Attack the Week (ATW)

October 6, 2024

Sunday Thoughts

Many moons ago, I gave transcendental meditation (TM) a go. I was in the midst of a managerial battle at one large asset manager and had constant unpleasant run-ins with senior managers about strategy and necessary changes I wanted to apply. I was unbalanced, emotional, and unrelaxed most of the time. I am not a confrontational personality, so fighting my own corner constantly meant personal upheaval. I went to find refuge in daily meditative rituals. I read about TM in a book and knew that good Ray Dalio was a long-term practitioner.

For those of you unfamiliar, TM is a specific form of silent mantra meditation developed by Maharishi Mahesh Yogi in the 1950s. The technique involves silently repeating a mantra—a specific sound or phrase—chosen for the individual by a certified TM teacher. The goal is to transcend ordinary thought, reaching a state of restful alertness, where the mind becomes calm and experiences a profound sense of relaxation and inner peace.

So, I searched some places near where I lived and enrolled in an informational beginners event. I then booked a TM guru to come to our house and get my wife and me “licenced” as new TM members. It took a weekend of afternoons filled with lighting incense sticks and frequent meditation. The guru himself even fell asleep in our chair practising it. So I thought, this can’t be a bad thing. We were given our own personal mantras, which we aren’t allowed to share with anyone, and off we went.

I then started practising it twice daily for 20 minutes each. I stopped doing it after a year or so, but I have to say it worked a bit of magic when I dedicated time. As in any muscle, the mind needs training. The constant thoughts in our heads need directing and blocking in order to figure out what we really are deeply feeling and thinking.

I hope our esteemed monetary leaders in the US are practising a bit of meditative reflection in their offices and analysing their own biases and the path they have set themselves up for at the current juncture. We know they won’t accept a softening labour market, and that’s fair enough, but instead, official data showed them the opposite way. I’m sure a few FOMC voting members might be sweating in their yoga pants while sitting in their stillness. There will be doubts creeping in.

Next week, we will hear from quite a few of them, and I am already getting the popcorn ready to hear their excuses as to last Friday’s stellar data point. “We don’t set policy based on one data point” will probably be the most common sentence to be repeated. I remain sceptical. We know Powell used much of his political capital to persuade his esteemed colleagues to vote for a 50 bps cut. He felt they might look stupid after not cutting in July and hence used an extra bullet to get ahead, which now looks like an overreaction. Those members he pushed won’t be happy.

Let’s remind ourselves of the “dot plot” where 7 members are voting for one more cut and 9 for 2 more cuts. We currently have precisely two more priced for the rest of the year. And remember, that was before more robust data and the latest labour report.

Source: Federal Reserve

I am looking forward to this week’s FOMC minutes release, which will hopefully indicate the heat of the discussion and how close the call for 50 bps ultimately was. Make no mistake, after last week’s number, some voters will open their eyes from their meditations, realising that their thinking is possibly more clouded than ever before.

Let’s now hear Macro D’s latest market musings before we go ahead and scan the upcoming weekly calendar. To finish off, I will get the 10 most important charts I want to have at hand as I navigate next week.

Let’s go!