“Summer’s lease hath all too short a date.”
-William Shakespeare
Here’s what you need to know this week:
· Stocks extend their winning streak on encouraging remarks from the Federal Reserve
· Markets are sanguine as we head into a short week
“Shifting Balance”
Stocks climbed sharply on Friday due to dovish remarks from Federal Reserve Chairman Jerome Powell at the Fed’s symposium in Jackson Hole, Wyoming. Markets had declined for most of the week prior to Friday before launching to new highs on renewed investor optimism. The key part of Powell’s speech was when he alluded to the Fed shifting its focus from inflation to unemployment, stating “…the shifting balance of risks may warrant adjusting our policy stance”[1].
Historically speaking, the Federal Reserve has attempted to hold annualized inflation around 2%. I’m sure everyone reading this is aware that inflation has run hotter than 2% the past few years; this is one of the main reasons why the Fed has held off from lowering rates, hoping that a restrictive rate environment would constrain spending. While inflation has been largely tamed from the highs of 2022-2023, it never quite got to the Fed’s 2% target:
The optimistic reading of Powell’s speech is that the Fed will likely cut interest rates at their September meeting and rate cuts tend to be bullish for stocks. However, some analysts are concerned that the Federal Reserve taking their focus off inflation right as tariffs take effect may lead to a policy mistake; only time will tell.
Slow Week
There is not much on the docket for markets this week as we head into Labor Day. Most tariffs have already taken effect, and while there are a few lingering tariffs kicking in this week such as new tariffs on India and the removal of de minimis tariff exemptions, investors seem content to wait for the next inflation report to see any tariff impact. The next inflation report will come this Friday in the form of the Personal Consumption Expenditures (PCE) for the month of July.
Analysts expect the report to show annualized inflation at 2.6%[2], less than June’s 2.9% but still higher than the Fed would prefer. If inflation comes in hotter than expected then it may cause some market anxiety, but otherwise investors will be looking ahead to the next Fed meeting on September 17th.
What Else
· President Trump is threatening to fire Fed governor Lisa Cook over allegations of mortgage fraud
· US negotiators believe a stronger ceasefire between Israel and Hamas is close
· President Trump is considering additional sanctions against Russia if Putin does not agree to a ceasefire within the next two weeks
· Hurricane Erin swept the east coast but avoided the worst damage projections
· New wildfires have spread across Oregon and northern California
What We’re Reading
The James Webb Space Telescope recently discovered a previously unknown moon orbiting Uranus, bringing the total number of the tilted planet’s moons to 28. This new moon is the smallest moon ever discovered with a circumference of just six miles, meaning one could walk the entire moon in under two hours! Click below to learn more:
What’s Happening Downtown
Downtown has an unusually light schedule this week so I’d like to highlight the OKC Farmer’s Market at Scissortail Park! The Farmer’s Market takes place every Saturday from 9 AM through 1 PM from April through October. The market features dozens of local vendors selling meats, produce, baked goods, hot food and more. My wife and I buy groceries from the market every Saturday; click below to learn more!
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Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, CFP®, Brandon Ingerson, Jenni Hess
Sources: [1] Bloomberg [2] Investopedia