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TheBRRR’s Thoughts

GM.

I’m back in Florida - the honeymoon was fantastic.

Between surfing on a remote beach in Mahé, observing wild cheetahs, lions and elephants while on safari and spending all the quality time with my lovely wife, I couldn’t have asked for a better trip to Seychelles and the Serengeti.

First, a few photos.

Now onto the news flow.

Conveniently for the newsletter, markets have traded in a tight range with little volatility over the last few weeks. Here are the narratives we’ve paid attention to:

• Tech has walked mildly higher and crypto as walked mildly lower, so the newsletter’s portfolio is essentially unchanged (+0.5%) since the last update.

• In regard to central bank policy, broad consensus that the Federal Reserve will kick off an easing cycle in September remains, as markets continue to price in 100 basis points of interest rate cuts by the end of the year.

  
  This consensus was cemented by Powell at last week’s economic symposium in Jackson Hole.
  
  Powell unequivocally claimed that the Fed felt great about the path of price inflation, and that they were committed to supporting the weakening labor market instead of battling high prices.

• Election odds have seesawed around 50-50, while Wall Street has grown wary of the impact of the proposed Harris-Walz tax policy.

  
  The policy, detailed in a document outlining Harris’ economic plans, called for a tax on unrealized gains on Americans with over $100m in net worth.
  
  The tax would be destructive for asset valuations and startup funding, as newly successful founders would be forced to sell off large chunks of their companies to pay the tax on their paper wealth.

Have a great long weekend!

Soft Core PCE Reading Sets The Stage

WHAT HAPPENED:

• The Fed's favored inflation metric, Core PCE, came in below expectations on a YoY basis at 2.6%, missing the 2.7% estimate and showing no change from the previous month. Monthly data remained steady at 0.2%.

• The headline PCE index aligned with forecasts, showing a 0.2% MoM increase and holding steady at 2.5% YoY.

• Durable goods prices fell, dragging down Core PCE, while service costs continued to rise, keeping inflation elevated. SuperCore PCE, which excludes food and energy, rose 0.2% MoM, maintaining an uncomfortable 3.25% YoY.

• Meanwhile, consumer spending outpaced income growth again, leading to a drop in the U.S. savings rate to 2.9%—the lowest since June 2022.

WHY IT MATTERS:

• The savings rate plunge signals that consumers are stretching themselves thin, relying on spending beyond their income—an unsustainable trend.

• Despite this, inflation, particularly in services, is stubbornly high. This is likely related to the cumulative effects of wage inflation.

• The broader implication? Consumer resilience appears to be on shaky ground, bolstered by government handouts, yet inflation remains persistent. This situation could lead to a vicious cycle of inflation and economic stress—potentially a setup for the kind of policy errors that could unleash a hyperinflationary spiral, reminiscent of the Arthur Burns era.

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The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.ll