Outlook

Inflation continues to give mixed signals, which can unsettle investors who anticipate the Fed adjusting rates at its September meeting.

When data pushes and pulls in opposite directions, like Dr. Doolittle’s fictional animal, traders should be prepared for anything. And prior Jackson Hole conferences have shown that Powell can be anywhere from even-handed to strident.

Unlike income taxes, which are progressive, tariffs function like a sales tax—affecting all income levels equally and hitting lower-income consumers harder.

There will be three large Treasury settlements on Tuesday, Thursday, and Friday. One can only make an educated guess as to where the funding will come from. Will the reserves take a hit?

The ECB and BoJ held rates, signaling caution. UK retail sales rebounded slightly, but consumer sentiment and global growth indicators remain mixed, keeping markets on edge.

Stocks were under pressure from the opening bell on Friday as investors sorted through fresh tariff announcements from the White House, a softer-than-expected July jobs report, and mixed Q2 corporate reports.

Once again, the decision to keep the Fed Funds Rate at its current level comes as little surprise, as attention now turns to the next official FOMC gathering in September.

It appears the US is on the path to completing trade deals with the largest countries in the world which will change the terms of trade between the respective areas. And then there was the signing of the Genius Act.

Like a pilot advising his passengers to keep their seat belts buckled in case of potential air pockets, over the past two days, it seemed advisable to buckle up for a potential pop in volatility. Consider VIX to be the price of parachutes when a plane hits turbulence.

After a secular rise in equity prices in 2023 and 2024, extended valuations and high concentration laid the groundwork for factors to stabilize market excesses. In the context of risk efficiency, the factor-driven narrative becomes even more compelling.

Despite rising geopolitical risks, tariff threats, and shifting rate expectations, global markets remain resilient—buoyed by strong fundamentals, easing inflation, and tactical policy pivots across major economies.

This week brings numerous critical events, including key economic reports, significant Treasury auctions, major central bank decisions, high-profile earnings, and a court case reviewing presidential tariffs.