Steve Liesman

The economy added 130k jobs, which is considered "out of sample" (stronger) than the Fed's expectations for a cooling market. A strong labor print removes the urgency for the Fed to act. The data supports a "higher for longer" narrative, with Liesman predicting zero rate cuts for the remainder of the year. Expect rates to stay elevated; rate cut expectations are "dying." Sudden deterioration in labor data in subsequent months.

July CPI showed gasoline prices fell 2.9% month-over-month, but Liesman said he does not think that decline will last and expects gasoline to come back in the August data; this is a near-term rebound call for gasoline/energy prices.

The Fed Beige Book shows data centers are a key economic driver: manufacturing activity picked up partly on data center demand, and commercial construction is rising while residential construction declined because of data centers.

Steve Liesman reads Fed Chair Kevin Warsh's Jackson Hole speech as overall hawkish: Warsh signaled the Fed still has work to do on inflation, and Liesman notes market-implied odds of a September rate hike jumped to about 56% from roughly 30-35% before the speech, with December near 86%. Liesman says the market's hawkish take 'may be the right call here,' consistent with the two-year and ten-year Treasury yields bouncing higher.

Steve Liesman reads Fed Chair Kevin Warsh's Jackson Hole speech as overall hawkish: Warsh signaled the Fed still has work to do on inflation, and Liesman notes market-implied odds of a September rate hike jumped to about 56% from roughly 30-35% before the speech, with December near 86%. Liesman says the market's hawkish take 'may be the right call here,' consistent with the two-year and ten-year Treasury yields bouncing higher.

The government shutdown detracted approximately 1.15% from previous GDP, but forecasters are "putting it back into this quarter," with Goldman Sachs predicting 3% growth. The economic drag was temporary and artificial. The reversal of this drag creates a mechanical lift in GDP data for the current quarter, supporting the narrative of a resilient economy. Long broad US equities to capture the growth rebound. If the underlying economy (excluding government effects) slows faster than the rebound adds growth.

Fed Governor Waller stated that the Supreme Court ruling on tariffs "may have a positive impact on spending and investment." If the legal ruling reduces tariff burdens or uncertainty, it removes a headwind for business capex (Industrials) and consumer costs (Discretionary). This creates a favorable environment for sectors reliant on investment and consumption. Long sectors tied to "spending and investment" (Consumer Discretionary and Industrials). Waller noted "considerable uncertainty" regarding how businesses will actually react and to what extent tariffs continue despite the ruling.

Fed Governor Waller stated that the Supreme Court ruling on tariffs "may have a positive impact on spending and investment." If the legal ruling reduces tariff burdens or uncertainty, it removes a headwind for business capex (Industrials) and consumer costs (Discretionary). This creates a favorable environment for sectors reliant on investment and consumption. Long sectors tied to "spending and investment" (Consumer Discretionary and Industrials). Waller noted "considerable uncertainty" regarding how businesses will actually react and to what extent tariffs continue despite the ruling.

Peter Navarro (White House Trade Advisor) explicitly refuted reports that the administration would lower tariffs, stating there are "no plans" to scale them back and that steel/aluminum are "sacred." The market had begun pricing in a potential reduction in tariffs (which would lower prices and hurt domestic producers). The confirmation that high tariffs (up to 50%) remain in place protects the pricing power and market share of domestic US steel and aluminum producers against foreign competition. Long domestic metal producers who retain protectionist advantages. Retaliatory tariffs from trading partners or demand destruction due to high prices.

Peter Navarro (White House Trade Advisor) explicitly refuted reports that the administration would lower tariffs, stating there are "no plans" to scale them back and that steel/aluminum are "sacred." The market had begun pricing in a potential reduction in tariffs (which would lower prices and hurt domestic producers). The confirmation that high tariffs (up to 50%) remain in place protects the pricing power and market share of domestic US steel and aluminum producers against foreign competition. Long domestic metal producers who retain protectionist advantages. Retaliatory tariffs from trading partners or demand destruction due to high prices.