“Despite a slowdown in the economy, I think recession risks are still on the lower end of the scale.” – 03:56
Jeffrey Roach, Chief Economist at LPL Financial joins Remy Blaire to discuss the latest developments on Wall Street, particularly following a significant rally that has propelled the Dow to its first record of 2025. After a remarkable surge of over 800 points at the end of the previous week, investors are now processing the implications of Fed Chair Jerome Powell’s recent comments, which suggest that potential rate cuts could occur as soon as next month.
The pair discuss the current state of the U.S. stock market and the importance of Fed independence in shaping monetary policy. Jeffrey emphasizes Powell’s focus on the Federal Reserve’s mandates—full employment and price stability—while also addressing the upcoming framework review that occurs every five years.
As they look ahead to the September 17th rate decision, Remy and Jeffrey examine key economic data on the horizon, including the PCE report and the jobs report due next Friday. Jeffrey highlights the challenges the Fed faces, particularly with rising inflation metrics that could complicate the case for near-term rate cuts. He introduces the concept of stagflation risks, where slow growth coincides with persistent inflation, and discusses how this could impact the Fed’s decisions in the coming months.
For listeners strategizing their investments, Jeffrey reassures them that despite the economic slowdown, recession risks remain low. He notes that a potential easing of rates without a recession could be beneficial for risk assets. They also touch on the importance of productivity growth, especially in light of a shrinking labor market, and the upcoming earnings report from NVIDIA as a key indicator of future trends.