Foggy

The short week will be dominated by the employment report on Friday. It is likely there will be another downward adjustment to employment data justified by lack of resources from the BLS. Depending on how severe the adjustment is, the Fed and the market will be reaffirming the need of an “adjustment in the policy stance”. Ironically, investors may put more weight on past numbers than the current month, as the margin of error is so high, the number as reported in the first release is becoming irrelevant. To complement that number, the Bureau of Economic Analysis has released the first revision of 2Q GDP, and it has been increased by 0.3% to 3.3%. There’s an argument to be made that the economy is running hot, in which may be prudent to leave monetary policy as is, particularly in the context of the OBBB where a fiscal stimuli has been approved. We keep getting mixed signals, that make any decision dificult and controversial. And if and when we get clarity, it may be too late to act.

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