💥BREAKING:🇺🇸 U.S. TREASURY SECRETARY BESSENT SAYS FED IS LIKELY TO CUT RATES BY 50 BASIS POINTS.VERY BULLISH FOR MARKETS! https://t.co/GpxYtMPS6C ...

Global investors dived in the riskiest assets after a benign US inflation report dispelled fears of stagflation and lifted a roadblock for the Fed to cut interest rates https://t.co/pluagcsVoR ...

Stocks and bonds are rallying after the consumer inflation report reassured investors that the Fed can cut rates next month. Some traders are even betting on on an outsized, half-a-percentage reduction https://t.co/fisORfnWEh ...

>> NEWSMAKERS AND MARKET MOVERS, THIS IS "THE PULSE WITH FRANCINE LACQUA. " FRANCINE: GOOD MORNING AND WELCOME TO "THE PULSE. " TREASURY SECRETARY SCOTT BESSENT HAS DISMISSED THE POSSIBILITY THAT CHINESE INVESTMENTS IN THE U.S. COULD BE PART OF ANY TRADE PACT. CHINA COULD MAKE SIMILAR PLEDGES LIKE JAPAN, SOUTH KOREA, AND EU AS PART OF THEIR TRADE AGREEMENTS. SCOTT BESSENT SAID CRITICAL INDUSTRIES NEEDED TO BE " RESHORED AWAY FROM CHINA." HE DID NOT SPECIFY WHETHER THOSE INDUSTRIES WERE SEMICONDUCTORS OR PHA ...

Economic Outlook - Russia's economy likely returned to growth last quarter [1] - The economy dodged a recession despite pressure from ultra-high interest rates [1]

Economic Outlook & Business Sentiment - Cullen Frost Bankers sees customer agility in managing costs and passing them along, but the primary concern related to tariffs is uncertainty about a potential recession [4][5] - Businesses are delaying projects, not canceling them, due to recessionary worries, but increased clarity in trade policy could lead to renewed activity in the next 6-12 months [6] - Cullen Frost Bankers' loan pipeline is good, but many projects are being delayed; a Fed rate cut could stimulate activity [9] - Customers are trying to avoid raising prices to maintain market share and volume, suggesting limited inflationary pressure [10] Cullen Frost Bankers Performance - Cullen Frost Bankers experienced strong consumer activity in Q2, with a 37% jump in consumer deposit growth and strength in real estate loan products [1] Energy Sector - The energy industry is healthy at mid $60s per barrel oil prices, but significant production increases are unlikely at that level [12] - The industry is focused on efficiency rather than increasing production into lower price levels [13] - There's a growing bullishness around natural gas due to demand from data centers and increasing LNG capacities [14][15]

An Man Group investment manager is adding Japan’s financial shares to her portfolio on the view the nation’s central bank will need to hike interest rates to tame inflation https://t.co/BMqTHa4AmZ ...

A US inflation report is bolstering the case for traders betting that the Fed will soon cut interest rates, with some seeing an increased possibility of an outsize reduction https://t.co/Uct99h1KhB ...

Market Overview - Blackrock views the current investment environment as the best ever, though not necessarily meaning everything is going up [2] - Equity technicals are strong due to the amount of cash on the sidelines and buybacks relative to the IPO calendar, indicating high demand versus supply [3] - Equity volatility is low, making it cheap to own equities and hedge portfolios [5] - Markets tend to overreact to news flow, particularly in August, creating opportunities for investors [18] Fixed Income & Interest Rates - Fixed income portfolios can generate yield levels of 65% to 7% [4] - The speaker anticipates the Federal Reserve can cut rates, especially with signs of slack in the labor market [4][6] - The speaker believes the Fed funds rate can be lowered by 100 basis points, considering core CPI is running under 3% and five-year inflation break-evens are at 25% [8] - High interest rates are hurting low-income borrowers and increasing the cost of government debt [11][12] Economic Factors - Significant productivity gains are occurring due to technology investments and data utilization by large companies [13] - Inflation volatility has been incredibly low for the last 25 years, except for the pandemic period [14] - Complacency in the market is a concern, particularly in credit markets [16][17]

Market Sentiment & Performance - Bank of America's flow data indicates net selling of small-cap stocks by clients last week, while large and mid-cap stocks saw net buying [1] - 44% of fund managers surveyed believe large-cap stocks will outperform small-cap stocks this year, an increase from the previous reading [1] - The Russell 2000 is up only 1.5% year-to-date, indicating continued underperformance of small caps [1] Concerns & Cautions - B of A remains near-term cautious on the Russell 2000 index and does not expect any Fed rate cuts this year [2][4] - Tariff risk poses a greater threat to small caps due to their thinner margins [3] - Inflation remains sticky, leading to the expectation that the Fed will remain on hold, potentially negatively impacting the Russell 2000, which is sensitive to interest rates [4][5] - Small-cap earnings recovery has been slower than expected compared to large caps, with lofty expectations for the second half of the year [6][7] Opportunities & Recommendations - It is advisable to be selective within small caps, favoring mid-caps due to cleaner balance sheets and lower risk from tariffs and refinancing [8] - Despite risks, small caps offer wider performance spreads and alpha opportunities, with relatively cheap valuations compared to large caps [8] - Focus on higher quality areas within small and mid-caps, prioritizing stocks with positive revisions and stronger margins [9][10]