“Without ambition one starts nothing. Without work one finishes nothing. The prize will not be sent to you, you have to win it.”
-Ralph Waldo Emerson
Here’s what you need to know this week:
· Stocks retreat on tumultuous economic headlines
· Volatility returns amid tariff negotiations
Revision Rampage
Stocks snapped their winning streak last week due to two disappointing economic reports. The first was the Personal Consumption Expenditures (PCE) report for June. The PCE report is the Federal Reserve’s preferred measure of inflation; June’s report showed monthly inflation at 0.3% and annualized inflation at 2.6%, both slightly higher than analysts’ estimates[1]. This hot inflation report lowered the odds of an interest rate cut at the Federal Reserve’s next meeting in September, although the chances of a rate cut have since moved again.
The real blockbuster report was the nonfarm payrolls (NFP) report for the month of July releasing on Friday. The report showed the US economy adding only 73,000 jobs in July, well below analysts’ estimates of 104,000[2]. Even more notably, the report dramatically revised down job gains over the prior two month, eliminating nearly all of the report job growth since April:
These revisions show the US labor market as the weakest since the COVID pandemic in 2020:
Revisions to the NFP report are common as it takes time for the Bureau of Labor Statistics to collect all the data. However, President Trump expressed extreme displeasure with the report and immediately fired BLS Commissioner Erika McEntarfer, accusing the commissioner of rigging the report to paint him in a negative light[3]. This firing drew condemnation from financial sector and raised questions about the legitimacy of jobs data moving forward.
However, one silver lining of this underwhelming report was that odds of an interest rate cut immediately skyrocketed. On the day before the jobs report, the bond market was assigning just a 38% chance of an interest rate cut at the Federal Reserve’s next meeting in September; after the report, odds of a rate cut rose to 92%[4].
Back On
In other news, President Trump’s tariff plans were delayed for one more week to August 7th. As a refresher, nearly every country was hit with a baseline tariff of 10% and then each country was assigned its own tariff rate back on April 2nd, which President Trump dubbed “Liberation Day”. US negotiators have carved out extensions with Mexico, Canada and China to allow for more time to hammer out trade details[5].
Other countries such as Japan, Vietnam and Brazil have either agreed to new trade deals or are reportedly in final negotiations, and the European Union has also agreed to a new trade framework. As of writing, this is where the tariff picture stands:
We will likely see more trade agreements reached ahead of tomorrow’s deadline, but it appears the tariffs are finally about to take effect.
What Else
· The 22 members of the Arab League nations released a declaration calling for Hamas to relinquish its rule in Gaza
· The US is discussing terms of a permanent ceasefire between Israel and Hamas
· Federal Reserve Governor Adriana Kugler resigned
· Canadian wildfires continue to cast smoke across multiple northeastern US states
· The acting NASA administrator has suggested plans of constructing a nuclear reactor on the moon
What We’re Reading
More than 2,000 lighthouses adorn the Norwegian coastline, some of which are hundreds of years old. Now for the first time, the Norwegian government is funding a massive undertaking to bring the lighthouses to modern standards. Click below to read about the project and to see some great photos of these historic lighthouses:
What’s Happening Downtown
Scissortail Park is hosting their monthly Sky Rink skating rink event this Friday through Sunday. Admission is $6 per person and a few dollars more to rent skates if you do not bring your own. 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