We believe the market must make better sense of the economy even though we can see from the Bubble Monitor dashboard that investors currently are of the opinion that everything is on the mend. Commodity costs are moderating, and everyone is back to work, or so it seems. But something still doesn’t seem right. Lower oil prices are at least a partial function of the government releasing 1MM barrels/day from its strategic reserve and that can’t last forever – well at least until the midterms! In any case, an +8.5% CPI-U number is still very high, even if it is lower than the June number by 50 basis points. While unemployment is low, the number of people who are actually working (i.e. the labor participation rate) remains substantially lower than pre-covid. And then there is consumer spending… Retail sales came in flat m/m during July even as gas prices fell and that doesn’t seem intuitive. Gosh, even Target was forced to deep discount non-essentials to right-size its bloated inventory. All the restaurants agree that the lower-income demo is struggling. Well, of course, they are with the rent CPI number up +22% y/y in July – that will quickly drain a few pocketbooks. In the meantime, the Fed continues to push interest rates (including mortgage rates) higher, making a huge renter class of people now priced out of home ownership. We are happy that inflation may be plateauing, and the unemployment headline number is low, we really are. However, it would be reassuring to us if the market would demand a little more economic substance for this summer rally because that is the best hope that the structural problems will be addressed in earnest.