Author Archive

• Morning News: September 4, 2025
  Eddy Elfenbein, September 4th, 2025 at 7:06 am

  The US Has Outsourced Its Gaza Policy to Israel

  In Tariff Standoff With Trump, China Boycotts American Soybeans

  Germany’s Ifo Institute Cuts Growth Forecasts on Tariff Impact

  Trump Asks Supreme Court to Allow His Sweeping Tariffs

  The Supreme Court Can’t Keep Dodging the White House

  Malaysia’s Central Bank Keeps Policy Rate Steady

  Turkey Inflation Inches Down as Central Bank Primes Fresh Easing

  Swiss Inflation Holds Steady as SNB Mulls Rate Cut Below Zero

  Financial Crime Watchdog Calls for Countries to Come Clean on Shell Companies

  The U.S. Dollar, and the Struggle for a Stable Currency

  Trump’s Fed Pick to Face Grilling From Lawmakers

  Three Things to Watch for at the Confirmation Hearing for Trump’s Fed Nominee

  Wall Street Strategists See More Unease on Fed Independence

  When the Government Dabbles, Freedom Wobbles

  Who Does Trump Fire If He Hates This Jobs Report?

  A Sovereign Wealth Fund for the US Is a Great Idea, Actually

  CVC Capital Partners Confident in Outlook After Results Match Views

  Goldman to Buy $1 Billion of T. Rowe Stock as Firms Team Up

  Jane Street Blindsides Regulator in Fight Over India Trades

  Revolut Debuts Buyback in Latest Move to Stay Private for Longer

  US Hiring Intentions Pull Back While Job-Cut Announcements Rise

  The Biggest U.S. Oil Companies Are Eliminating Thousands of Jobs

  Mexico Sees a Future in Shale Gas. Just Don’t Call it Fracking.

  John Deere, a U.S. Icon, Is Undermined by Tariffs and Struggling Farmers

  Harvard Judge Blasts Justice Gorsuch’s ‘Unhelpful’ Criticism

  Yes, America Has a Housing Emergency

  Trump’s Housing Chief Wants to Build, But With What?

  Health Care Costs for Workers Begin to Climb

  Novo Has High Hopes That Ozempic Pill Can Also Fight Dementia

  $40,000 Vacations Inspire Finance Pros to Become Travel Agents

  The Message for Big Tech in the Google Ruling: Play Nice, but Play On

  Amazon Pares Back Free Shipping Perk on Prime Membership

  McDonald’s Escalates Restaurant Industry’s Fight Over Tipping

  The Kelce Brothers’ Garage Beer Company Is Now Worth $200 Million

  Suntory Boss Who Resigned Said He Took CBD Supplements for Jet Lag

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• Morning News: September 3, 2025
  Eddy Elfenbein, September 3rd, 2025 at 7:04 am

  Xi’s Historic Meet With Putin and Kim Showcases Unity Against US

  China Services PMI Expands at Fastest Pace in Over a Year

  China’s ‘Opportunistic Devaluation’ Fuels Europe Trade Shock

  Turkey Inflation Inches Down as Central Bank Primes Fresh Easing

  Eurozone Inflation Accelerates, Priming Continued Rate Pause by ECB

  Central Banks Urged to Pool Dollar Reserves as Fed Help Questioned

  ECB’s Lagarde Says EU Should Close Loopholes in Stablecoin Regulation

  Global Bond Selloff Deepens With Longer Debt Leading Losses

  Tariff Chaos Reigns and America’s Economy Suffers

  US Treasury Yields Brush With 5% as Global Borrowing Costs Mount

  Behind This Season’s Bumper Earnings: Job Cuts, Price Hikes, Glum Workers

  Trump’s Drive to Reshape the Fed Progresses With Rapid Senate Hearing

  The Potentially Big Costs of Trump’s Fed Fight

  Cook’s Lawyers Fire Back at Trump’s Claim of Vast Powers to Oust Fed Officials

  Why Trump Isn’t Turning Into a Lame Duck

  Dumbing Down the SAT Bodes Poorly for Education

  U.S. Bancorp Resumes Crypto Custody as Regulators Clear Path

  Oil Traders Are Finding It Harder to Make Money in a Tumultuous Market

  Venture Capitalists Band Together in New Bid to Back Climate Tech

  Why Iowa Chooses Not to Clean Up Its Polluted Water

  A Hidden Tax That Could Price Us Out of Our Homes

  Anthropic Stake Propels Qatar’s $524 Billion Wealth Fund Deeper Into AI

  Google Avoids Harshest Penalties in Landmark Search Monopoly Ruling

  With Each Passing Day, Robots Are Enhancing the Value of Workers

  How Fining Elon Musk’s X Could Threaten the U.S.-E.U. Trade Deal

  What We Know About America’s Billionaires: 1,135 and Counting

  Pharmacy Benefit Managers Aren’t the High-Priced Drug Problem

  Cracker Barrel’s Sales Took Hit Before It Went Back to Old Logo

  How Jet Lag Cost the Global Face of Japan Inc. His Job

  Nestlé CEO’s Unraveling Started With a Tip to an Employee Hotline

  Behind the Numbers: How Hollywood Missed Its Mark This Summer

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• CWS Market Review – September 2, 2025
  Eddy Elfenbein, September 2nd, 2025 at 10:11 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.”)

  The stock market got off to a weak start for September. Historically, September and October have been the two worst months for the stock market. Perhaps Wall Street wanted to start the downtrend immediately.

  What’s interesting is that today’s damage was mostly felt by those High Beta names. I’ve been talking a lot about them recently, and you can see why. The S&P 500 was down by 0.7% which isn’t that bad. At one point, the index was down more than 1.5% for the day. At its low, the index was down 100.68 points.

  Notice the red rightmost cross in the chart below. You can see how low it fell during the trading day.

  

  This has been an odd market in that it’s been internally volatile but externally calm. In other words, the overall market is placid, but the riskier stocks have done well. I’ve been waiting for High Beta stocks to get their comeuppance.

  I’m starting to feel like Linus in the pumpkin patch. Instead of the Great Pumpkin, I’ve been waiting for the rotation out of high-risk names. Now might be a good time, but the market has easily repulsed any attack led by the bears. Just recently, the market had a five-day losing streak, but that lost ground was quickly regained by the bulls. In fact, it happened again this afternoon, but on a smaller scale.

  Today was the worst day for stocks since August 1. Interestingly, that was also the first trading day of the month. Take that away and today was the second-worst day for the market since July 7.

  August was another good month for Wall Street. It was also the fourth monthly gain in a row. As an investor, it’s hard to argue with a strong trend. Trying to spot market rotations is a dangerous game and I try to avoid it. Instead, I watch for what the market gives us.

  I’m closely watching to see if the S&P 500 falls below its 50-day moving average. Let me be clear that this is an imperfect metric, but it does have its merits. The index is still above its 50-DMA, but it got a lot closer today. If the market does lose its 50-DMA, which it hasn’t for several months, that could be a signal for the bears to continue attacking.

  Kraft Heinz to Split in Two

  Kraft Heinz (KHC) announced today that it’s splitting into two companies. The company had to make a move, and this was building for years, but not everyone is happy.

  Warren Buffett, whose Berkshire Hathaway owns more than one-quarter of the shares, said he’s “disappointed” in the news. That almost sounds like a scolding parent. Shares of KHC fell 7% today.

  

  If you recall, ten years ago, Buffett was the one who pushed for the original Kraft-Heinz merger. He hasn’t touched his shares since 2015. Berkshire originally partnered with 3G Capital to get the deal done, but 3G sold all of its KHC shares two years ago.

  The plan is simple. What Kraft Heinz wants to do is divide the current company into two publicly traded companies. One company focuses on sauces, spreads and shelf-stable meals. The other would include staples like Oscar Mayer, Kraft Singles and Lunchables.

  Buffett conceded that the merger hasn’t worked out as well as he has hoped. That’s some classic Midwestern understatement. He said that any splitting apart will cost a few hundred million dollars, and it will take several months. That’s true, but the present course isn’t working.

  The fact is that Americans’ tastes have changed and packaged food isn’t as popular as it once was. CNBC noted that some analysts “blamed the company’s slump on cost-cutting measures that kept Kraft Heinz from investing in its brands at a time when they needed it most.”

  Will Buffett sell? That’s not clear. He did say that if Berkshire is offered a block deal, meaning someone ponies up a few billion to take KHC off Buffett’s hands, he won’t take it unless the same deal is offered to KHC shareholders.

  This story brings me to an important lesson about investing: it can take a long time before you can properly judge a business. It’s been ten years at Kraft Heinz, and management and the major shareholder still disagree.

  Here’s an interesting stat that might surprise you: Shares of Nvidia (NVDA) were dead money for more than 13 years. It’s true!

  If you had invested in Nvidia on January 2, 2002, by September 1, 2015, you would be down about 4% with your investment (not including dividends). Make no mistake – this is a massive example of cherry-picking data, but nevertheless, those cherries are real. Nvidia really did very little for more than 13 years.

  

  Over the next ten years, shares of Nvidia have risen about 340-fold. Over the last four days, the stock has lost $340 billion.

  Shares of Pepsi (PEP) got a nice pop today when Elliott Investment Management said that it has taken a $4 billion position in the soda company.

  Elliott is a well-known activist hedge fund. By activist, I mean a fund that takes a large position in a stock and then advocates for some important changes in the hopes of giving the stock a boost. Oftentimes, this means paying out a dividend or boosting capital expenditures.

  Pepsi’s stock hasn’t been doing that well this year, and it’s even been lagging Coke (KO).

  The problem with being an activist investor is that the easy part is finding a company that’s not doing well. The hard part is finding a company that’s not doing well and that can easily get back to health. Elliott said that Pepsi should “evaluate the potential refranchising of its bottling network, while streamlining its portfolio by divesting non-core and underperforming assets.”

  Elliott’s position is different than Buffett’s with KHC. The reason is that even despite Elliott’s big position, it’s still small compared with the overall company which has a market value of $200 billion. As a result, Elliott needs to get investors on its side. Elliott said that Pepsi has the potential to rally 50% from here. That certainly got attention from a lot of folks.

  What I don’t get about Elliott’s position is that it doesn’t involve any major strategic gain, outside some generalities. It doesn’t advocate for a new dividend, or spin off, or merger. Instead, Elliott seems to say that Pepsi can somehow do better. I hope that’s right.

  The next big test for the market will come this Friday when the government releases the jobs report for August. The July report was weak, and the other months were downgraded. We’ll get the ADP report on private payrolls tomorrow.

  That’s all for now. There will be no Tuesday issue next week. I’ll be at the Future Proof Festival in Huntington Beach, CA. AdvisorShares will be at booth #327. If you’re around, come on by! I’ll have more for you in the next issue of CWS Market Review on September 16.

  – Eddy

• Morning News: September 2, 2025
  Eddy Elfenbein, September 2nd, 2025 at 7:04 am

  China’s Xi Redraws Geopolitical Map With Embrace of Putin, Modi

  It’s a Strongman’s World and We’re Just Living in It

  Putin’s Gas Pipeline Win in Beijing Sends a Message to Washington

  OPEC+ Set to Hold Output Steady as Oil Glut Anxiety Looms

  South Korea’s Inflation Hits Nine-Month Low

  Eurozone Inflation Accelerates, Priming Continued Rate Pause by ECB

  Loss of Fed Independence Would Push Up Borrowing Costs, Set Off Turmoil, ECB’s Schnabel Says

  US Regulators Cancel Bank Exams as Trump Rollback Gathers Pace

  After Court Defeat, Trump Warns of Economic Chaos From Loss of Tariffs

  American-Made Businesses Are Clamoring to Get on This Tariff List

  Economists Can Solve the Fed’s Tariff Problem

  America Inc. Swaps Decades for Days in Rush to Commercial Paper

  America Can Teach Europe a Lesson on Corporate Fundraising

  Why Investors Can’t Seem to Get Enough of Gold

  Stablecoins Are Coming for Your Rewards Points

  GOP Faces Headwinds on Push for Second Big Tax and Spending Bill

  This Little-Known US Transport Gauge Is Flashing an Early Hint of Slowdown

  How Can an Economy This Good Feel This Bad?

  Why a Balanced Budget Is the True Immoral Burden for the “Grandkids”

  Americans Lose Faith That Hard Work Leads to Economic Gains, WSJ-NORC Poll Finds

  More Fentanyl Shows Up in Random Workplace Tests

  Trump’s Space Research Cuts Are a Gift to China

  Why China Is Trying to Tame Its Electric Car Frenzy

  Tesla Will Derive 80% of Its Value From Optimus Robot, Musk Says

  Silicon Valley’s Drive to Get AI Into America’s Schools Is Working

  YouTube’s Covert AI Editing Experiment Won’t Be Its Last

  Leading With AI Without Compromising People, and Principles

  Klarna, Backers Seek $1.27 Billion in US IPO After Tariff Pause

  Kraft Heinz Is Splitting Into Two Companies

  CEO of Jim Beam’s Japanese Owner Quits During Police Probe

  Nestlé Fires CEO Following Probe of Romantic Relationship With Subordinate

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• Morning News: September 1, 2025
  Eddy Elfenbein, September 1st, 2025 at 7:08 am

  Xi Offers a Glimpse of His Alternative World Order

  China Factory Activity Gauge Signals Rebound in Manufacturing

  India Was the Economic Alternative to China. Trump Ended That.

  Putin Proposes Shanghai Cooperation Organisation Members Should Issue Joint Bonds

  Modi Hugs Putin and Hails Russia Ties in Defiance of Trump

  Putin Sees Only US Weakness in Ukraine

  Ukraine War Leads to Global Shortage of TNT

  Keir Starmer Is Hearing Voices From Political Valhalla

  How—and Why—U.S. Capitalism Is Unlike Any Other

  A Free Market Conservative Celebrates Labor Day

  USA250 | A Letter From The Wall Street Journal’s Editor in Chief

  Perfectly Legal and Undeniably Scandalous

  The Cracks in America’s Rule of Law Are Getting Deeper

  Threats to Fed Independence Are ‘Very Worrying,’ ECB’s Lagarde Says

  Trump’s Plan to Pack the Fed With Loyalists

  US Courts Size Up Trump Tariffs With WTO Defanged

  What Are Trump’s Options If His Tariffs Are Ruled Unlawful?

  Alibaba’s AI Revenue Surge Triggers $50 Billion Stock Rally

  How This A.I. Company Collapsed Amid Silicon Valley’s Biggest Boom

  How to Prevent AI From Causing an Economic Catastrophe

  Data Centers That Don’t Exist Yet Are Already Haunting the Grid

  Microsoft Now at the Center of Big Tech’s Worker Protests

  Chevron’s Boss Says the World Will Need Oil for a ‘Long, Long Time’

  Equinor to Subscribe for Orsted Shares Worth Up to $939 Million in Rights Issue

  Tesla Grabs Top Spot in Norway Where Almost All New Cars Are EVs

  EV Deals Are Booming Ahead of Tax-Credit Expiration

  Netflix ‘KPop Demon Hunters’ Success Is No Surprise

  America Closed Malls, but China Kept Building Them. Now It Has Too Many.

  The Corporate Logo That Broke the Internet

  The US Open Has Become About Everything But the Tennis

  How Alcaraz and Sinner Skipped the Line in Men’s Tennis

  She Avenged Caitlin Clark on the Court. Now Sponsors (and the Right) Love Her.

  ESPN Employees’ Favorite Sport: Lamenting Their Home Base

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• 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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