JD Straight Up - 4Aug25 - Lies, Damn Lies, and Statistics

Lies, Damn Lies, and Statistics

Drulard Family Capital Fund

Fortnightly Macro View

JD Straight Up:

S&P 500 at 6307 – flat from 6332 two weeks ago

VIX at 18 – up 13% from 16 two weeks ago

10yr Treasury yielding 4.22% (down 3% from 4.36% two weeks ago)

Agg (US Aggregate Bond Index) at 99.12 – up 1% from 98.46 two weeks ago

Gold at 3426 per oz (up 1% from 3408 two weeks ago)

Crude Oil (WTI) at 67 per barrel (flat from 67 two weeks ago)

Bitcoin at 115k (down 3% from 118k two weeks ago)

JPM shares at 293 (flat from 292 two weeks ago)

Deutsche Bank shares at 33.58 (up 10% from 30.51 two weeks ago)

Truist shares at 43.40 (down 4% from 45.19 two weeks ago)

Blackstone shares at 170.24 (up 1% from 168.36 two weeks ago)

Magnificent 7 Index at 363 (flat from 363 two weeks ago)

US unemployment: at 218,000 in latest claims – down 1% from 221,000 two weeks ago - we think; probably; maybe; not sure...

EUR at 1.16 USD (down 1% from 1.17 two weeks ago)

GBP at 1.33 USD (down 2% from 1.35 two weeks ago)

Macro Environment

Inflation rate in US is running at 2.7% while EU is at 2%.  US GDP growth rate is 3% while US deficit is growing at 6%.  US continues to negotiate trade agreements and tariffs with all major counterparties.  Wars continue in Ukraine and Gaza with political pressure mounting on Israel regarding humanitarian relief for Palestinian residents and refugees.  US 10yr Treasury shows some strengthening to bring yields down to lowest level in 2025, but they are still well above 4%.  US mortgage rates remain near 7% and housing market remains stalled.  Risk assets show signs of plateau as volatility increases.

Macro View

Critical indicators are inflation, government security yields, confidence (consumer, investor, corporate), employment, debt levels.  It is increasingly challenging to sift through presumably official and reliable statistics on these indicators to have an objective view of what is transpiring.  Many are subject to restatements or to changes in compilation or calculation.  Getting a set of data that is comprehensible and comprehensive is difficult.  Yields and market prices are occurring after the impact of the indicators makes it way into prices, so having valid indicators and being able to use them for projections is imperative.  The latest critical indicator under assault is US employment data.  The administration does not agree with its execution or narrative and is looking to revise it.  Constant debate is going on regarding inflation data and if CPI, RPI, PPI, and other metrics accurately reflect price changes.  The more these data are improved or altered, the more challenging it is to derive any direction from them with any degree of confidence.

Relevance

Changing or discrediting data creates more uncertainty.  Markets need a degree of certainty to function.  When there is lack of agreement on what is in the data or what it means, dislocations happen.  The collateralized securities market during the GFC is a good example.  When nobody could agree what was in the CDO and how it should respond to changes to the value of underlying mortgage assets in MBS that were pooled into CDO, the bid disappeared and the market broke.  Not all data and statistics are going to be optimal but many are sufficient for practitioners to understand and accept and to do so over extended periods of time so that data tapes can be built.  The more of the critical indicators that we remove, obfuscate or replace, the more uncertainty and hence the more broken markets.  Trade requires trust.  Whether amongst countries or between investors.  Ours is wearing thin.

Head Scratchers

1 - Which statistics can we actually rely on?  Government?  OECD?  World Bank?  Central Bank?  Is anyone entirely objective, consistent and accurate?  Or is it a constantly evolving, moveable feast?

Drulard Family Capital Fund

Drulard Family Charitable Fund

www.drulardfund.com

#22- 4Aug25