Beige Book

Maybe I'll replace you with AI, you know, and workers have lower bargaining power.

So we actually literally measure those things, and using that, we're able to say, "Hey, this is the wage, actual wage pressure that earlier you just had to noisily model using that noisy services CPI and the lagged employment cost index." So our thing is available in real time, and the good thing is it tracks all the theoretical stuff that we grew up with, like vacancies over unemployment, you know, things like that, or the Fed Beige Book.

So it just basically takes the same macro concepts that we're comfortable with, but because it measures them directly and in real time, it's just better.

You know, something like, I mean, if we sort of be very reductive here and say something like you're monitoring tweets around workers complaining about it's hard to find a job or something, how do you separate the issue of more people using Twitter or X than before? Is it just that more people are using it, and so that's is a reflection of more use of a platform-

So you'd expect a central bank bringing in lots and lots of information, and different central banks do this in different ways.

Famously for the US Federal Reserve, there's the Beige Book, and that is a survey through all of their regional federal reserves, pulling comments from businesses to get on-the-ground insights about what's happening within the economy and different pressures that are being faced In the Australian perspective, the RBA has a number of staff that go and conduct more than 100 meetings each month with different firms across the economy and pull a lot of data in that they use in addition to all of the official data and other sources around the economy in order to enrich that view around the economy.

So that's what the RBA does around its business liaison program.

And you'd expect that they would be doing that as a central bank.

They're talking to businesses, community organizations, economists, market experts, labor representatives, consumer representatives.

And all of these are compiled into a document called the Beige Book, which is published on Wednesday, two weeks before the Open Market Committee meeting.

And increasingly, beyond all that, the Fed has also paid close attention to other indicators of current economic activity, including so-called alt data.

And those efforts have been aimed at attempting to take advantage that We live in an era where we're bathed in economic information.

And of course, they review all of the economic data from the 12 regions.

And that's called the Beige Book.

It's all compiled into a book that just happened to have a beige colored cover.

So traditionally, we call it the Beige Book.

But what they do is they analyze what the 12 regions are doing.

What does the economy look like? Unemployment, inflation, growth, whatever.

It's a very different environment than a few years ago, where businesses were able to not only pass on like, a $1 of cost increase to consumers, they could actually kind of boost it a bit, like $1.02. Well, now it's very different.

You know, the Fed's Beige Book itself has talked about how businesses are feeling like they're not able to pass on those cost increases, so that shows up, um, in terms of the margin pressure.

So not only do we have kind of this uncertainty around the growth outlook with some of the growth parts of the market, but now we also have concerns about the margins.

So to me, this is a recipe for a little bit more of a pullback here, kind of g- reestablish what's the foundation, what's the quality of the businesses that we're investing in, their ability to protect those margins and still grow.

The summer season was very healthy for tourism and for travel.

So the Federal Reserve's August Beige Book noted that consumer spending was strong throughout the entire summer months.

And that's coming off the back of strong tourism and travel and increased spending by highest earners in the U.S., So we're seeing that consumer spending is staying healthy and we're seeing that jobs numbers are staying pretty healthy right now.

The unemployment rate currently in August is down to 4.1%.

Better history is not the same as easier mobility.

You also had that Beige Book detail in the notes.

Only two districts reporting broad-based hiring pickup.

Everything else was still selective.

And I mean, prices are certainly ridiculous, but it's nothing like it was during COVID or during, not COVID, but 2021, 2022.

Like if you read the Beige Book, the Fed has this thing called the Beige Book, the eight branches that Fed put out.

They go and talk to captains of industry and people actually on the front lines of the economy and ask them what their concerns are.

They talk about concerns about prices and things going up, but it's nothing like it was during the inflationary sort of storm we had in 2021, 2022.

Back then, if you go and read the Beige Book, it was like every respondent is concerned about prices, like every respondent saying they got to hike prices.

And it's not happening.

So I don't know.