After the Fed cut interest rates this afternoon, all three indices hitting intraday records early, but only the Nasdaq landed in the green. The S&P nearly unchanged, the Dow down more than 70 points. Nvidia making history, becoming the first company to hit a $5 trillion valuation.It is up nearly 15% in just the last five trading sessions. Gold, meantime, settling back above the $4,000 level today, but pulling back in the last few hours. Shares of Adidas dropping more than 10% on weak sales in North America. ...

Economic Overview - The U.S. economy is experiencing significant growth, with a reported 4% growth rate according to the Atlanta Fed, while global economic performance is lagging behind [2][4][10] - Commodity prices, including groceries, energy, and other essentials, are declining, indicating a potential deflationary trend despite expectations of tariff-induced inflation [1][2][4] Federal Reserve Policies - There is a call for a change in the Federal Reserve's management and operating framework to better align with the current economic conditions and support Main Street rather than just Wall Street [3][5][6] - The Fed's current policies are seen as counterproductive, contributing to stagflation, and there is a suggestion to lower the target interest rate from 4% to 2% to stimulate the housing market and overall economic activity [8][10] Government Policies Impact - The policies of the current administration are credited with driving economic growth and lowering prices, contrasting with the previous administration's approach [4][10][12] - A strong emphasis is placed on the need for coordination between government policies and the Federal Reserve to avoid conflicting objectives that could hinder economic progress [12]

Core Viewpoint - The Federal Reserve Bank of Chicago President Austan Goolsbee expressed concerns about rising inflation and the potential for tariff-induced price hikes to become a persistent issue, particularly if stagflation occurs [1][3]. Inflation Concerns - Goolsbee highlighted that inflation has recently risen after a period of easing from the 40-year high reached in 2022, which raises concerns for policymakers [2][3]. - He noted that inflation has been above the Fed's target of 2% for over four years, and the recent upward trend is troubling [3][6]. Dual Mandate Challenges - The Fed's dual mandate to maximize employment and stabilize prices presents a dilemma, especially if both inflation and unemployment worsen simultaneously [6][9]. - Goolsbee emphasized that if inflation proves persistent, it would create a challenging scenario for the Fed, complicating its ability to meet its dual mandate [3][6]. Economic Forecasts and Tariffs - Goolsbee introduced the "11% lane" framework to assess the impact of tariff-induced price hikes, noting that goods imports accounted for 11% of U.S. GDP in 2024 [10]. - Concerns were raised about tariffs affecting intermediate goods, which could lead to broader macroeconomic impacts and increased production costs [11][12]. Services Inflation - The trend of rising services inflation could indicate that tariff inflation is not a one-time event, which would heighten concerns for the Fed [13][14]. - Goolsbee expressed that if services inflation continues to rise, it would be difficult to attribute this solely to tariffs, suggesting a more complex inflationary environment [14].

Core Views - Newly confirmed Fed Governor Steven Myron expresses a differentiated view on monetary policy, advocating for a 50 basis point cut instead of the quarter-point cut favored by the majority of the committee [2][12][8] - Myron argues that there is no material inflation from tariffs, as import-intensive core goods have not inflated at a higher rate than overall core goods [3][4] - He believes that recent changes in border policy have been significant inflation drivers, with a potential disinflationary effect due to negative net migration [5][7] Monetary Policy Insights - Myron's perspective includes a belief that the current monetary policy is too restrictive, which could lead to risks in meeting the employment mandate [19][42] - He plans to provide a detailed accounting of his economic views in an upcoming speech, emphasizing the need for thoroughness in his analysis [9][16] - The Fed's current policy is seen as appropriate by Chair Powell, who indicates that there was not widespread support for a more aggressive cut [11][12] Economic Growth and Labor Market - Myron anticipates better economic growth in the second half of the year, attributing earlier weaknesses to uncertainties around trade and tax policy [22][23] - He acknowledges recent revisions indicating a weaker labor market than previously thought, which raises concerns about the risks of a restrictive monetary policy [41][42] Balance Sheet and Interest Rates - Myron discusses the size of the Fed's balance sheet, suggesting that it should be determined by the regulatory regime rather than as a target in itself [47] - He expresses that the Fed should not engage in credit allocation across sectors, maintaining focus on its mandates of maximum employment and stable prices [48] Tariffs and Inflation - Myron challenges the notion that tariffs are driving significant inflation, arguing that the burden of tariffs is often borne by exporters rather than U.S. consumers [52][54] - He emphasizes that relative price changes do not equate to macroeconomically significant inflation that would warrant a monetary policy response [59][60]

Core Inflation Insights - The Consumer Price Index (CPI) has shown the largest month-on-month and year-on-year increase since January, with a year-over-year increase of 2.9% compared to 2.7% in July [1][2] - Core commodities have shifted from being a negative drag on CPI to a positive contributor, likely due to tariff effects, while core services remain sticky at 3.6% [6][10] Labor Market Concerns - There is a notable spike in jobless claims, which may be partly seasonal, with claims rising from 236,000 to 263,000, including a significant increase in Texas [4][2] - The Federal Reserve is expected to prioritize labor market concerns over inflation data, indicating a cautious approach to monetary policy [7][9] Market Expectations - Market expectations for Federal Reserve rate cuts remain high, with a 100% chance of a rate cut in September and 92% in October, reflecting confidence in three rate cuts this year [5][9] - Economists express skepticism about the inflation report, indicating that the current inflation dynamics may not align with their expectations for a stable economic environment [6][10]

Yesterday's headlines, just modestly higher inflation from tariffs. Steve's going to dig deeper into it, but I just want to have a conversation with you before you you wrote something out. We've been crunching some numbers.You can do that in a sec. Can I read something to you. >> You got something. What do you got.>> So, this is what we were trying to say yesterday that and I think this is good. And then I want to ask you what it would really take for the Fed. The lack of a more alarming acceleration in pri ...