In a Tuesday article for The New York Times, Lydia DePillis described the US macro backdrop in terms befitting of “Oblivion,” which regular readers will remember as the July 2023 Monthly Letter.

“The American economy feels a little bit like a hot August afternoon,” she began. “The air is heavy and still, as lightning flashes on the horizon. The storm could sweep through and leave destruction in its wake. It could set in for a brief drizzle. Or it could pass by in the distance, and take its fury elsewhere.”

That’s a flowery way of saying the US could succumb to recession or not, and no one will know which until the storm’s upon us. Or not.

Early this week, SocGen’s Kit Juckes made a similar observation, tying it into the dollar, which has traded more or less sideways since selling off more than 10% from YTD highs.

“I think we are trading FX on shifting expectations about growth, more than anything else,” he wrote. “With brains scrambled by weaker correlation between risk and FX, rates and FX and so on, we buy currencies of countries where we are becoming more optimistic about the growth outlook” and vice versa.

As the figure from Juckes shows, growth expectations are drifting sideways — “meandering meaninglessly,” as he put it — with the greenback.

If you ask Kit, that sets up markets for outsized moves in the event top-tier data due early next month delivers any big surprises. ISM manufacturing and, of course, the jobs report, are the most important “even if plenty of the people I meet are now deeply skeptical of the quality of the data,” Juckes went on, quipping that his efforts to play down such concerns by reminding clients that America’s jobs data “is still much more reliable than is the case in the UK” have so far failed to impress.

Ahead of Powell’s last Jackson Hole, Juckes cast doubt on the idea, perpetuated by Donald Trump and his surrogates, that Jay’s been cruelly hawkish or, more politely, unduly obstinate. Powell “presided over an economy whose average growth rate has been 2.7% and CPI inflation has averaged 3.3%,” Juckes remarked, before exclaiming, “That doesn’t look too hawkish at first glance!”

Coming quickly full circle to the summer storm analogy, I’m reminded of Jamie Dimon who, during off-the-cuff remarks at a conference early in 2022, famously said there’s a “hurricane right out there, down the road, coming our way.” The only question, he mused, is whether “it’s a minor one or Superstorm Sandy.”