Archive for August, 2025

• Morning News: August 29, 2025
  Eddy Elfenbein, August 29th, 2025 at 7:01 am

  Global Markets Mixed as Focus Shifts to Inflation Data

  India’s Economic Growth Unexpectedly Picks Up Speed

  US Ends Tariff Exemption for Small Packages, Upending Global E-Commerce

  When Mailing a Letter to the U.S. Becomes a Global Headache

  A Guide to Shopping Online After De Minimis Tariff Rule Ends

  Higher Prices Are Coming for Household Staples

  Trump Leans on National Security to Justify Next Wave of Tariffs

  Congress Must Erect a Barrier Between the FTC and Foreign Antitrust

  Trump’s Attacks Risk Wrecking the Fed’s Hard-Won Credibility

  Bond Market’s Inflation Gauge Touches Six-Month High on Fed Risk

  Bond Market ‘Fragility’ Showcases Danger of Hope as a Tactic

  Can America Get Americans to Buy Its Bonds?

  Inside European Banks’ Stellar Run: Towards or Beyond the Sweet Spot?

  In Hong Kong, Eric Trump Lauds Growing Influence of Crypto

  China’s Big Banks Warn of More Margin Pressure in the Second Half

  Citi Asks Two Japan Bankers to Rethink Leaving in Talent War

  New York Needs More Millionaires, Fiscal Watchdog Says

  US Military, Government Skip Asia Security Forum for First Time

  Troops Shouldn’t Be Fighting America’s Culture Wars

  Trump’s Immigration Policies Threaten U.S. Cities and U.S. Growth

  What’s Next, Comrade Trump?

  Mike Gallagher Owes Us Peace, Not Lucrative Anti-China Rhetoric

  The Maryland Governor Has Suddenly Joined the ‘Resistance’

  New York Pipelines Back From Dead Signal Gas Revival Under Trump

  Offshore Wind Is Running Into Trouble Everywhere Except China

  China Is Running the World’s Most Powerful Floating Wind Turbine

  BYD Profit Jumps as Aggressive Overseas Push Bolsters Sales

  Cadillac Is a Luxury E.V. Giant. Can It Keep It Up Under Trump?

  Nuance in Nvidia’s Results Sparks Great Frustration

  How the TSA Is Set to Change Your Walk Through Airport Security

  Lululemon Founder Sells $160 Million of Stock in Amer Sports

  ‘The Wizard of Oz’ Is Getting an A.I. Glow-Up. Cue the Pitchforks.

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• Morning News: August 28, 2025
  Eddy Elfenbein, August 28th, 2025 at 7:05 am

  Navarro Calls Ukraine ‘Modi’s War’ Over Russian Oil Buying

  Bitten by Trump’s Tariffs, China and India Look to Repair Ties

  Mexico to Raise Tariffs on Imports From China After US Push

  Eurozone’s Economic Outlook Worsens Amid U.S. Tariffs, Domestic Pressures

  The Path Forward From Tariff Uncertainty That Saps Ingenuity

  Bank of Korea Stands Pat for Second Time; Lifts Growth Forecast

  Bond Market Bonanza Leaves Investors With Razor-Thin Safety Net

  Erosion of Fed Independence Would Lead to Higher Inflation, ECB’s Rehn Says

  Why the Market Doesn’t Care Much About Trump Firing the Fed’s Cook

  How Trump Could Gain Control of the Fed

  The Fate of the Fed May Turn on Two Words: ‘For Cause’

  Dudley: One Way the Fed Can Bolster Its Defenses

  Your Mortgage Data Is Probably Public. Can You Hide it?

  Can a Person Ever Legally Have Mortgages for More Than One Primary Residence?

  Community Banks Don’t Need Regulatory Favoritism, They Need Relief

  Buffett Lifts Stakes in Japan Trading Houses, Buoys Shares

  Not Even Buffett’s Confidence Buy Can Spur a Housing Recovery

  Trump Administration Ousts CDC Director After Vaccine Clash

  Medicare Will Require Prior Approval for Certain Procedures

  The Chinese City Punching Above Its Weight in AI and Robots

  Nvidia Forecasts Decelerating Growth After Two-Year AI Boom

  Is the White House Standing Between Nvidia and $50 Billion?

  Americans Are Fixers. Their Troops Should Be Too

  India’s Race to Deliver Everything, Instantly

  Billionaire Gangwal Raises $501 Million in Downsized IndiGo Sale

  Tesla’s German Car Factory Looks Vulnerable as Sales Keeps Sliding

  Union Leads in Vote at Ford Battery Plant

  Nothing Could Topple the ‘Queen of Heels.’ Then Trump Came Along.

  Dick’s Sporting Goods Lifts Outlook as Sales Climb

  After Cracker Barrel Uproar, Activist Investor Seizes the Moment

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• Morning News: August 27, 2025
  Eddy Elfenbein, August 27th, 2025 at 7:03 am

  Full Weight of American Tariffs Slams Into Effect Against India

  Australian Inflation Indicator Jumps, Backing RBA Caution on Rate Cuts

  Satellite Images Show China Parade Weapons Capable of US Strikes

  Europe Is Spending Big on Defense. Will That Help Its Ailing Economy?

  EU to Propose Removing US Tariffs This Week to Meet Trump Demand

  German Consumers Feel Ever Gloomier as Economy Slumps

  Fears of a French Government Collapse Send Its Borrowing Costs Soaring

  Canada Factory, Wholesale Sales Look to Build on Recovery in July

  Do We Still Really Need the Bureau of Labor Statistics?

  Get Ready for the End of Fed Independence

  Seeking to Control the Fed, Trump Risks Upending a Pillar of the Global Economy

  Trump’s Fed Gamble Risks Pushing Key Bond Rates Even Higher

  Lisa Cook, the Fed Governor at the Center of a Firestorm

  Bill Dudley: I Wasn’t Very Worried About the Fed. Now I Am.

  Claudia Sahm: The Fed Shouldn’t Take the Political Bait

  What the Federal Reserve, Supreme Court and Senate Need to Do After Lisa Cook’s Firing

  Goldman, BNP to Structure Hybrid Bond for Africa Development

  How Russian Oil Could Make Americans’ Diamonds More Expensive

  Exxon Held Secret Talks With Rosneft About Going Back to Russia

  Top Gold Miner Newmont Plans Job Cuts in Sweeping Cost Drive

  Electric vs. Gas Car: Try Our Calculator (Because the Math Is About to Change)

  Trump Hands the Biofuels Business Another Win by Boosting Mandates

  Soaring Power Bills in Largest US Grid Pose Risk for Republicans

  Nvidia Investors Grapple With China Risks Ahead of Earnings

  The A.I. Spending Frenzy Is Propping Up the Real Economy, Too

  Musk’s Boasts About Grok Undercut Claims in Suit Against Apple, OpenAI

  Dear Conservatives: the Universities Didn’t Do It, Neither Did Hollywood

  From Airbnb to America’s ‘Chief Design Officer’

  How ‘KPop Demon Hunters’ Became Netflix’s Most Watched Movie Ever

  Coffee Flop Shows What US Investors Won’t Swallow

  Cracker Barrel Says It’s Going Back to Its Old Logo After Backlash

  Kohl’s Jumps on Rosier Outlook in Sign of Turnaround Progress

  Lafufus, Fake Labubu Dolls, Raise Safety Alarms and Spawn Raids

  US Seeks $15 Billion From Drug Lord El Mayo—But Recovery Looks Difficult

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• CWS Market Review – August 26, 2025
  Eddy Elfenbein, August 26th, 2025 at 6:13 pm

  (This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

  At Jackson Hole, Powell Hints that Rate Cuts are Coming

  Last Friday, Federal Reserve Chairman Jerome Powell gave his highly anticipated speech at the annual Jackson Hole conference in Wyoming. As I’ve explained in previous issues, the Jackson Hole conference is a big deal in the Fed world.

  The central bank has used the occasion to announce important policy decisions. This year, Powell told the world to expect interest rate cuts from the Fed. This is hardly news, but it’s noteworthy that Powell used Jackson Hole to make his announcement.

  

  The market celebrated the news and the stock market rallied strongly on Friday. That gain ended a six-day losing streak. The market’s gain on Friday nearly wiped out the entire loss of the preceding six days. The market continued to rally and came close to a new all-time high today.

  I get the feeling that Powell is in the hawkish camp at the Fed. By that, I mean that he’s more reluctant than other members to lower rates right now.

  The Fed has an unfortunate habit of fighting the last war. The Powell Fed is uniquely concerned with its credibility. Sadly, that took a big hit during the opening months of inflation. If you recall, the Fed said that inflation was merely transitory. Well, that wasn’t the case, and the Fed eventually reversed course and attacked inflation with its full force. Now it needs to relent.

  Specifically, Powell said, “With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” As you know, your humble editor is conversant in the abstruse language of Fed-speak, which has a distant relationship with proper English. I’ll happily translate.

  The Fed has been holding rates high for several months, and the bond market is getting antsy. The White House has also been placing pressure on the Fed to cut rates (more on that later).

  The problem for the Fed is the president’s tariff policies. We’re not exactly sure what the effect will be, or even the finalized policy. This places the Fed in the position not knowing what it doesn’t know. There’s also the impact of more restrictive immigration policies.

  The Fed’s mandate is to keep inflation low and the labor market happy. That’s not always an easy balance. Powell admitted that “the balance of risks appears to be shifting.”

  Powell said:

  Overall, while the labor market appears to be in balance, it is a curious kind of balance that results from a marked slowing in both the supply of and demand for workers. This unusual situation suggests that downside risks to employment are rising. And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.

  At the same time, GDP growth has slowed notably in the first half of this year to a pace of 1.2 percent, roughly half the 2.5 percent pace in 2024. The decline in growth has largely reflected a slowdown in consumer spending. As with the labor market, some of the slowing in GDP likely reflects slower growth of supply or potential output.

  Check out this chart. Inflation is the blue line and unemployment is in black. It looks like the black line is inching up while the blue line is still moving lower:

  

  This is also an unusual time for the Fed because the stock market has been doing well. The unemployment rate is still relatively low. While inflation is down, it’s above the Fed’s target of 2%. The economy isn’t as strong as it could be, but we don’t appear to be near a recession. Wall Street is expecting good numbers for Q3 GDP.

  Given these facts, why is there such pressure to cut rates? Part of the reason is simply that the Fed went too far in raising rates, so it may be appropriate to walk that back.

  Also, despite some good economic numbers, we’re seeing problems in areas of the economy that are heavily dependent on interest rates, the most important being housing. Over the last two years, the cost of housing – not just home prices but also mortgage costs – have soared. Yesterday, in fact, the Commerce Department released a report showing that sales of new homes dropped by 0.6% last month.

  I like to keep an eye on how homebuilder stocks are doing. The homebuilders stand at the intersection of the stock market and interest rates. A good ETF to watch is the SPDR S&P Homebuilders ETF (XHB). Starting last summer, the homebuilders badly lagged the overall market. But in recent weeks, the homebuilders have perked up. I think it’s in anticipation of lower rates.

  

  For now, we can expect the Fed to cut rates in September. After that, things are less clear. I would say the odds are that the Fed will cut again in October or December, but not both. Rate cuts will help alleviate some pressure points within the economy.

  Now let’s look at the latest political battle at the Fed.

  President Trump Fires Lisa Cook. Or Maybe Not

  Sixty years ago, President Lyndon Johnson famously clashed with Fed Chairman William McChesney Martin. LBJ was used to getting his way and he didn’t take kindly to the Fed trying to fight inflation by raising interest rates.

  The fight started when the Fed ignored the president’s demand to leave rates alone. Instead, the Fed hiked rates. LBJ was furious. And he summoned Martin to the LBJ ranch where the president was recovering from gallbladder surgery. Depending on whom you ask, LBJ berated Martin and even shoved him around the president’s office.

  I bring these events up because on Monday, President Trump fired Lisa Cook, one of the Fed’s governors. Or I should say, he tried to fire her. The courts will most likely sort this all out before we’re done. If Trump prevails, his appointees will have a majority at the Fed.

  Let me take a step back to describe what happened. The Federal Reserve is run by its seven-member board. The board is designed in such a way as to reduce political influence. The term of each board member is for 14 years. That way, a president will nominate new board members once every two years.

  Board members usually serve around three to five years. Most board members fill in for part of a 14-year term. Note that the Fed board is not the same thing as the interest-rate setting Federal Open Market Committee which is comprised of Fed board members and rotating Federal Reserve bank presidents.

  While the president appoints members to the Fed, and the Senate votes on the nominees, the president doesn’t have the power to fire Fed members except—and this is important— if it’s “for cause.” That means gross misconduct.

  President Trump is claiming that Cook committed mortgage fraud and is therefore eligible to be fired. Cook is accused of claiming two primary residences over a two-week period. This happened before she worked at the Fed.

  Cook ignoring the president. She has returned to work and said she intends to sue. Her lawyer said the president’s action is unlawful. Importantly, Cook hasn’t been charged with anything, and the actions involve her personal business dealings, and nothing about the Fed. Her term at the Fed doesn’t end until 2038.

  This could get messy if the president nominates a replacement and the Senate confirms him or her. What then? I have no idea.

  President Trump has already appointed two current Fed governors, both from his first term. He also got an opening recently when Adriana Kugler resigned, although that seat was due to be open soon. Then in May 2026 comes the big one when Jerome Powell’s term is up and the president can appoint a new Fed chairman. That would give Trump appointees a majority at the Fed.

  The issue is that the Fed is designed to operate independent of political pressure, but it isn’t truly independent and never has been. I suspect that this battle will eventually be decided by the Supreme Court. The Fed is best left outside politics.

  That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

  – Eddy

  P.S. Our Buy List had a nice 8.75% winner today with Heico. It’s up 40% for the year. If you want to learn more details of our Buy List, you can sign up for our premium letter here.

• Morning News: August 26, 2025
  Eddy Elfenbein, August 26th, 2025 at 7:02 am

  French Premier Risks Government Collapse as Opposition Grows

  Klarna to Seek Valuation of Up to $14 Billion in IPO Next Month

  U.S. and Japan at Odds Over Terms of $550 Billion Investment

  Trump Vows Export Curbs, Tariffs in Digital Tax Reprisal

  EU Defends Right to Regulate After Trump Attacks Digital Taxes

  California Is Dense With Billionaires, Of Course It Has Lots of Debt

  Why Letitia James’s Zelle Lawsuit Will Not Stop Fraud

  ‘Uncharted Waters’: Trump’s Attempt to Take Charge of the Fed

  How Trump’s Move to Fire Cook Could Open Door to ‘Momentous’ Fed Overhaul

  Lisa Cook Says She Will Not Step Down From the Fed Board

  The World Doesn’t Revolve Around the White House

  Long US Bonds Fall as Threat to Fed’s Cook Spurs Inflation Worry

  This War on Expertise Thrills America’s Enemies

  US Consumers with Prime Credit Are Starting to Slip on Payments

  As Housing Demand Continues to Fall, Builders Get Creative

  There Is Now Clearer Evidence AI Is Wrecking Young Americans’ Job Prospects

  AT&T to Buy EchoStar Spectrum Licenses for About $23 Billion

  After U.S. Takes Stake in Intel, Trump Pledges ‘Many More’ Deals

  Trump Seems Pretty Socialist These Days

  Trump Channels Hatred for Wind Farms Into Strike Against Orsted

  PetroChina Proposes Buying Gas Companies for $5.6 Billion

  African Imports of Chinese Solar Panels Surge in Energy Shakeup

  The Backbone of the Global Auto Supply Chain Is at Risk From Trump’s Tariffs

  The Boom in New Steel Mills Is Outpacing Demand

  For This Tractor Manufacturer, Tariffs Are Making Competition Even Stiffer

  Norway’s Sovereign-Wealth Fund to Shed Caterpillar Stake

  America’s Most Popular Furniture Brands Face More Tariffs

  Eli Lilly Ready to Seek Obesity Pill Green Light After Study Hits Goals

  Messi’s Favorite Drink Is Rocked After Milei Ends Price Controls

  The Latest Bachelorette Party Trend: Asking Brands For Free Swag

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• Morning News: August 25, 2025
  Eddy Elfenbein, August 25th, 2025 at 7:04 am

  5 Years On, China’s Property Crisis Has No End in Sight

  This Is the End of China’s Once Mightiest Property Firm

  Why Haven’t Sanctions on Russia Stopped the War? The Money Is Still Flowing.

  How Weapons of Mass Destruction Became Popular With ESG Investors

  What’s the EU For? Its Leaders Need a Better Answer

  German Business Sentiment Keeps Improving Despite Economic Clouds

  Trump’s Pressure Campaign on the Fed Casts Shadow Over Jackson Hole Gathering

  Trump’s Policies Leave Central Bankers at Odds on How to Respond

  Swan Song in the Rockies Makes Music for Markets

  Week Ahead for FX, Bonds: U.S. PCE Inflation Data in Focus as Fed Rate Cut Looks Likely

  Wall Street Ramps Up Bets on September Rate Cut After Powell’s Dovish Tone

  After 9 Months on Hold, the Fed Could Cut Rates in September. Why the Long Pause May Extend Stocks’ Rally

  If The Trump Economy Is ‘Booming,’ Then It Doesn’t Need The Fed

  Wall Street Hires More Senior Bankers as Growing Confidence Spurs Deal Rebound

  The Real Reason Americans Worry About Trade

  Businesses Don’t Want Gerrymandered Election Maps Either

  Detention Centers Don’t Need Nicknames — and Certainly Not Merch

  Trump Threatens Troops to Fix Chicago ‘Mess’ as City Rebounds

  Ex-Trader’s Burrito Fortune Sinks on Guzman y Gomez Slowdown

  How a Historic Immigration Drop Is Changing the Job Market

  Workers Who Lost Jobs to Trade Needed Help. Washington Cut the Funding.

  They Put Off Relationships Until They Earned Enough Money

  America’s Newest Auto Plant Is Full of Robots. It Still Needs the Human Touch.

  Rented Robots Get the Worst Jobs and Help Factories Keep the Humans

  Cars Are So Expensive That Buyers Need Seven-Year Loans

  Inside Intel’s Tricky Dance With Trump

  Nvidia Faces Wall Street’s High Expectations Two Years into AI Boom

  Clegg Says Silicon Valley’s Herd Behavior Drives It Toward Trump

  Orsted Falls to Record Low After Order to Halt US Wind Farm

  ‘KPop Demon Hunters’ Is Netflix’s First No. 1 Box-Office Hit

  Keurig Dr Pepper Strikes $18 Billion Deal for JDE Peet’s

  Krispy Kreme Bets on Big-Box Stores to Stay Fresh

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• Morning News: August 22, 2025
  Eddy Elfenbein, August 22nd, 2025 at 7:03 am

  Japan’s Inflation Stays Well Above BOJ’s 2% Target

  Kazakhstan Presses on With $4 Billion Sulfur Fine on Majors

  Weather Traders Are Hedging Against the Next German Wind Drought

  Why Solar and Wind Power Can Thrive Without Subsidies

  Back Ukraine Diplomacy With Deterrence

  Germany’s Economy Shrank by More Than Expected on Tariff Hit

  Can Germany’s Merz Revive the Economy? Voters Are Running Out of Patience

  U.S. Foreign Trade Zones Draw New Demand as De Minimis Ends

  ECB Officials to Stick With Steady-Rates Plan After Trade Deal

  Trump’s Attacks on Institutions Threaten a Bulwark of Economic Strength

  3 Experts on What Trump Is Doing to the Economy

  Staff Cuts and Turmoil Hit the CFTC While the Crypto It Oversees Booms

  Bitcoin-Volatility Collapse Forces Risk-Loving Traders Elsewhere

  Bond Market Rate-Cut Bets Face Powell Reckoning at Jackson Hole

  Trump’s Attacks on Fed Overshadow a Critical Moment for the Central Bank

  Powell Plans U-Turn on an Economic Strategy That Soured

  How Long Can This Uncanny Stock Market Prosper?

  Wall Street Is Too Complex to Be Left to Humans

  Private Equity Keeps Inventing New Ways to Give Cash to Investors

  JPMorgan to Pay $330 Million to Malaysia to Settle 1MDB Case

  Meta Poaches Apple AI Executive Even as It Plans Hiring Slowdown

  Nvidia Chief in Talks With China to Allay Security Fears Over A.I. Chips

  How Trump Will Decide Which Chips Act Companies Must Give Up Equity

  Can You Still Get a Covid Booster? It’s Too Complicated

  Do You Know What’s in Your DNA? If Not, That’s a Problem

  Costco Joins a Quiet Retail Resistance

  The Biggest Retailers Are Thriving in the Tariff Economy

  Saudi Arabia, Olympic Council Weigh Moving Asian Winter Games

  Bollywood Icon Rejects Global Streaming Sites for $1 YouTube Hits

  Podcasting Is a Talent Business. SiriusXM Is Intent on Winning.

  Energy Drinks Are Now Offering a Bit of Value Along With That Caffeine Boost

  Chili’s Pays Fat Bonuses to Staff After Record-Setting Sales

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• Morning News: August 21, 2025
  Eddy Elfenbein, August 21st, 2025 at 7:07 am

  Africa’s Richest Person Wants to Dominate Oil Refining, Too

  Parched Texas Ranches Offer a Solution to Shale’s Water Woes

  A Cure for Sudden Power Blackouts

  Stalling New Zealand Economy a Test Case for Trade Chaos

  The Trade That Binds the Indian and American Economies

  European Business Takes Trump Tariffs in Stride

  Swiss Watch Exports Ticked Up in July Ahead of U.S. Tariffs

  U.S. Will Preserve 27.5% Auto Tariffs on EU Until Bloc Moves to Reduce Levies

  Trump’s Steel Tariffs Now Apply to Milk and Hundreds of Other Products That Aren’t Steel

  Trump Turns Up the Heat. Fed Chair Jerome Powell Tries to Keep His Cool.

  Trump Aims to Win Majority on Fed Board With Attempt to Oust Lisa Cook

  Fed Chair Contender Bullard Backs 100 Basis Points of 2025 Cuts

  Fed’s Schmid Says Modestly Restrictive Policy Still Appropriate

  Behind Powell’s Big Gamble in Final Jackson Hole Speech

  Fed Minutes Reveal Broad Support for Holding Rates Steady Last Month

  What Matters More to the Stock Market? The Fed or Nvidia?

  Goldman Traders Say It’s Time to Buy the Dip in Momentum Stocks

  This Round of American Exceptionalism Is Mediocre at Best

  Krugman: ICEing the U.S. Economy: Mass Deportations Will Hurt More Than People Realize

  American Businesses in ‘Survival Mode’ as Trump Tariffs Pile Up

  More U.S. Companies Plan to Slow Hiring in Second Half of 2025

  Google Is Trying Everything to Sell AI to Skeptics

  Musk Relies on AI to Breathe Life Into X’s Ad Business

  Novo Slump Darkens Danish Consumer Mood as Growth Outlook Sours

  Thoma Bravo Agrees to Acquire Dayforce in $12.3 Billion Deal

  Want Your Company’s Merger Approved? Pay a MAGA Influencer.

  Hertz to Sell Used Cars on Amazon Autos

  Amazon’s Big Bet on Groceries Isn’t a Knockout Blow for Rivals

  Walmart Wins Over More Shoppers as Tariffs Push Prices Higher

  Boeing in Talks to Sell as Many as 500 Planes to China

  New ESPN, Fox Streaming Services Join a Baffling Landscape for Fans

  Will Ticketmaster Face Justice Before Taylor Swift’s Next Tour?

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• Morning News: August 20, 2025
  Eddy Elfenbein, August 20th, 2025 at 7:09 am

  This Ukraine Summitry Is All Reality TV, Zero Substance

  Indonesia’s Central Bank Delivers Back-To-Back Rate Cut to Support Growth

  New Zealand’s Central Bank Cuts Rates, Sees More on Horizon

  Malaysia’s Rosy Economic Picture Belies Discontent

  Japan’s Exports Fall Most in Four Years as Tariff Pain Deepens

  U.K. Inflation Gains Pace, Likely Keeping Bank of England From Fresh Rate Cuts

  Europe Should Deepen Ties With Non-U.S. Trade Partners, Lagarde Says

  Sweden Central Bank Stands Pat, But Says It Could Cut Again This Year

  Powell’s Global Peers to Cheer for Fed in Rebuke to Trump

  Trump Embarks on $104 Million Bond-Buying Spree While in Office

  Trump Fights to Democratize 401(k)s With the Addition of Private Equity

  Finance Industry Bodies Call for Changes to Crypto Rules for Banks

  Fed’s Bowman Suggests Allowing Central Bank Staff to Own Small Amounts of Crypto Products

  Apollo’s Financial Origami Is Smart — And Scary

  AI Is Siphoning Up Venture Money, Spurring Talk of Bursting Bubbles

  Mark Zuckerberg Shakes Up Meta’s A.I. Efforts, Again

  OpenAI in Deal Talks That Would Value the Company at $500 Billion

  The Day ChatGPT Went Cold

  Silicon Valley Is Drifting Out of Touch With the Rest of America

  Intel Rescue Will Depend on Trump as Investor — and Pitchman

  Donald Trump Panicked In March of 2020, and D.C. Never Recovered

  The Unsung Hero of the OBBBA: Permanent Expensing

  The Oil Market’s Brightest Spot Is Aviation Fuel

  Flight Attendants Win Boarding Pay, Four-Year Deal, Ending Air Canada Strike

  Constrained at Home, China’s EV Champs Are Now Going Global

  Ford’s Dividend Looks Hard to Maintain, Even With Bespoke Accounting

  Target Bets a Lifelong Employee Can Steer Its Turnaround

  The True Cost of Firing a CEO

  McDonald’s to Cut Combo Meal Prices After Convincing Franchisees

  Alcon Shares Fall After Guidance Trim on U.S. Trade Tariff Hit

  Scotts Miracle-Gro Tried Playing Both Sides: Weed Killers, ‘Weed’ Growers

  Come One, Come All! Buy Your TV Subscriptions Here!

  Hint of Mini Labubu Launch Sends Pop Mart Stock Soaring 12%

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• CWS Market Review – August 19, 2025
  Eddy Elfenbein, August 19th, 2025 at 6:48 pm

  (This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

  Wall Street Is Focused on Jackson Hole

  This week, most of the world’s attention has been on the diplomatic meetings in Washington that are trying to end the Russia-Ukraine War. But on Wall Street, traders have been focused on the Federal Reserve’s annual late-summer conference in Jackson Hole, Wyoming.

  In previous years, the Fed has used the Jackson Hole conference to announce major policy decisions. Fed Chairman Jerome Powell will be delivering his speech on Friday, and he’s expected to give greater clarity to the Fed’s plans for the economy and interest rates. This will likely be Powell’s last Jackson Hole conference as Fed chair.

  

  The Jackson Hole shindig is sponsored by the Kansas City Fed. The KC Fed has been running the conference since 1978. It moved to Jackson Hole in 1982 because, it’s said, Paul Volcker wanted to get in some fly fishing.

  Tomorrow, the Fed will release the minutes from its last meeting. In July, the Fed again decided to forgo any rate cuts. There were, however, two dissenting votes on the Fed, which is unusual. There could be more members thinking about breaking ranks, but we don’t know yet. The Fed isn’t known for its transparency, but it does like to show a united front.

  The most likely scenario is to expect the Fed to cut rates next month. After that, things get a little murky. Still, I think it’s reasonable to expect at least one more rate cut between July and the end of the year. Let me be careful to say that there are still a lot of unknowns floating around out there. In recent days, for example, we’ve had conflicting news on the economy.

  After reaching an all-time high last Thursday, the S&P 500 had minor drops on Friday, Monday and today. Today’s market was noteworthy because the High Beta sector again lagged the market. This is the third time this has happened in the last four days. Not long before that, there was a period when High Beta lagged for five days in a row. This is probably a reaction to lower interest rates.

  Has the High Beta cycle ended? I’m not willing to say just yet. For over four months, High Beta stocks have done very well. Perhaps too well. I’m skeptical that High Beta will do well in the coming weeks and months. These recent sessions could be an omen for a longer-term rotation away from High Beta and towards Low Vol. At some point, those boring stocks will look attractive.

  Now that earnings season is over, this is when we get many of the off-cycle earnings reports. In particular, many retailers are due to report this week. A lot of retailers prefer to have their quarters end in January, April, July and October. That way, the important holiday-shopping quarter isn’t cut off early. This week, we’re get earnings reports from big box retailers like Lowe’s (LOW), Walmart (WMT) and Target (TGT).

  This morning, Home Depot (HD) reported earnings that were slightly below consensus. The stock rallied today as the company reiterated its full-year guidance. The company also said that it will have to raise some prices due to tariffs. I like to look at HD’s earnings because it tells us a lot about the housing sector and about many independent contractors. This is a vital segment of our economy.

  We got another snapshot of the economy last Friday when the retail sales report for July was released. Wall Street had been expecting a 0.6% increase. Instead, retail sales were up 0.5%. That’s not too bad. If we strip out auto sales, then retail sales were up by 0.4% which matched estimates. If we take out autos and gas, then retail sales were up 0.2%.

  

  This was the second month in a row that retail sales increased. That came after two months of lower sales. In fact, the retail sales number for June was revised higher. The initial report showed an increase of 0.6%. Now it’s an increase of 0.9%.

  The retail sales report showed so-called control-group sales — which feed into the government’s calculation of goods spending for gross domestic product — advanced 0.5% in July after an upward revision to the prior month. The measure excludes food services, auto dealers, building materials stores and gasoline stations.

  Several categories that posted solid gains, such as furniture, sporting goods and cars, also saw some price increases during the month. Because the data aren’t inflation adjusted, an advance could reflect the impact of higher prices.

  Spending at restaurants and bars, the only service-sector category in the retail report, fell by the most since February. That doesn’t bode well for discretionary services spending at the start of the third quarter, said Oscar Munoz, chief US macro strategist at TD Securities.

  Also on Friday, the Federal Reserve reported that industrial production declined by 0.1% in July. Wall Street had been expecting no change. The sluggish number could be a result of shifting resources ahead of new tariff policies. The Fed also revised higher the industrial production number for June to a gain of 0.4%.

  Manufacturing makes up for 75% of all industrial production. The Manufacturing number for June was revised upward to no change. At the start of this year, manufacturing was doing quite well but that’s slowed down in recent months. Lower interest rates could help ease the decline. Since April, the manufacturing sector has lost 37,000 jobs.

  Inflation’s Impact on the Stock Market

  I often talk about inflation and the Federal Reserve, but this week I wanted to show why it’s so important. I want to show you how poorly the stock market has performed under high inflation.

  I went to Professor Robert Shiller’s data library. He has stock market data going back over 150 years. I took all the monthly market gains and monthly inflation rates. I then sorted all the months by level of inflation. I then calculated the average market return by different levels of inflation.

  To make things easier to read, I annualized the data. Here’s what I got:

  

  For example, the monthly inflation was 0% in 448 months. Over those 448 months, the stock market has had an average annualized gain of 13.59%. As you can see, the stock market really takes a nosedive when inflation gets too high. The turning point is about 7.3%. As long as inflation has remained below that, the stock market has done well. Above that is the problem area. The inflation rate is currently 2.7%. The important lesson is that few things kill the stock market quite like inflation.

  That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

  – Eddy