Slender Slim

Real GDP Growth (2-3%), low inflation (2-3%) but shaky labor market. The story for 2026.

To conclude, it doesn't seem like any of these structural differences will wade in the near future, which is likely why Goldman has reiterated their stance on U.S. outperformance over other advanced economies.

Items that overestimate the gap (but not by much):
(i) The calculations likely assume overstated quality improvements in IT, because U.S. hardware costs have declined relative to Europe.
(ii) Average hours worked are likely understated in the U.S.

4) Economies of scale - US firms are larger. Larger firms have shown to make twice the productivity gains as smaller firms, particularly among "superstar firms." (MAG7 are all US-based). They also improve productivity throughout their supply chains through technology spillovers.

3) Better management practices that are more efficient

2) Labor force characteristics (includes workers' education levels, not just heritable demographics)

1) Better Capital Markets. Higher investment overall & allocation to more productive (software, intangibles, IT production & IT-intensive) sectors and more productive firms.

Goldman breaks down U.S. Exceptionalism.

Why U.S. productivity has outpaced Europe, and will continue to do so:
(1/7)

FOMC:
"Several" see Dec cut as appropriate.
"Many" see pausing as appropriate.
"Most" worry further cuts risk higher inflation / imply lack of policy commitment, but say further cuts "over time" are likely appropriate.
Sounds like pausing, yet markets pricing in an >80% chance of a Dec cut #Bearish

Rethinking Borders: Real-Time Payments and Stablecoins are Reshaping International Payments

An FDIC insured bank just started accepting stablecoin payments. Are the fintech-forward banks that outsource asset generation to NBFI partners (while clipping fees) going to replace legacy banks doing DTC low-rate lending? They are gaining market share...
www.crossriver.com/insights/rea...

‪20 minutes later, GS updates to 3.8% amid data release of a reduced trade deficit.‬

Q3 GDP tracking 3.7%, per GS.

Nomura changes rate forecast to Fed holding steady in December.

25% of the US are now subprime, as Apollo reported yesterday.

Powell indicated b/s runoff will discontinue (~early next year most likely), which is bullish for markets.

There is a divergence in market pricing and street consensus for rates. The street thinks rates will be higher for longer compared to cuts implied by the market.

Everyone is talking about Gold rising because of USD weakness, but what's not being talked about is a China's relatively weak economy (citizens want somewhere to put their money) and central bank reserve reallocations buying up gold.

There's lots of alpha to be found in small caps. Market of stocks, not a single stock market.

Berkshire Hathaway now owns more treasuries than the Fed itself. It could conduct its own monetary policy if it chose. #FunFact

# of investors in USA that see ESG as a fiduciary responsibility has fallen over 30% from 2024 to 2025!

China is a whopping 23%! Think about that - a quarter of every home is vacant.

People say the US has a chronic housing shortage but the housing vacancy rate is 10%, higher than some other western countries, such as France, Germany, UK ( 5% vacancy!!), & even CANADA! Canada is bigger than the US yet ~the same population as California.

US government job growth YoY is now higher than the private sector. Largely due to base effects, however.

2nd wave of inflation appears to be coming, while GDP running at close to 3%.

Fed will have to change course and market will tank. Buy some downside insurance or reallocate more to bonds.

Apollo says economists were wrong, Trump was right.

Everyone's been expecting an economic slowdown from tariffs (& fear of), but 2Q real GDP was 3.8% (6% nominal), Atlanta Fed expects Q3 to be 3.9%.

Job losses have been to slowing immigration. These are strong growth numbers.

This graph always skews up, especially the Shiller index, as it is current price over earnings from prior quarters. Price reflects the earnings in the future and when they eventually release the ratio in prior data points are adjusted down.

Ex: Current P/E is off Q1 earnings.

Apollo thinks the USD deprecating this year was overdone and is recommending short EURUSD.

www.apolloacademy.com/wp-content/u...

Powell reiterates views on inflation above target and unemployment rising. Tough spot to be in.
#Stagflation

US government will likely shut down Oct 1

Shutdown means government data releases like CPI cease.

Less data between now and next FOMC meeting means they are more likely follow dot plot. So can be bullish in a sense.

Market pricing in most dovish scenario. If Powell says anything that communicates hesitancy towards further three cuts or dot plot shows anything different, market will react harshely. Also already at ATHs.

Buying a put is cheap insurance today.