“Your success depends on the risks you take, your survival depends on the risks you avoid.”
-James Clear
Here’s what you need to know this week:
·Stocks gained and then retreated on conflicting inflation reports
·Markets brace for remarks from Federal Reserve leaders
Mixed Bag
Investors drove stocks upwards and then downwards last week due to diverging inflation reports.The first was the Consumer Price Index (CPI) report on Tuesday; as its name suggests, this report measures the impact of inflation on end consumers, and the CPI report for July was lighter than analysts’ expected.This contributed to investor optimism and pushed the S&P 500 and NASDAQ to new all-time highs.
However, this report was followed by the Producer’s Price Index (PPI) report on Thursday.This report measures the inflation borne by manufacturers and wholesalers, and the PPI report for July showed the highest monthly increase in three years:
Stocks declined modestly on the heels of this report.There are two ways to view this data: on the one hand, the PPI report shows that the tariffs are contributing meaningfully to inflation.On the other hand, the light CPI report shows that (so far) manufacturers and wholesalers have been able to absorb the increased costs and not pass them along to the consumer.Whether that continues remains to be seen.
Fed Week
This week investors have their sights set on the Federal Reserve’s annual Economic Policy Symposium in Jackson Hole, Wyoming from Thursday through Saturday.Fed Chairmen and governors use this event to discuss their outlook, hint towards future moves and even jockey for future roles.The main event will be the keynote speech by Federal Reserve Chairman Jerome Powell on Friday morning.While investors expect confirmation of a 25 basis point (0.25%) interest rate cut in September, anxiety has quietly snuck back into the bond market.Last week markets were treated a rate cut as a virtual certainty, but after the hot PPI report the odds of a rate cut fell to 85%[1].While this is still a strong probability, markets would likely appreciate some reassurance from Powell.
The symposium will also allow other senior Fed officials to make their case to be the next chairman.Jerome Powell’s term as Fed Chairman will officially end on May 12, 2026 and President Trump has been quite vocal about replacing Powell, although Trump did indicate he would allow Powell to finish out his term[2].
Many believe Fed governor Christopher Waller, first nominated to the Federal Reserve Board of Governors by President Trump in 2020, to be the leading candidate to become the next chair.However, Treasury Secretary Scott Bessent told CNBC that interviews for the next Fed Chair will begin in earnest after Labor Day and the list of candidates includes multiple people from outside the central bank[3].Banking politics are typically a dull affair, but for this week they take center stage.
What Else
·President Trump hosted Ukrainian President Volodymyr Zelensky to continue peace agreements after hosting Russian President Vladimir Putin in Alaska last Friday
·Hamas has agreed to a ceasefire deal with US negotiators
·President Trump suggested higher tariffs on semiconductors and microchips in the near future
·Hurricane Erin threatens Florida’s eastern coast although current projections show the storm veering further north
·Wildfires are sweeping Spain and southern Europe
·Legendary actor Terence Stamp passed away at the age of 87
What We’re Reading
From package delivery to remote warfare, people continue to find new usage for drones.Scientists in the Caribbean have developed a small fleet of drones to study sperm whales, using the drones to attach tags to the whales and to film their habits.Click below to read more about this study and to see footage from the drones in action:
What’s Happening Downtown
Midtown’s Ten Buck Lunch Week continues through this Friday, August 22nd.This event features $10 lunch deals from dozens of restaurants in the Midtown District.Click below to see the list of participating restaurants and their lunch deals:
·https://midtownokc.com/10-buck-lunch/?mc_cid=fa2b34bc3f&mc_eid=71bf387036
To read more from our blog, click here
Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, CFP®, Brandon Ingerson, Jenni Hess