The Year was 1816

Will this be a year without a Summer?

Let’s touch on a few key points this week. Next week I’m going to take a break and then release my assault on the burning house of fiat. The Bitcoin piece from the last two weeks can be downloaded as a PDF here.

War Update

In the summer of 1989, I returned from freshman year college to live and work in San Francisco. I held three jobs — mail clerk at a law firm, valet parking attendant, and designing an inventory control system for an apparel company. You can guess which one paid the bills (hint: it paid good tips). But I also picked up my lacrosse stick for the first time in six months and played adult club lacrosse with some of my high school buddies.

I was a mediocre crease defense. Good enough to play varsity at the high school level, but nowhere good enough for Penn. Fine for club. But one day that summer, I pulled an All-American NCAA lacrosse attackman as my coverage. It did not go well. Our goalie stopped a shot, and pitched it out for me to clear. Being clever and lazy, as most 19-year-old men are, I decided I’d pull that attackman off the midfield line, towards me, and increase the space available to my mids. I distinctly remember the look of exasperation on his face — “Are we really going to do this?” He began to jog towards me. I patiently waited. When he pulled far enough off the mids, I prepared to pass. His jog became a sprint. The ball left my stick headed to a midfielder…

Which was when this attackman jumped seventeen feet into the air, picked off the pass, and before he hit the ground had dumped an assist to wide open wing attack. And that was when I knew I had better work harder on that inventory control system. Because my future was not in sports.

The relevance? “Are we really going to do this?”

I know what the headlines say, “Talented upstart defenseman holds all-star attack at bay in early play!” I also know what really happened.

Oil is now transiting the Straits of Hormuz. The US Navy is in the Strait. The IRGC appears powerless to stop them. You’re welcome to disagree. But facts are facts.

Inflation

A “disappointing” inflation report reinforced a few key themes. First, remember that “residual seasonality” has corrupted the seasonally adjusted inflation data we receive. As a result, CPI is overstated in Q4 & Q1 and understated in Q2 & Q3. The February PCE and March CPI captured the two largest seasonal impact months; that is over now.