Postcards: What's Keeping Me Up at Night

We will try to be a little more active today after a quiet first two days on this international trip. But sleep hasn't come easy... and neither will reliable gains in this market. ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: What's Keeping Me Up at Night]( We will try to be a little more active today after a quiet first two days on this international trip. But sleep hasn't come easy... and neither will reliable gains in this market. [Garrett {NAME}](floridarepublic) Jun 17 floridarepublic   [READ IN APP](   Republic Risk and Republic Insiders: [Go Here, Please.]( --------------------------------------------------------------- Dear Fellow Expat: I forgot about seagulls. The pigeons of the sea. Now mix seagulls with pigeons, and you end up with the noisiest mornings possible. Sleep hasn’t come that easy on this trip - I’m somewhere around 8 hours total so far - but we’ll battle through. Insomnia isn’t a fun experience for me. I’ve written about it before - and [how it becomes a terrible space ride to nowhere.]( But the last few nights - the thoughts haven’t been about Walmart+ spending or the Federal Reserve. They’ve centered on more purpose, and I hope that’s what I can get out of this time abroad. [My trip to Switzerland delivered]( important answers about the production of this publication and what I wanted to build here with Republic Research. But this trip is a bit different. I’m 43 - and I stand at a bit of a crossroads. There is a lot of change going on around me. And questions must be asked that can, at times, be uncomfortable. What are the purposes that I’m seeking having made such a radical change? What do I want to do for the rest of my life? What other hobbies can I develop? And I mean… develop… because writing was my hobby and became my career. That’s difficult because I no longer have time to write creative fiction. How will I ensure I sleep, eat, work out, and stay in a proper cycle to achieve those goals? As I’ve long said, this isn’t a publication just about finance. This is a publication about the things you can control: Your health, your wealth, and yourself. I need to think about No. 1 and 3 on this trip. What about you? The answers will be somewhere on this continent. The good news is that you can always start today when you want to change yourself. There’s still a lot of time on the clock. [Upgrade to paid]( Speaking of Clocks Neel Kashkari is the head of the Federal Reserve Bank of Minneapolis. And now he’s the latest central bank member to float an interest rate cut this year. Here he is - in his Federal Reserve jacket - paid for with printed money. That is a good-looking jacket. I was surprised to find out that the central banks all sold their own swag. Here’s the [Federal Reserve Bank of Richmond’s jacket](. You have a choice when you buy them… You can buy 12 at a time, but the $3 discount doesn’t start until you buy 500. Those are the only two options. Kashkari told CBS over the weekend that it’s reasonable to predict a rate cut by December after the election. We’ve played “Lucy and the Rate Cuts” (Football) for the last two years. I’m not sure that even they know when it will be a good time to cut. Even though Kashkari said [he can’t understand why Americans fear inflation]( over a recession, the central bank can’t afford to see inflation spiral back up because it slashes rates. Where Are We Now How much have things changed? Most people predicted four to six rate cuts at the start of the year. Now, the latest data from the Fed - of 19 contributors - shows one expected cut. And they probably still won’t get there. Even worse… what happens if they cut and then have to raise it again? It will puncture their credibility even more, and we’ll see more [crazy letters from Senators demanding rate cuts at the expense of inflation.]( Massive deficits and infrastructure bills add a lot of money to the economy, which spills into services and goods. Kashkari also told CBS that he was “surprised how strong” the U.S. labor market has been despite the rate cuts. But pour through the data, and you’ll see that nearly all jobs created in the last few years are either government or healthcare (by proxy a government job), and nearly every job went to a foreign-born person. In addition, as we’ve noted, about [23% of Americans are](. There was no challenge from the CBS reporter on any of these subjects. Consumer Sentiment Remains Weak While Kashkari praised the economy, Americans were not convinced. Consumer sentiment hit its lowest point since November 2023. The reading was much lower than expected, and the 65.6 estimate was a sizeable drop from the 69.1 in May. I’m unsure what other data the Fed needs to see - but it’s all right here. Leading indicators are contracting, and the [Mean of Coordinates fell]( under the baseline into contraction mode. The real economy is suffering, but the government still borrows and spends at a tremendous clip, bolstering inflation. We are still waiting for a negative monthly print on inflation, but we remain firmly at 3.3%, while service inflation is sticky. I continue to remain very on guard over this summer. This market can burn much higher - like it did in 2007… aided by heavy concentration in these tech names. But the hedge funds aren’t playing the game elsewhere. [Recent commodity reports]( of Traders report) show that hedge funds have been dumping crude oil and taking profits on metals. This is good news because it can provide a reset for many investors who missed the first wave of buying. WTI crude and Brent crude saw long positions fall to their lowest levels, which we’ve seen twice in the last 12 years. I’ll need to overview the CoT report this week and why it’s so important to commodity markets. If CTAs and funds are dumping, it’s a good time to get out of the way. But if you’re stuck… don’t just sell to sell. You’re in it now. So, be patient, as the future will see a rise in commodity prices again when we do finally start to slash rates and the dollar inevitably weakens (which it needs to for the stability of the global financial system - see the 2022 crisis). This all goes back to the Risk On conversation we had in early April. It’s a long burndown regarding crude oil, but it only takes one geopolitical pump to bring people back to the table. I will stay in the midstream for now on crude oil and look for opportunities to emerge as many of these indicators above start to find their bottom later this year. Stay positive, Garrett {NAME} Secretary of Finance Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.   [Like]( [Comment]( [Restack](   © 2024 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()