| Dear Reader,
We’re now just a week away from the U.S. Federal Reserve’s June meeting, and it’s become abundantly clear that Powell will NOT be cutting rates.
These interest rate decisions have been a major focal point for investor attention over the last year, and rightly so. Rates are still relatively elevated from where we’ve had them over the last few years, and that creates a tough environment for some of the market’s most promising tech companies.
But today, instead of diving into the deeper details, I thought I’d start with the why…
Namely, what qualifies me to make these kinds of predictions — and why my expertise in the labor market can translate so directly to predicting the economy’s future:  | 
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Before we jump into talking all things economics and how that may affect the markets out there, I want to share some personal things.
First, I would like to pay my respects to the passing of a great musical genius, Sylvester “Sly” Stone. He was the leader of the band Sly and the Family Stone, fantastic music. And the messaging … so on point. He just wanted to take us higher. And if I had a theme song for Moneyball economics, that would be it. So wherever you are, I miss you and I'm going to be listening to your music all night long.
On a more personal and more positive note, I'd love to share with you the fantastic news. My firstborn, my son Ari, he just graduated high school today and I'm so excited for him. He's going off to West Point in a couple of weeks to start his college career and the next leg of his life journey.
Ari, I love you. I respect you, and I couldn't be more proud of you, son.
Alright, so having said that, let's talk economics. What gives me the right to talk economics?
Well, let me share with you at least one thing that allows me to have some insights into what's going on in the economy. You often will hear me say, “I'm a top ranked economic forecaster on Bloomberg.”
Bloomberg, as you may or may not know, is the preeminent source of information for fund managers, portfolio managers, banks, you name it. Everyone goes to Bloomberg to get information and analysis. Now, there's different kinds of information out there. There are surveys, call 'em soft surveys. “What do you think is going on?” And then you've got hard data. This is where inflation is, and then you've got forecasts.
See, Bloomberg is kind of a clearinghouse. Whenever you hear something in the news like “consensus expects payrolls to be blah, blah, blah,” what they're doing is they are basically citing Bloomberg.
And Bloomberg gets that consensus by reaching out and asking professional economists for their opinions, their forecasts of where certain economic data is going to be, and then they come up with what the median is. And that's the view. Well, the economists who are invited in are professional economists at leading banks around the world. It could be Goldman, it could be Citibank, it could be myself.
So I'm one of about 80 forecasters out there. Professional economists who are looking at economic data and saying, this is where I think it's going to be. So in my case, I focus on a lot of the consumer stuff. I focus on retail. I focus on weekly jobless claims, and I focus on payrolls by focusing in on what's going on in the labor market.
That gives me some unique insight into is the Fed going to cut rates or raise rates because they do it based on what's going on in the labor market or the consumer out there?
Is the economy growing or shrinking based on, again, jobs? Are they growing or shrinking? What's going on with retail? Are consumers spending yes or no?
So in essence, my area of focus tends to be the area of focus that you want to be, to get a finger on the pulse of the economy at large. And when it comes to Bloomberg, they obviously rank. There's 80 of us out there, they're ranking us. And you oftentimes hear me say, “I'm a top forecaster.”
Well, the reality is I'm not a top forecaster. I am the top forecaster.
So I am number one for payroll forecasts. What that means is I have had consistently a much better handle on what's going on in the labor market. And again, by having that unique insight into what's really going on in the economy and as it manifests itself in the labor market, I'm now bringing that insight into, well, what else is going on in the broader economy?
Because we know what happens in the economy suddenly happens in the stock markets and in the bond markets. This isn't Vegas. Whatever happens in Vegas stays in Vegas. Whatever happens in the economy doesn't stay in the economy.
So let's cut to the chase.
Where are we in the economy or more critically, where are we in the economy such that the Fed may or may not be cutting interest rates next week?
Well, the reality is the Fed's not going to be cutting interest rates next week. I thought they would. Quite frankly, I thought we were going to have a rate cut, but the economic data just hasn't been weakened up. There's nothing urgent in the economic data. So right now you're not seeing a yellow, much less a red, and we're probably not going to see that even in July.
And so if you are looking for a rate cut, September is more likely, and in fact, this is what the markets are expecting. So in September rate cut, boom, you'll see the stock market surge, for example. But right now, no rate cut. That's okay. The markets have already priced it in. Continued below | 
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Click here to view our presentation, ASAP >> | Why aren't we going to see a rate cut? Well, again, the economy's kind of in this goldilock zone. Payroll's a little soft, but not critically soft. Jobless claims a little bit high, but not critically high inflation. Well, this week we get inflation, we get CPI and we get the producer version, the PPI. What are factories and what are consumers facing in terms of inflation?
Well, the markets are expecting a little bit of a move up. That's again, priced up, priced in. So if inflation comes in and it comes flat or low, you're going to see the market's very happy.
If it comes in a little bit up, you're, again, the markets are going to just ignore it because everyone expects a little bit of inflation because of tariffs. Let's face it, you raise the cost of imports eventually that's going to make its way into the broader economy. Doesn't matter what retailers or factories are doing behind the scenes to address rising costs from tariffs, they're not going to be able to address all of it. So consumers are sitting there facing a little bit more inflation.
Again, it's all priced in.
So right now, there are no surprises expected. I'm not seeing any reason for surprises to be out there. And later this week I'm going to talk about what's going on with the consumer because they are the bedrock of this economy, and we've got retail figures coming out next week, and retail is critical to tell us what's really going on when it comes to the consumer behavior.
Not so much their sentiment, but their behavior. And to be honest, right now, sentiment is actually pretty strong. We're going to talk about that again later in the week.
In the meantime, we are looking at a bullish stock market. I've been telling you for months to buy, buy, buy, because got to buy the dip, man, this market's going up because the economy's going to be going up.
We're going to win it folks.
Zatlin out. 
Andrew Zatlin
Editor, Moneyball Economics |
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