There’s a common idea on Wall Street that US economic strength is on the precipice of significant deterioration without significant Federal Reserve interest-rate cuts over the next 12 months. Apollo’s Torsten Slok just doesn’t see it. Looking at travel spending, retail earnings, restaurant and hotel bookings, “we have a general picture that the economy is just not slowing down,” Slok said this morning on Surveillance. “This whole narrative that we’re slowing down is just not evident in the data, so that’s why I think that we should, in markets, think about the outlook for the Fed with that backdrop.” Slok’s takeaway: It’s foolhardy to price in substantially lower benchmark borrowing costs without understanding what “normal” looks like in the post-pandemic economy. He expects a policy move next month, but beyond that, who knows. “I think they have agreed now that they will cut interest rates by 25 basis points in September, but after that, I think everything is open, because the data is not slowing down,” he said. Put another way, Slok said, the Fed last hiked rates in July 2023 and the economy still isn’t seeing the weakness many expected. He referenced Samuel Beckett’s play, Waiting for Godot, about a character who never shows up, saying, “If Godot didn’t arrive here over the last 18, 24 months, why should Godot arrive in August of 2024?” Slok’s comments were accentuated by a drip-feed of retail earnings throughout the morning, with reports from Target Corp. and TJMaxx owner TJX Cos. seeming to confirm the idea of a resilient consumer. Analysts may ultimately be debating a question of degree. Perhaps there are signs of less consumer spending, but maybe it’s just heading down to something that looks more normal rather than careening toward a recession. “The trend is the labor market is slowing, but not slowing as catastrophically as some of the bears would have us believe,” said Krishna Memani, Lafayette College chief investment officer. But Citigroup’s Veronica Clark had a different take. She expects the Fed to cut rates by 100 basis points this year, with a 50 basis point rate cut next month and one of a similar size in November. “The bar for starting with a 50 basis point cut in September is actually pretty low,” Clark said. “There’s just been multiple months now where the unemployment rate has been rising.” The key issue for Clark is that once analysts appreciate the big uptick in jobless rates, it’s too late. “There are really asymmetric risks around a weaker labor market,” she said. | 
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