Economic Data & Monetary Policy - The Federal Reserve (Fed) acknowledges a slight degradation in the scope of economic surveys but expresses concern about the direction of travel regarding the accuracy and reliability of US economic measurement [4] - The Fed emphasizes the importance of accurate economic data for itself, Congress, and businesses to understand the state of the economy, including growth levels [4][5][6] - The Fed notes that current interest rates are at higher levels, providing significantly more room for cuts compared to periods of very low interest rates [15] Inflation & Tariffs - Retailers anticipate tariff-related inflation to become more apparent in future data, as current sales reflect inventory from previous months [8][9] - There is uncertainty regarding how much of the tariff impact will be passed on to consumers; the effect could be lower or higher than expected [10] - Companies may increase prices on non-tariffed goods to compensate for losses incurred due to tariffs on price-elastic goods [11][12] - The Fed acknowledges the possibility of companies increasing prices on necessities, even if not subject to tariffs, to offset losses from tariffed goods, as seen in past tariff episodes [12][13] Bureau of Labor Statistics (BLS) - Congress is considering a proposal to cut $56 million from the Bureau of Labor Statistics (BLS), raising concerns about the agency's ability to collect accurate data and provide reliable indicators [3]

Congressman, welcome back to the program, sir. Always good to hear from you. I'm going to start with a slightly provocative question.I'm paraphrasing here. Do you plan to work for this very term hotheaded person a little bit later this morning. Well, Jonathan, it's great to be with you.We look forward to having Chair Powell before the committee this morning. And I think he'll face questions on his outlook for inflation and therefore what his views are about rate cuts coming forward. I think that's the impor ...

Market Sentiment & Geopolitics - The market is currently overlooking geopolitical risks, inflation, and potential trade wars [12] - Market participants believe current uncertainty levels are manageable [5] - Closing the straits would be a significant market-moving event impacting crude oil and the S&P [2] Oil Price & Inflation - Oil prices are crucial for managing inflation and potentially enabling interest rate cuts [4] - A jump in Brent or WTI crude oil prices impacting consumer spending could negatively affect the market [3] - Crude oil being down 6% was unexpected given recent events [1] Federal Reserve (The Fed) & Interest Rates - The Fed's actions are currently more influential than other factors [7][8] - The market anticipates the Fed stepping in and potentially moving towards rate cuts, benefiting sectors that would gain from such a move [8][9] - Some voices suggest rate cuts may come sooner and be more frequent than previously anticipated [12] - The Fed seems comfortable with PCE (Personal Consumption Expenditures Price Index) at 31%, until the labor market weakens [7] - There's a possibility of yields approaching 5% due to ongoing concerns, even if the market is currently disregarding them [14]

Money supply and interest rates generally have an inverse relationship. Learn more about the link between them. https://t.co/UcZevKDEmN ...

Inflation Outlook - The Fed acknowledges upside risks to inflation, with base effects likely to worsen inflation numbers in upcoming meetings and potentially by year-end [3][4][5] - Crude oil price increases of $10, representing a 20% rise, could add approximately 04 percentage points to the headline CPI if sustained [5][6] - Tariffs are viewed as inflationary by Powell, potentially leading to margin compression and lowered earnings estimates [6][7] - The bond market anticipates the Fed will cut rates even if inflation remains above 3% between now and year-end [9] Monetary Policy & Employment - The Fed's dual mandate faces increasing tensions, potentially requiring a choice between fighting rising unemployment and fighting rising inflation [7] - The market believes the Fed is more likely to prioritize addressing rising unemployment over fighting inflation, even if inflation is moderately above 3% [8][14] - No discussion of rate hikes suggests a consensus within the Fed that the next move in rates will be lower [14] Recession Indicators - A one-year moving average of the twos 10's yield curve turning positive has historically preceded recessions and is currently above its 12-month moving average [9] - The U3 unemployment rate crossing above its three-year moving average has historically signaled the front end of a recession, which has already occurred but is not yet accelerating [10] - Rising continuing claims foreshadow a potential increase in the U3 unemployment rate [11][12] Market Dynamics - The bond market is signaling expectations of rate cuts through a steepening yield curve, with long rates rising more substantially than short-term rates [8][9] - The yield curve steepening is a trend that is expected to continue, with the Fed likely to keep pressure lower on short-term interest rates [13]

Federal Reserve & Market Expectations - The market anticipates the Federal Reserve to maintain current interest rates, with focus on the summary of economic projections (SEP) and the dot plot for future rate guidance [2][3] - There's a possibility the Fed's 2025 dot plot could be revised up, expecting only one rate cut this year instead of two, potentially causing initial market declines if it skews hawkish [4][5] - Investors are closely monitoring the Fed's policy decision and the dot plot for clues on future interest rate movements [57] Economic Concerns & Consumer Sentiment - A majority (65%) of Americans believe tariffs will negatively impact their personal finances, contributing to downbeat consumer sentiment [60] - Consumer sentiment regarding the economy's direction is heavily influenced by political affiliation [64][65] - Younger Americans are slightly more pessimistic about the economic outlook, potentially due to financial fragility [67] Housing Market - New housing construction has fallen to levels not seen in 5 years, since May 2020, with 126% million new homes started in May [40][41] - High interest rates, labor shortages, and material costs continue to challenge home builders and weigh on new construction [42][43][45] - The US faces a shortage of approximately 5 million homes, exacerbated by long-standing issues in the housing market [47] Labor Market for New Graduates - New college graduates are facing challenges in the labor market, with an unemployment rate of 66% in May for those aged 20-24 [23] - Industries like technology, information, media, and financial services are not hiring as many new graduates as before the pandemic [26][27] - Education and healthcare sectors are showing stronger hiring growth for young professionals [31] Formula 1 Growth & Brand Partnerships - Formula 1 is experiencing growing popularity in the US, with the 2024 championship reaching approximately 30 million viewers across ESPN's platforms [87] - The F1 fan base in the US is around 50 million and has been nearly doubling year-on-year [94] - A third of Formula 1's partners and sponsors are from the US, highlighting the sport's importance in the American market [94] Gaming Industry - AMD and Xbox have announced a multi-year hardware partnership for the next generation Xbox consoles and handhelds [106][107] - Microsoft aims to expand its Game Pass service, costing between $9 and $1999 per month, through this partnership [107][108] - Nvidia holds a significant lead in the PC gaming market, while AMD powers the Xbox and PlayStation consoles [112][113] Credit Card Comparison - The Chase Sapphire Reserve card's annual fee has increased to $795, up from $550, offering new credits and perks [74] - The American Express Platinum card has a slightly lower annual fee at $695 and offers similar travel benefits [80] - The Capital One Venture X card has a significantly lower annual fee of $395 but is removing complimentary guest access to airport lounges [84][85]

Interest Rate and Monetary Policy - The market anticipates the Federal Reserve (Fed) to closely monitor the path of interest rates, with discussions potentially shifting towards rate cuts [1] - Rising oil prices and existing tariffs may deter the Fed from implementing rate cuts in the immediate term [4][5] - Dovish signals from the Fed, particularly indications of rate cuts towards the end of the year, could positively influence market sentiment [4] - The industry suggests that delaying rate cuts could lead to an economic slowdown, emphasizing the need for timely intervention [6] Geopolitical Risks and Economic Impact - Geopolitical events, specifically conflicts in Israel and Iran, pose significant risks to the economy [4] - Increased oil prices, influenced by geopolitical tensions, present challenges for the Fed's monetary policy [3][5] Defense Sector Analysis - RTX (Raytheon Technologies) is highlighted as a potentially favorable stock pick due to ongoing geopolitical conflicts, trading at a 17 PE multiple and offering a 2% dividend [7] - RTX's focus on aerospace, defense, and missiles positions it as a key player in the current environment, with the ability to sell to countries outside the US [8] - Global defense spending reached $27 trillion last year, marking a 10% increase, the largest since the Cold War [9] - The defense sector, including names like Northrup Grumman and Halliburton, is generally experiencing growth, but investors should carefully assess multiples to avoid overpaying [10][11]

Consumer Discretionary Sector Overview - The consumer discretionary sector typically thrives during strong economic conditions, characterized by low interest rates and robust job growth [1] - Recent employment data indicates a decline in job additions, with only 139,000 jobs added in May 2025 compared to 272,000 in May 2024, suggesting potential challenges for the sector [2] - The Consumer Discretionary Select Sector SPDR Fund (XLY) is down over 2% year-to-date, contrasting with a 3% increase in the broader S&P 500 [3] Greif Inc. Performance - Greif Inc. has a 12-month stock price forecast of $74.17, indicating a 14.15% upside potential based on 7 analyst ratings, with a current price of $64.97 [3] - The company has a strong dividend yield of 3.36% and a payout ratio of 60.85%, reflecting its stability over nearly 140 years in business [4] - Greif's earnings per share (EPS) of $1.19 exceeded analyst expectations by 11 cents, with quarterly revenue showing a year-over-year increase of just over 1% [5] - The company is targeting $25 million in savings for the current fiscal year and $100 million by the end of fiscal 2027 through cost optimization efforts [6] - Greif's operational structure mitigates tariff impacts by selling products close to manufacturing locations, enhancing its competitive position [7] O-I Glass Inc. Performance - O-I Glass has a 12-month stock price forecast of $15.88, representing a 16.56% upside based on 8 analyst ratings, with a current price of $13.62 [9] - The company benefits from increasing demand for glass containers as consumers shift away from plastics, positioning it well for future growth [9] - O-I's Fit to Win program has successfully improved operational efficiency, contributing $61 million in benefits and leading to an adjusted EPS of 40 cents, surpassing analyst predictions by 22 cents [10] - Future projections indicate adjusted earnings for 2025 could surge up to 85% above 2024 levels, with strong analyst support reflected in six Buy ratings [11] Silgan Holdings Inc. Performance - Silgan Holdings has a 12-month stock price forecast of $63.11, indicating a 15.42% upside based on 9 analyst ratings, with a current price of $54.68 [12] - The company reported an 11% year-over-year revenue increase, with EPS of 82 cents exceeding expectations by 4 cents [13] - Despite strong performance, recent executive turnover introduces uncertainty, particularly in the U.S. metal containers business [14] - Analysts remain optimistic, with all nine ratings for Silgan shares classified as Buy [15]

Consumer Credit & Spending - Vantage Score data indicates consumers are shifting from cautious behavior to net borrowers, increasing credit consumption unexpectedly [2] - Consumer credit utilization is increasing, particularly in auto loans, driven by expectations of tariff-related price increases [2][4][7] - Overall, the consumer is resilient, with average credit balances remaining relatively stable and delinquencies moderate on a historical basis [3][4] - The percentage of super prime consumers (Vantage score 780 and above) increased in April, indicating high-quality credit [4] Auto Loans - Auto loan borrowing surged in April, exceeding pre-pandemic levels, with growth rates not seen since January 2020 [7][8] - Consumers are anticipating tariffs of 50-100% on cars, leading them to purchase vehicles before prices increase [7] Student Loans - The resumption of student loan payments initially caused the average Vantage score to drop by 1 percentage point in February [8] - Consumers reacted positively to the resumption of student loan reporting, making timely payments and improving their credit scores, bringing the average Vantage score back to 702 [9] Economic Outlook & Risks - A weakening employment picture combined with increased credit utilization would be a negative sign for the economy [6] - The Fed's decision to hold steady on interest rates means consumers will continue to face relatively elevated interest payments [10][11] - High interest rates may lead to fewer consumers taking out new mortgages or maxing out credit cards, resulting in lower credit utilization [11] - The Fed is concerned about the potential inflationary impact of increased pricing, partly related to tariffs, and is waiting to see the results before making any sudden movements [12]

Core Viewpoint - Commerce Bancshares, Inc. (CBSH) is positioned for top-line growth due to strong loan demand and high interest rates, although concerns about weak asset quality and elevated expenses persist [1] Group 1: Growth Drivers - Solid loan balances have recorded a compound annual growth rate (CAGR) of 3.2% from 2019 to 2024, contributing to revenue growth despite a decline in 2020, with a five-year CAGR of 4.2% [2] - Total revenues are expected to grow at a CAGR of 2.7% by 2027, with capital market fees projected to grow at 5.1% and loan fees and sales at 5% [3] Group 2: Interest Rates and Balance Sheet Strategy - The Federal Reserve's steady interest rates will support CBSH's net yield on interest-earning assets, which expanded to 3.47% in 2024 from 3.16% in 2023 and is expected to reach 3.75% by 2027 [4][5] - CBSH's balance sheet repositioning strategy, initiated in May 2024, involves selling debt securities and reinvesting proceeds at higher yields, which is anticipated to boost growth [4] Group 3: Capital and Liquidity Position - As of March 31, 2025, CBSH had total debt of $624.7 million and cash and due from banks totaling $3.3 billion, indicating strong earnings capacity to meet debt obligations [6] - CBSH has a history of consistent capital distribution, including a 5% stock dividend for over 25 years and a share repurchase program, enhancing shareholder value [7] Group 4: Near-Term Challenges - Asset quality has been deteriorating, with a significant rise in provisions for credit losses recorded in 2022 and 2023, and total net loan charge-offs (NCOs) showing a CAGR of 2.8% over four years ending in 2024 [8][9] - Non-interest expenses have increased at a CAGR of 4.4% over the last five years, primarily due to higher salaries and benefits, and are expected to continue rising amid technology investments and inflationary pressures [11]