Let's now ask New York Life's Lauren Goodwin. She joins us now. Lauren, record highs for the S&P and NASDAQ.It's like a broken record at this point. Did anybody, including yourself, really expect that we were going to see this constant ratcheting up. Not massively so, but a slow meltup of record highs throughout the course of 2025.I don't think so. Especially not after liberation day. And my estimation is that we are likely to see market jitters associated with all the policy change that we've been getting ...

Monetary Policy and Federal Reserve Actions - The U.S. Federal Open Market Committee (FOMC) is expected to cut rates for the first time in 2025, following a total reduction of 100 basis points in the last three meetings of 2024 [1] - A 25 basis point cut is virtually guaranteed, with a possibility of increasing to 50 basis points, which would set rates between 3.75% and 4.00% for the first time in nearly three years [3] - The labor market is weakening, with a loss of 13,000 jobs in June, while inflation is slowly rising, influenced by tariff policies [2] Political Influences on the Federal Reserve - The politicization of the Fed is complicating monetary policy decisions, with President Trump criticizing Fed Chair Jerome Powell for being slow to reduce rates [4] - Fed Governor Lisa Cook was fired by Trump amid accusations of personal financial wrongdoing, but a federal judge reversed this decision, leading to ongoing legal disputes [4][5] - The Senate is set to vote on confirming Stephen Miran, a pro-Trump official, to the FOMC, who has previously advocated for a 300 basis point rate cut [5] Manufacturing Sector Performance - The Empire State Manufacturing Index reported a negative reading of -8.7 for September, significantly below the expected +4.5 and a decline from August's 11.9 [7] - This negative trend is consistent with the past year, where seven out of twelve months showed negative growth in New York State manufacturing [8] - The upcoming Philly Fed survey is anticipated, which has also shown negative headlines in four of the past five months [8]

Monetary Policy and Federal Reserve Actions - The U.S. Federal Open Market Committee (FOMC) is expected to cut rates by 25 basis points (bps) for the first time in 2025, following a total cut of 100 bps in the last three meetings of 2024 [1][3] - The decision is complicated by low job gains, including a loss of 13,000 jobs in June, while inflation is slowly increasing, influenced by tariff policies [2] - There is speculation whether the rate cut could be larger, potentially reaching 50 bps, which would set rates between 3.75% and 4.00% for the first time in nearly three years [3] Political Influences on the Federal Reserve - The politicization of the Fed is evident, with President Trump criticizing Fed Chair Jerome Powell for being slow to reduce rates and attempting to remove Fed Governor Lisa Cook over personal finance allegations [4] - A federal judge's injunction reversed Trump's decision to fire Cook, but the White House is contesting this to prevent her from voting in the upcoming FOMC meeting [4][6] - The Senate is set to vote on confirming Stephen Miran, a pro-Trump official, to the FOMC, who has previously advocated for a 300 bps rate cut [5] Manufacturing Sector Performance - The Empire State Manufacturing Index reported a negative reading of -8.7 for September, significantly below the expected +4.5 and a decline from August's 11.9 [7][8] - This marks the first negative reading in three months and reflects a broader trend, with seven out of the past twelve months showing negative growth in New York State manufacturing [9]

Group 1 - The Federal Reserve is expected to cut interest rates due to weak labor market data despite persistent inflation, with a 25 basis points cut anticipated during the upcoming policy meeting [1][3][4] - Consumer prices increased by 0.4% in August, up from a 0.2% rise in July, indicating ongoing inflationary pressures [1] - Weekly jobless claims rose to 263,000, the highest level in nearly four years, reflecting a slowdown in the labor market [1][5] Group 2 - Wall Street strategists highlight the complexity of the Fed's decision-making process, balancing the dual mandate of full employment and price stability amid a slowing job market and sticky inflation [2][3] - There is a 76% probability priced in by investors for three rate cuts by the end of the year, although caution is advised due to the underlying economic data [4] - A recent jobs revision indicated that the US employed 911,000 fewer people than previously reported, underscoring the labor market's slowdown [5]

Central Bank Decisions - The Federal Reserve (Fed) is expected to be the most significant event next week, with other central banks like BOJ, BOE, and Bank of Canada also in focus [1] - A 25 basis point rate cut is widely anticipated, but the market will be more interested in the Fed's updated dot plot and qualitative commentary from Powell [2][3] - Markets have already priced in 25 basis point cuts at each of the final three meetings of the year, indicating limited room for more dovish guidance from the Fed [4] Economic Data - Recent economic data shows signs of a softening economy, particularly in the labor market, with disappointing job reports and a significant jump in weekly claims [5][6] - Consumer sentiment has also dropped, reinforcing expectations for the Fed to ease policy, while inflation remains above the Fed's target despite cooler-than-expected PPI data [7][8] Company Insights - FedEx is highlighted as a crucial earnings report next week, serving as a barometer for U.S. and global economic activity, particularly sensitive to trade dynamics [9] - There is concern regarding inventory levels as companies may have brought forward inventory to avoid tariffs, which could lead to inflationary pressures if replenishment occurs at higher post-tariff rates [10] - The closing of the dimminimous loophole is impacting many e-commerce companies, adding pressure to their operations [11] Trade Talks - Expectations for significant developments in China trade talks are low, with only headlines anticipated rather than any major agreements [12]

Market Sentiment & Rate Cut Expectations - The market rally is driven by the anticipation of rate cuts, primarily fueled by momentum rather than fundamental economic improvements [1] - Before the Jackson Hole speech, there was an approximate 10% probability of a 50 basis point rate cut [1] - The Federal Reserve (Fed) is unlikely to acknowledge the conclusion of the inflation battle [1] Monetary Policy & Economic Indicators - The FOMC statement emphasizes that stable prices are crucial for achieving maximum sustainable employment [1] - Initial jobless claims have overshadowed the CPI data, leading the Fed to prioritize the labor market aspect of its mandate [2] - The current CPI level remains too high and is inconsistent with the target of 2% inflation [2] Fed's Potential Actions - If the Fed cuts rates, it will likely be due to negative employment data rather than positive inflation news [2]

Economic Overview - The service sector is driving a 0.4% topline growth, indicating a stronger-than-expected performance in this area [2][4] - Inflation in the service sector appears to be sticky and potentially stubborn, complicating the Federal Reserve's efforts to return to a 2% inflation target [4][10] - The recent jobless claims reached 263,000, the highest since 2021, suggesting a weakening labor market [10] Federal Reserve Actions - The Federal Reserve is expected to cut rates by 25 basis points next week, but this decision is influenced by rising inflation and downside risks to employment [8][13] - There is a conflict in the Fed's mandates, as inflation remains elevated while employment data shows signs of weakness [9][16] - The Fed funds futures market anticipates a sub-3% rate by the end of next year, which may be overly optimistic given current inflation levels [14][30] Inflation Dynamics - Inflation remains elevated, with specific increases noted in food prices and shelter, which are impacting lower-income Americans disproportionately [18][22] - The food at home price index increased by 6.1%, while the shelter index rose by 0.4%, indicating persistent inflationary pressures [18] - Apparel prices also saw a 0.5% increase, suggesting that tariffs may be influencing these costs [20] Market Sentiment and Consumer Behavior - Consumer sentiment has shown some improvement, but there remains a general pessimism regarding job prospects and wage growth [25][26] - The economic environment is characterized by a K-shaped recovery, where wealth inequality is evident, impacting policy decisions [19][39] - The Fed's credibility is under scrutiny, particularly regarding its ability to manage inflation expectations while navigating political pressures [42][43] Interest Rates and Treasury Yields - Long-term yields, such as the 10-year Treasury yield, are not expected to fall significantly due to persistent inflation and fiscal concerns [29][30] - Mortgage rates are unlikely to decrease much further, as they are influenced more by long-term yields than by the Fed's short-term rate cuts [33][34] - The yield curve is steepening, indicating that investors are becoming more cautious about the Fed's independence and its implications for monetary policy [37][38]

Group 1 - The S&P 500 has reached a new high, indicating strong market performance [1] - Nearly 90% of traders anticipate interest rates will be between 3.5% and 3.75% by December, suggesting a potential 25 basis point cut at each of the three remaining meetings this year [2] - Expectations for a 25 basis point rate cut are strong ahead of the Federal Open Market Committee meeting next week, with 11% of traders predicting a larger 50 basis point cut [3]

Economic Indicators - Economic indicators are signaling concerns about employment and inflation [1] Financial Markets - Financial markets are showing strong positive performance [1] Discrepancy - There is a significant disconnect between economic indicators and financial market performance [1]

had here today. Jeffrey's chief market strategist and CNBC contributor David Zervos is back. Always good to see you, Z.Welcome. Great to be here. What do you make of this uh inflation versus margin story in PPI today.You know, we had a big surprise last time, a lot of it revised away and then this big surprise to down. It's a volatile number and I the big numbers tomorrow, but it's great news. I think it feeds the narrative that many had hoped for.Uh, and it takes uh it takes us back to kind of where Steve ...