The truly instructive detail, however, is that adjusted for CPLie, real retail sales plummeted 0.6% from June's supposedly Goldilocks levels — collapsing right back to where they sat before the Empire hosted the World Cup and threw itself a $2 billion 250th-birthday party — confirming that the entire "resilient consumer" narrative of early summer was less an economic trend and more a temporary sugar high manufactured by a football tournament and a fireworks display. Strip away the confetti, the commemorative merchandise, and the stadium concession stands, and the American consumer is exactly where they were before the celebrations began: broke, stretched, and financing groceries on credit cards at 21% interest, only now without a tournament to distract them from the bill.

The American consumer's economic recovery was powered by the World Cup and a birthday party — and the moment the confetti settled, July's receipts were left to sweep up the mess.

Having spent July celebrating a consumer sentiment "recovery" that consisted entirely of Americans feeling as good as they did before the war started, the University of Michigan has now delivered the inevitable August sequel: sentiment tumbled from 55.2 to 51.0 — missing the 55.0 expected — as the Middle East re-escalated, gasoline prices climbed, and consumers rediscovered that the ceasefire they were briefly cheerful about had been cancelled, re-bombed, and reduced to one vessel transiting Hormuz on a Wednesday. Both Current Conditions and Expectations tumbled, with Republicans posting the steepest monthly decline and sentiment among them now sitting 19% below pre-Iran-conflict readings — the lowest since the 2024 election — a delightful reversal for the demographic that spent the past year insisting the economy was fine.

The US consumer sentiment "recovery" evaporated the moment the war restarted — because it was never a recovery in the first place. It was a ceasefire dividend with a 30-day expiry.

In a development that will have Warren Buffett quietly muttering into his cherry Coke, the post-Oracle-of-Omaha era at Berkshire has officially arrived: new CEO Greg Abel spent a net $20 billion on equities in Q2, including — brace yourself — a $10 billion cheque to Alphabet to fund its AI ambitions, marking the exact moment Berkshire, the conglomerate that spent decades religiously avoiding tech and lecturing everyone about circle-of-competence, finally bought the AI hype right as the Magnificent 7 became the year's biggest laggard. Abel also handed $6.8 billion to homebuilder Taylor Morrison, added to Delta, Lennar, and — in a truly poetic touch — Macy's and the New York Times, while trimming Bank of America, Kroger, and Capital One, and exiting Constellation Brands entirely. The genuinely instructive detail, however, is buried beneath the shopping spree: even after spending $20 billion, Berkshire still sits on $365.5 billion in cash — down from a record $397 billion but still a mountain of dry powder.

🤵 The Macro Butler Weekly Digest 🤵

🌐 The world can pump crude almost anywhere — but only a few fiendishly complex refineries turn it into what moves civilization. 🌐

Read more here: https://themacrobutler.substack.com/p/the-alchemy-of-crude

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