Higher Frequency Data

What are the odds that someone who stopped seven wars doesn’t win the Nobel Prize?!? And the winner was someone who I had never heard of before, who isn’t even the head of the Venezuelan opposition party. That is crazy! Speaking of crazy, what are the odds that a person who didn’t win the Nobel Prize (after stopping 7 wars) then goes on a tirade about China and threatens 100% additional tariffs? That tirade ended what was a nice string of very quiet price moves in the markets because of the lack of government economic data. I have been thinking more about higher frequency economic data ever since Waller implied getting more frequent ADP data. I wanted to share some preliminary thoughts this week, but first the week in news:

· I think if you asked someone what the odds were that Trump would have raised the temperature ahead of negotiations with Xi in a few weeks, it would have been something on the order of 80%. So I’m not sure why the markets were so taken aback on Friday. What is especially strange is that the markets saw that the Chinese may have raised the temperature a day or two before with their export restrictions note and there was no market reaction. I was out of the office last week, so maybe I missed something.

· I do think a meltdown of the equity markets is one of the principal transmission mechanisms of a potential recession. Much of spending has been concentrated in the wealthy, and gains in asset portfolios have supported spending.

· Kalshi is saying that the breakeven on the government shutdown is about 31.7 days. Polymarket’s odds of the shutdown lasting 30 days or longer is 63%. That means it is likely there will be no government data other than CPI (October 24) for the Fed’s October 29th meeting. I’m not sure we can get enough data to derail the 25bp ease that is almost fully priced. This also means the data collection for the month of October will be very sketchy. It’s not clear we will have much data for the December meeting.

· Speaker Johnson is refusing to swear in a new member of the House who may be a key vote in releasing the Epstein files. I have no idea what other things PeDo-nald (umm… I mean “The Donald”) can do to prevent the release. Not swearing someone in looks pretty desperate and childish – like they don’t have that many other options. But Kalshi is saying the odds of the Epstein release before the end of 2026 is only 36%. So I’m not sure what I am missing, unless Johnson is somehow using this as shutdown leverage.