Key Takeaways
- August PMIs show manufacturing softening (53.2) while services and composite beat; Philly Fed employment and expectations hit cycle highs.
- Treasury Secretary Bessent says deficits have likely peaked, but bond markets and skeptics push back.
- Top AI application firms are building their own open-source models, treating OpenAI and Anthropic as competitors.
- Nevada reverses a decade-long ride-hailing freeze to approve up to 8,000 robotaxis.
- Long-run returns (S&P 500 +12.2% annual since 1985) undercut the 'dollar destruction' narrative.
1. US Macro Data and Market Signals
- August PMI data was mixed: manufacturing fell to 53.2 (below 53.9 expected and prior), while services climbed to 56.8 (vs 54.0 expected, 54.6 prior) and composite to 56.0 (vs 54.0 expected, 54.5 prior). The strong services and composite readings suggest the economy remains resilient despite manufacturing softness. — via 1
- Philadelphia Fed's August survey showed strength: employment metrics were broad-based, with employee numbers and the average workweek hitting cycle highs. Adjusted by ISM methodology, the manufacturing gauge remains in expansion, and six-month expectations for activity and capital spending reached multi-decade highs. — via 1 2 3
- Leading indicators turned positive: The Conference Board's LEI posted its first positive six-month annualized change in four years, with nine of ten components rising. This supports the view that cyclical momentum is improving. — via 1
- Treasury Secretary Bessent said the fiscal deficit has likely peaked — a disputed claim, as bond markets erased gains from his buyback announcement and Jason publicly bet against it. — via 1 2 3
- Long-run returns contradict 'dollar destruction': Since 1985, gold rose 6.8% annually, cash compounded at 3.4%, the S&P 500 returned 12.2%, and 10-year Treasuries returned 5.8%. Comparing gold prices without counting interest is flawed; even counting it, the claim fails. — via 1
- Bond yields are a growing market focus: Liz Ann Sonders' latest podcast discusses how rising global bond yields affect stocks, with an interview of Jim Bullard. — via 1
2. AI and Tech Trends
- Energy and compute are the new GDP inputs: Raoul Pal argues growth now depends on falling electricity costs and the intelligence extracted from chips, following a solar-like cost decline path. — via 1
- AI app-layer firms are moving off frontier models: Jason notes top application companies are building open-source models to avoid depending on OpenAI and Anthropic, which they increasingly view as competitors. Harvey is the latest case; he also flags Anthropic's lead over OpenAI and OpenAI's IPO chatter. — via 1 2 3
- AI debate has gone off the rails: Aswath Damodaran writes that, less than four years after ChatGPT, AI dominates business and investing conversations, but participants are talking past each other; he attempts to bring structure to the discussion. — via 1
- Nevada fast-tracks robotaxis: After a decade of blocking ride-hailing, Nevada approved up to 8,000 robotaxi deployments within a year. The policy swing is a notable signal for autonomous vehicle adoption. — via 1
- Crypto clarity push: Marc Andreessen thanked the White House and CFTC for crypto innovation support and urged Congress to pass the CLARITY Act immediately. — via 1
- Public support favors nuclear over data centers: Almost three times as many people support building nuclear plants near homes (44%) as support data centers (15%), a potential hurdle for AI infrastructure. — via 1
3. Investment Strategy and Market Moves
- The global market portfolio is the bar: Meb Faber says any new investment must improve absolute returns, lower risk, help investors stay the course, or cut costs/taxes. Most 2-20 hedge funds, thematic funds, and pet projects fail these criteria. — via 1
- AI models disagree on trend allocations: Claude/Gemini suggest 15% for pension trend-following, ChatGPT 25%, Meb AI 35%, Grok 40% — but almost no CIO allocates that much in practice, highlighting the range of AI recommendations. — via 1
- David Booth on DFA's history: Faber interviewed DFA founder David Booth, covering the first index fund (1971), Fama-French factors, the AI boom, and DFA crossing $1 trillion AUM. Booth also bought the original rules of basketball for $4.3 million and donated them to Kansas. — via 1
- ETF M&A intensifies: T. Rowe Price acquired F/m Investments, a ~$20 billion ETF issuer, signaling continued consolidation in the ETF industry. — via 1
- Muddy Waters targets $SRAD: Muddy Waters says there were efforts to suppress the 1xBet reference in its report, alleging $SRAD holds U.S. licenses but depends heavily on a gambling group with a criminal record. The claim is disputed and unverified at this time. — via 1 2
- Gen Z investors are betting on sports over markets: A Betterment survey found over half of Gen Z investors diverted funds to sports betting at least once this year, and they are most likely to see it as part of long-term financial strategy. — via 1
