Redeye Macro Note: Geopolitical Updates, Bizarre BLS Release, Pertinent Macro Data - What Still Matters?

In this Redeye Macro Note - we discuss the latest geopolitical updates and war developments from the first half of the weekend, talk about a bizarre BLS release, and more...

Don Johnson (@DonMiami3), Chief Economist

Good Saturday Evening MacroEdge Readers & Community,

It was a very warm week last week and felt shortened by my travel on Monday. I had a very successful few days in Arizona, and it’s good to be back in the office and firing on all cylinders. This is going to continue to be a very busy second half of the year, and everyone at our organization is rocking and rolling full steam ahead while it seems that many others have logged off for their final summer ‘siestas’... Now, don’t get me wrong - I don’t mind a siesta every now and then; it just seems like a large part of our society lives on a perpetual vacation subsidized by a smaller and smaller group of producers - and I think that math is going to be very, very problematic in the long run for Western countries.

This evening we’re back with the Redeye Macro Note to cover the latest geopolitical events from the Friday evening & first half of the weekend, discuss the *hilarious* BLS release on Friday morning, and other pertinent macro data from the previous week. It continues to look very unlikely that we’re going to see any meaningful shift as it pertains to the Strait of Hormuz for the time being - with ship traffic remaining near zero on a moving-average basis - the clock to the *red alert* days continue to tick lower:

While we continue to subsidize demand with the SPR for the time being - this dynamic is not sustainable on a long-term basis, and cyclical energy bulls should remain patient through October while this hot potato dynamic continues to mold itself into form. US officials are starting to get antsy about getting out of the conflict due to advanced munitions shortages (that are also impacting Saudi Arabia, Kuwait, Bahrain, & Iraq) - but today, it was noted in an Israeli news report that they may attack again if the US Administration is unwilling to take said actions to continue the conflict. Just as I said from the beginning of this thing - the general theme is that there seems to be absolutely no plan or objective to this day - and fighting a war in the Middle East against the most formidable regional opposition in the region (in hindsight) is never, ever, a good idea. All of this to say, I continue to think the clock is ticking on *everything* right now - from the AI/data center trade, to the labor market, price levels on everything, and many of the other things going wrong in the United States right now. When the majority of a society has to resort to gambling and nihilism to stay above water on the cost of living, and we see travel data like we’re seeing now - there are many flashing lights that things are going wrong under the surface (and frankly, have been for a long time)... This isn’t some doomer take - for the Wall Street economists and portfolio strategists who think things are just dandy - I suggest they get out and take some of the trips that I’ve taken this year to get a perspective on the real world beyond the guard gates & golf courses… It’s quite eye-opening.

Anyways, for the next couple of months now on the energy front - we’ll continue to ‘knock on Heaven’s door’ as we TACO-waltz around the minefield and continue to drain critical energy supplies. They’ve bitten off more than they can chew - and it’s going to sting them… yet inflation is the only tool they have to keep nominal growth going… what a bizarre dynamic we’ve fallen into.

This evening - we’re going to briefly cover the following:

• Latest Geopolitical Events

• Bizarre BLS Release and Nonfarm Summary

• Pertinent Macro Data from the Last Week

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Next Reports in the Queue:

• Sunday: Weekly Macro Note: Macro Week Ahead, Homebuilder Situation Update, A Looking at Transportation, Bulls Over Their Skis for a Month or Two More

• Tuesday: War Note

• Wednesday: Oil and Gas Research (Portfolio Strategy & Briefing #1)

Latest Geopolitical Events

The US has paused attacks for a third straight week - as we head into midterms - there’s going to be a growing rift on attacks during this period. There’s now between 8 and 12 weeks before things get to *red alert* levels on the oil inventory front - and some are looking for a way out of the conflict - but I think it’s rather unlikely now that we see Strait traffic normalize… We’re shifting to the ‘denial… acceptance’ cycle among officials right now - and while there are still TACOs to come to control the front of the oil curve, gas prices are notably higher right now than they were when RB futures were at these levels at the earlier low of the year.

Houthi forces carried out two attacks on Aramco assets this evening (US time):

Continue reading below with Ozone (Latest Geopolitical Events… Continued, Bizarre BLS Release and Nonfarm Summary, Pertinent Macro Data from Last Week, and More)…