Monetary Policy Stance - The Federal Reserve (Fed) was in a wait-and-see mode regarding the impact of tariffs, but recent data suggests a muted impact, potentially leading to rate cuts [2] - The Fed perceives no signs of tariffs causing inflation expectations to become unanchored, viewing it as a one-off event rather than an ongoing inflationary cycle [3] - The speaker suggests Chair Powell is ready to start moving in September [3] - There was a debate within the committee about the luxury of waiting longer, possibly influenced by the August 1st payroll report [4] Inflation and Tariffs - Data suggests a more muted inflation impulse from tariffs, with some tariffs being negotiated down [5][6] - The initial tariff concerns from April, anticipating widespread increases of 20-30%, have subsided [6] - The slower impact of tariffs over time makes the Fed more comfortable that inflation expectations will remain anchored [7] Inflation Expectations - Inflation expectations are considered crucial in monetary policy, but the right measure is unclear, with options including Treasury Inflation Protected Securities (TIPS), consumer surveys, and business surveys [9] - The Fed has wiggle room in choosing which inflation measure to emphasize [10] - Despite past concerns about transitory inflation, people continue to believe the Fed regarding inflation expectations [10][11] Labor Market - Revised data suggests the labor market has been weakening [2][7] - Weakening labor market data supports the idea of bringing rates down [7]

Inflation & Unemployment - ECB Governing Council member Gabriel Makhlouf indicates that inflation expectations in the euro area helped the region avoid large increases in unemployment during a period of strong consumer-price growth [1]

Market Sentiment & Economic Outlook - The market is facing a battle between resilience and complacency as the second quarter ends [1] - Some believe the market is resilient and will continue to rise towards all-time highs [2] - Concerns exist about the removal of buybacks and the end of the 90-day tariff extension [3] - The market may react negatively if the dot plot indicates only one rate cut, while two cuts may already be priced in [12] - The market has pure momentum in basically every sector, with strong appetite for IPOs until the second quarter earnings reports [17][18] Monetary Policy & Federal Reserve - The FOMC meeting is anticipated with uncertainty, especially regarding Chairman Powell's stance [3][4] - Some argue that recent weak data points, such as the largest drop in retail sales since March 2023 and poor home builder sentiment, justify a dovish stance [5] - Michigan consumer one-year inflation expectations have decreased from 73% to 53%, which the Fed may consider significant [6][7] - Uncertainty regarding tariffs and the Middle East conflict may prevent the Fed from adopting a dovish position [8][9] - The Fed's own measure of uncertainty is near pandemic and financial crisis levels, suggesting caution [22][23] - The core PCE went up by 03%, Real GDP went down by 04%, and the funds rate kept unchanged at 39% [21][22] Inflation & Tariffs - Looming tariffs and the conflict in the Middle East create uncertainty regarding future oil prices [8] - Inflation readings have been relatively good recently [8] - Inventories not subject to tariffs are dwindling, potentially leading to higher prices [16] - One company's aluminum costs, previously sourced from China, increased by 50%, leading them to source from the US, but costs are still up 35% year-over-year [14]