Interest Rate Policy & Market Impact - A rate cut was expected, and the market would have reacted negatively to anything less [2] - The expectation is for a 25 basis point cut at every meeting where a cut is possible [2] - Each 0.25% rate cut saves the government $88 billion annually on debt servicing [3] Market Trends & Sector Performance - Unprofitable companies rallied the most following the "April tariff tantrum" [3] - Mega-cap tech companies are regaining leadership [4] - Russell 2000 companies relying on variable rate debt financing are vulnerable, with 30% relying on month-to-month financing [4] Economic Concerns & Inflation - Inflation remains a concern despite not being at four-decade highs [5][6] - The Fed is weighing price stability versus full employment [7] - Tariffs cause a one-time price shock to goods [7] Fiscal Policy Impact - Tax cuts provide roughly $2,000 per household, while tariffs cost roughly $1,000 per household on average [8] - The market is not fully pricing in the impact of tax policies [9]

Economic Overview - The economy presents a strong headline snapshot, but closer inspection reveals concerning underlying data [1][2] - GDP reading shows 3%, largely a reversal from the first quarter [1] - The economy is basically at full employment, satisfying one of the Fed's dual mandates [1] Consumer Spending & Investment - Consumer spending is described as "okay" rather than strong [1] - Investment number was down 15% [1] - Consumer-driven companies are not having robust quarters, indicating consumers are feeling the pinch [9] Labor Market - Jolt data indicates a loss of 280,000 jobs in the system [1] - There were 260,000 less hires last month [1] - 150,000 less people quit their jobs, suggesting a less optimistic view of the economy [1] Inflation & Pricing - PCE and CPI numbers were warm, slightly higher than expected, but within an acceptable range [1] - Import numbers offset each other, from -4.7% to +5% [1] - Costs will ultimately be passed down to the consumer, as companies will not decrease their profit margins [4][5] Company Performance Indicators - UPS is a good indicator of e-commerce activity and last-mile delivery performance [8][11] - Starbucks numbers reflect consumer discretionary spending [8] - Whirlpool numbers indicate consumer willingness to upgrade appliances [9]