Nepal has been upended by a youthquake. Violent street protests led by Gen Z sending the very seat of government up in flames and ending a prime ministership. >> This government does not care about us.It's time for us to get on the streets, wear our mask, wear our helmets, and come down on the street and challenge the government because they I feel like they're taking us for granted at this point. >> The first trimmers of the movement were felt in March with a fiery speech by a 16-year-old student during a ...

Social Unrest & Political Instability - Asia's deadliest protest this year occurred in Nepal, highlighting growing unrest among youth populations [1] - The unrest is fueled by issues such as nepotism, corruption, and unemployment, particularly among smartphone-wielding youths [1] Geopolitical Risk - The events in Nepal serve as a warning to leaders facing increasingly restless populations [1]

Core Viewpoint - The discussion centers around the Federal Reserve's monetary policy, particularly the need to lower the target interest rate to around 2% to avoid damaging the labor market and to align with market expectations for a neutral rate [1][6][8]. Group 1: Federal Reserve's Target Rate - The Federal Reserve's current target rate is at 4.25%, and there is a call to reduce it to approximately 2.5% to achieve a neutral stance [6][12]. - The neutral rate, as estimated from the TIPS market, is about 2.3%, which is higher than some economists' estimates [5][8]. Group 2: Economic Indicators - Rental prices are currently falling, contrasting with official statistics that still show rising rates, indicating a potential misalignment in economic indicators [3][9]. - There is a concern about inflation, which has been rising over the past four months, suggesting that the Fed must balance its focus on employment with inflation control [9][10]. Group 3: Labor Market Concerns - The labor market is described as being at a standstill, with no significant hiring activity, raising concerns about a potential increase in unemployment [14][15]. - Despite concerns, there is no immediate evidence of a sharp rise in unemployment claims or layoffs, indicating that a drastic policy change may not be necessary at this time [15][16]. Group 4: Supply-Side Policies - The discussion includes the potential impact of supply-side policies, such as tax incentives and deregulation, which could help alleviate inflation pressures by increasing production [10][11]. - There is speculation about the need for increased savings to support these supply-side measures, which remains uncertain [11].

Let's bring in Aean Jabvers for some more reaction. And Aean, he he did underscore the notion that he talked about last week in terms of there not being a risk-free path and also the Fed's stance on on tariffs being sort of an isolated event. Yeah, that's right, Melissa.He called it a challenging task for the Fed uh to deal with both inflation and unemployment, which are both going in uh the wrong direction potentially right now simultaneously. And so, how do you deal with that as the Federal Reserve chair. ...

Core Viewpoint - The U.S. Federal Reserve is facing a challenging situation with the risk of faster-than-expected inflation alongside weak job growth, raising concerns about the labor market's health [1][5][6] Economic Conditions - Powell indicated that while the economy shows resilience, the data is inconsistent and is trending towards a slowdown [4] - The job market's potential shift from a lack of hiring to layoffs is a concern, which could lead to a slowdown in consumer spending [5] Interest Rate Outlook - Powell provided little indication of when the Fed might next cut interest rates, highlighting the risks of cutting too quickly or too slowly [2] - Market participants have priced in expectations for interest rate cuts, but recent comments from Powell and other Fed officials have cast doubt on the likelihood of further cuts this year [3] Market Reactions - The S&P 500 index experienced a decline of 18.42 points, or 0.27%, closing at 6,675.44 [3] - Treasury yields decreased, with the 10-year note yield down 0.4 basis points to 4.141% and the two-year note yield down 0.2 basis points to 3.599% [3] - The dollar index initially strengthened but ultimately fell by 0.05% to 97.27 [3] Investment Considerations - The S&P 500 has seen three consecutive years of double-digit returns, but a strong catalyst is needed for further significant gains, which is currently unclear [6]

Core Viewpoint - The Federal Reserve is responding to a weakening labor market by lowering interest rates, prioritizing employment concerns over inflation risks [1][2][4]. Group 1: Labor Market and Employment - The Federal Reserve's decision to cut interest rates is influenced by signs of waning supply and demand for workers, indicating a weakening labor market [2]. - Jerome Powell highlighted increased downside risks to employment, suggesting a shift in the balance of risks towards achieving employment goals [4]. Group 2: Inflation and Economic Conditions - Near-term inflation risks are tilted to the upside, while employment risks are tilted to the downside, creating a challenging economic environment [3]. - The current economic conditions resemble stagflation, characterized by slow growth and high inflation, although not as severe as the stagflation experienced in the 1970s and early 1980s [3]. Group 3: Federal Reserve Policy - Powell expressed comfort with the current policy path of the Federal Reserve, indicating that further cuts could be considered if necessary to support the economy [4]. - The Fed's policy stance is described as modestly restrictive, positioning it to respond to potential economic developments [4].

Group 1 - The Federal Reserve Bank of Chicago President Austan Goolsbee indicated that if inflation decreases, there is potential for the central bank to lower its interest rate target [1][2] - Goolsbee suggested that the neutral rate could be approximately 100 to 125 basis points lower than the current target range of 4% to 4.25%, potentially settling around 3% with inflation at 2% [2] - The Chicago Fed's recent report projected that the unemployment rate likely remained steady at 4.3% in September [3] Group 2 - Goolsbee described the current Fed policy as "mildly restrictive" while acknowledging ongoing inflation risks [3] - He emphasized caution regarding aggressive interest rate cuts due to inflation being above target for over four and a half years [3]

Group 1 - The appropriate Fed funds rate is estimated to be in the mid 2% area, which is nearly two percentage points lower than the current policy [1] - The Federal Reserve aims to promote price stability for the benefit of American households and businesses [1] - There are significant risks associated with maintaining a restrictive policy, particularly concerning the Fed's employment mandate [2] Group 2 - Current monetary policy is considered to be well into restrictive territory, with short-term interest rates being approximately two percentage points too tight [3] - The tight monetary policy could lead to unnecessary layoffs and higher unemployment rates [3]

Core Viewpoint - The new Federal Reserve official Stephen Miran expressed concerns that U.S. interest rates are excessively high, which could lead to unnecessary layoffs and increased unemployment if not significantly reduced [1] Group 1 - Stephen Miran's first major speech highlighted the risks associated with high interest rates [1] - The potential consequences of maintaining high interest rates include unnecessary layoffs and a rise in unemployment [1]

Core Insights - Federal Reserve Governor Stephen Miran voted against a quarter-point reduction in the benchmark interest rate, advocating instead for a half-point cut to address potential unemployment issues [3][7] - Miran argues that the majority of Fed officials overestimate inflation risks, particularly regarding tariffs, which he believes have led to excessive concern over price pressures [3][7] - He predicts that tariff revenues could significantly reduce the federal budget deficit, potentially by over $380 billion annually in the next decade, which may ease upward pressure on interest rates [4] Monetary Policy Debate - The recent monetary policy discussions have highlighted differing views among Fed officials, with St. Louis Fed President Alberto Musalem expressing limited room for further easing without risking an overly accommodative policy [5][6] - Musalem supported the recent 25-basis-point rate cut as a precautionary measure to support the labor market, emphasizing the importance of controlling inflation, which may remain above the 2% target due to tariffs and labor supply issues [5][6] - Miran contends that the neutral rate of interest has likely decreased due to tariff revenues and tax policies, suggesting that current monetary policy is too restrictive and risks higher unemployment [7]