Take the next 2 days off/'Detox' time/That 'choiceful' customer and the need to be 'neurotic'

Take the next two days off, you need it. I mean this week had it all. Major market volatility in stocks, bonds, commodities and currencies, big economic numbers, geopolitical and political drama, trade tensions and a bunch of important earnings releases (mostly from retail and some tech).

I think non voting member Raphael Bostic said it right yesterday when it came to the economy and their policy from here, "The question is, how does this all sort out? I'd be surprised if we got a lot of clarity before the late spring into summer."

We know of course they are looking for particular clarity on tariffs but I need to highlight how important the direction of government spending is to the economy. I am fully supportive of cutting government spending, especially the wasted kind and reducing our out of control debt ratios relative to GDP. A nearly 7% budget deficit relative to GDP in particular is more than double and sometimes triple what our developed economy peers have between 2-3% for Europe, Japan, Canada, etc... You want to know the reason why the US economy has outperformed just about everyone else, it's because of the massive amount of our government fiscal blowout. So, this must get under control. However, there is a short term economic cost to this. What is a key reason why US corporate profits have been so robust over the last 5 years? All that government spending relative to GDP which ends up in some form in the private sector, whether via a direct transfer payment, a payment to a healthcare provider, a defense contractor, a landlord, a restaurant, to retirees via social security, and I can go on and on.

In other words, the deficit at the federal government level is a surplus at the private sector corporate/household level. It's not an opinion, it is math, an accounting fact. The needed long term gains of controlling US debts and deficits and slowing its trajectory has short term negative economic consequences to bottom line it.

Scott Bessent on CNBC this morning acknowledged all of this by saying "There's going to be a natural adjustment as we move away from public spending. The market and the economy have just become hooked." Indeed we have. He said it's "detox" time.

I heard about this over the last few weeks but will highlight it today in light of people continuously talking about the negative GDP estimate from the Atlanta Fed for Q1. One of the factors in their model, that is actually NOT included in the government's report on GDP, is the massive amount of gold imports we saw in January, particularly from Europe/UK into US vaults. This took place to avoid any tariffs but the jump in gold imports was a factor in the blow out US goods trade deficit which the Atlanta Fed captured, but the actual GDP figure will not as it will take this out.

On to some earnings.