Consumer strength, future inflation concerns, and behold, AngelList data

Welcome to Cautious Optimism, a newsletter on tech, business, and power. Modestly upbeat.

Consumer spending came in better than expected, right after we got some pretty good inflation prints. The gist? The economy is still trucking along, even as prices slow their ascent. Should be good for 50 bips in September, right?

• 📈 Trending Up: Consumer health? … Black Forest Labs … Crypto in India … Ukrainian advances in Kursk … consumer interest in Polymarket … ChatGPT searches, now that school is back in session …

• 📉 Trending Down: Commodities prices in China … neobanking margins … Alibaba stock after earnings … Katy Perry …

• 🤔 What Else?:

  • Former Google CEO Eric Schmidt said that Google was losing the AI race due to remote work policies, comments that he is now walking back. It’s always funny to me that the people who are usually the least present the office. — executives — are the ones demanding that others return. Also, does anyone think that Schmidt actually thinks that he misspoke and that his cleanup is anything other than cynical ass-covering?

  • The OG Microsoft Surface is coming back? From Apple? Bloomberg reports that Apple is working on a new device that offers a tablet on an arm. Probably a good-sized tablet, perhaps one that you can use in a flat manner? A big, flat touchscreen computer is not actually new. Nope, Microsoft once made a Big Ass Table that was amazing. I still want one. Apple, please make the original Surface great again, I will buy one.

  • Funding to Black founders falls: Dominic Madori Davis reports that Black founders are raising less as a percentage of venture capital disbursement than in prior years. Or, put another way, an already dismal metric is getting even more grim as time passes.

  • Behold, Hunter Walk’s AngelList account: Want to know what it looks like to invest in a number of venture capital funds? Venture capitalist Hunter Walk wrote about his returns thereof, using screenshots from his AngelList account to make the point that it takes quite a lot of time for investments of that sort to mature. The data is really worth a look. (Also I am now going to use the cherries and lemons line in day to day life, as it’s super useful.)

  • Why does everyone want more inflation? Former President Trump is boosting his tariff plans, which would drive inflation up in the United States. His plan to mass-deport labor also wouldn’t help. Trump’s policies for a second term are pretty darn inflationary, before we even get to anticipated larger deficits due to proposed tax cuts.

    • And current Vice President Harris is trending in the same direction, albeit from a different angle. She’s working on a plan that appears to rhyme with price controls. Which don’t work. And would throw the supply-demand curve out of whack and, I presume, lead to higher consumer prices over time. Which would be, you guessed it, inflationary.

How Grok draws “inflation.” This was a letdown.

Everyone’s guessing right now

The market often trades on the inverse of results. If investors are more interested in rate cuts than near-term economic data, a strong print from one metric or another can send shares lower, for example. Alternatively, a too-weak data point could imply that rate cuts are late can also send shares down; sometimes, we see data come in weak but not too weak, implying that cuts might come in time and we’ll get a soft landing. Up go stocks.

Then there’s today, where we saw better than anticipated economic data — retail sales +1% and not the 0.4% that was expected — and that is cheered because investors are supremely confident that rate cuts are coming, so positive economic data becomes just that, simple good news.

Soft landing? Hard landing? No landing at all? Everyone is guessing right now. Watching the market whip around based on weird combinations of vibes, data, and expectations — hopium and copium, I suppose, in alternating quantities — has been highly entertaining, given my personal investing time horizon of decades and a regular index fund strategy. I don’t really care what the market does any given day, but my gosh is the ground beneath us unstable.

Mix in an election and rising geopolitical tensions and we’re living out the best of times/worst of times dichotomy. Keep calm and dollar-cost average on, I suppose.