InsideArbitrage Special Situations Newsletter: August 2023

The U.S. economy is humming on all cylinders. We not only saw Q1 2023 revised upwards to a 2% growth rate last month, we printed a 2.4% annualized growth number for Q2 2023 last week, topping estimates of 2% growth. Spending was broad-based across consumers, the private sector and government. Inflation dropped to 3% and June unemployed remained unchanged at 3.6%.

This isn’t a Goldilocks economy, this is a miracle. I looked at data going back more than three decades and never have we increased interest rates by such a large magnitude and in such a short period of time. Four back-to-back 75 basis point interest rate increases were not a scenario anyone would have had in their models going into 2022.

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