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What do we think this means for markets?
Overall, we think this report, once economists parse through the numbers, will not be as negatively perceived as some were thinking. To be sure, while negative revisions are noteworthy, our overall message remains the Fed needs to move aggressively, but we are not sure that includes 50 basis points to start – especially since financial conditions are still quite favorable. In the past, 50 basis point easings to start a cycle usually included wider credit spreads and higher unemployment rates. For stocks we still see some downward cyclical pressure in September. We see bonds appreciating a touch, and we expect modest dollar weakness. Our major themes remain intact. Focus on productivity, the Security of Everything, the surge in AI energy demand – and how it will be met, and collateral-based cash flows.