The economy is softening everywhere except the one place consumers still feel great about, which is stocks · Daily Briefing

In 30 seconds: A wave of August US economic data releases showed deterioration in consumer confidence, new home sales, manufacturing indices, and labor market indicators, while equity market breadth remained choppy and dividend stocks outperformed tech. The prolonged closure of the Strait of Hormuz has severely curtailed Middle East oil loadings and driven European natural gas futures to their highest levels in over three and a half years due to low storage ahead of winter. Stanley Druckenmiller's widely discussed Wall Street Journal op-ed criticizing US fiscal policy and the Fed's bond holdings has sparked debate about long-term Treasury yields, debt sustainability, and whether AI was used to draft the piece. Germany's economy surprised to the upside with Q2 GDP growth and an improved IFO business confidence reading, prompting Deutsche Bank to double its 2026 GDP forecast, while the German military hit a 13-year high in personnel numbers amid the ongoing Ukraine war.

The peculiar detail: even as expectations fell, consumers remain oddly upbeat about stocks, with the net share expecting prices to rise over the next twelve months well above normal. Housing looked worse. New home prices have fallen to a 5-year low and are now cheaper than existing homes. Labor data offered a mixed picture. The DJ Dividend stock ETF $DVY was beating both the Nasdaq 100 $QQQ and S&P 500 $SPY on a year-to-date basis.

The Strait of Hormuz closure remains prolonged, and the question of how much oil is actually getting out has become its own cottage industry of competing estimates. Satellite imagery of oil ports in Iraq, Saudi Arabia, and Kuwait inside the Persian Gulf, published on Aug 24, offers one lens. Vessel tracking offers another. The loading picture is messier. Gulf oil loadings on a 10dma basis sit at roughly 7 million barrels per day, up about ~2 million barrels per day from early August but still down some ~3 million barrels per day from the peak of 10 million barrels per day. Gulf oil loadings: ~7 million barrels per day. The downstream consequences are arriving. On August 24, traders reacted to the low level of gas in storage ahead of next winter combined with the prolonged closure, pushing Europe benchmark gas futures higher. Natural gas futures settled at $2.85, up 2.4083% on the day.

The numbers in the fiscal picture are not subtle: debt/GDP at 125%, the deficit running at 7% of GDP, and interest expense plus entitlements already consuming 105% of receipts — and growing at twice the rate of revenue. US interest expense + Entitlements as share of receipts: 105%. Those mandatory outlays are growing 2x receipts, a trajectory that makes the math progressively worse even if nothing else changes. US interest expense + Entitlements as share of receipts: 105%. US receipts employment-driven share: 50%. As one macro analyst put it, markets aggregate information no committee possesses, and prices are how that information reaches decision makers — making the long-term Treasury yield, in that view, the most important price in the world. The bond market offered a muted response on the day: the ten-year yield dipped 3 basis points, while oil prices slid 3%. Not exactly panic.

Germany posted GDP growth of 0.4% quarter over quarter in Q1 and 0.3% in Q2. Look under the hood, though, and the recovery is gaining traction but remains oddly unbalanced. Investment: 0.2%. The IFO business confidence survey for August rose more than expected. Whether confidence translates into actual capital expenditure is, of course, the perennial question.