed $440 million. Month-to-date, Ethereum remains positive (+$2.5 billion inflows), but bitcoin is down $1 billion.
Crypto has not matured enough to be anywhere near a risk-free safe haven asset. But who’s counting? Bitcoin is only 16 years old. As an innovation, it ranks high among “the quickening” – rapid acceleration of innovations meeting the economy and stock market. (Source: Coinshares).
Investors, even our own Andrew Packer, call it a “needed breather.” Skeptics call it a crack.
Katrina’s Legacy
Today marks 20 years since Hurricane Katrina devastated New Orleans.
I recall visiting Crescent City for the New Orleans Investment Conference a year before the storm.
At the time, I was writing about John Law’s 1715 Mississippi Scheme (which spawned the city) and the city’s precarious geography. National Geographic had already published satellite maps showing the levees’ fragility.
The 2005 devastation still scars the city.
Since then, New Orleans has lost 23% of its population, becoming the most income-unequal major city in America.
Climate change, regardless of the political spin put on it, only sharpens the threat: the revamped levee system is sinking faster than predicted, even as federal funding for infrastructure faces cuts.
Meanwhile, insurance and re-insurers are in their own sticky-wicket. (Source: Statista)
Yesterday, The Wizard of Oz debuted at the Las Vegas Sphere. AI-powered visuals, a re-recorded score, and 4D “immersive” effects. But one thing hasn’t changed: the house still falls on the Wicked Witch of the East.
And in Vegas — as in markets — the house always wins. If you’re thinking of catching an event at the Sphere, even if just for the spectacle, we recommend waiting until Dead & Company come around for their residency again.
~ Addison
P.S. Many thanks to Andrew Zatlin for joining us on Grey Swan Live! yesterday.
His message was clear: the Fed pivot is already priced in, the market will shrug off tariffs and inflation for now, but corrections are coming in AI and other frothy corners. The most terrifying bull market continues. The only question is whether you’re ready when the music changes.
