Waiting Game.

So this is a waiting game.

We’re waiting for Yellen and Draghi at Jackson Hole, and we’re waiting to see if the gridlock in Washington will end up triggering a government shutdown or worse, a catastrophic default. Trump isn’t helping:

Just to give you an idea of how absurd this has become, have a look at the following annotated chart for August which shows you just how much crazy (“crazy” is a noun there) Trump has managed to pack into 3 short weeks:

On Thursday, stocks were marginally lower. This is still on pace to be the worst month for the S&P since last October and only the second losing month in 10:

The grocers were crushed as Sprouts, Kroger, Costco, Wal-Mart, and Target all turned sharply lower after Amazon and Whole Foods announced their deal will close on August 28 and, more to the point, Whole Foods announced a new push to lower prices:

I don’t want to be an alarmist, but if you’re in Kroger or Target, I think it’s time to consider the possibility that sooner or later, Jeff Bezos is going to put you completely out of business. Obviously WalMart and Costco are going to be harder to bring down.

If the Fed was wondering what “structural deflationary force” looks like, here’s a visual:

As we get ready for Draghi, it’s worth stepping back for a second to appreciate the extent to which the euro has rallied this year:

So that’s what Draghi is staring down.

“If he shows lack of concern, EUR/USD could easily climb a cent or more on Friday afternoon amid very sparse end-of-week liquidity that will prevail around his 3pm ET appearance,” traders told Bloomberg, adding that “conversely, the shared currency could fall by that amount or more if the usually cautious central banker offers some pushback to its recent outperformance.” Recall that the ECB chief didn’t use his Wednesday speech in Germany to try and jawbone the single currency lower, but you’re reminded that the latest ECB minutes flagged “FX overshoot” as a considerable risk.

European shares moved cautiously higher, rising for the second time this week. It’s been a sideways-ish affair, although UK shares have managed to outperform as the pound continues to show signs of Brexit-fatigue:

“It’s hard to argue a bullish case for sterling in the near term [as] Brexit concerns and negative wage growth have taken away the reflation theme that the euro region is currently enjoying,” Bloomberg’s Anchalee Worrachate wrote earlier today.

The UK GDP data we got on Thursday didn’t do much to embolden sterling bulls, printing in-line with the preliminary estimate. As you can see, the UK is the G-7 laggard:

(Bloomberg)

Also notable: BoJ ETF buying has now “succeeded” in decoupling Japanese equities from the yen:

Oh, and there’s “good” news for the active management crowd – investors “only” yanked $100 billion in the first seven months of the year and as Bloomberg noted on Thursday, “the 1.2-to-1 outflow/inflow ratio is down dramatically from 2015 and 2016, when $1.90 left mutual funds for each dollar that went into ETFs.”

Golf clap…