“Investors maybe want to be prepared for some surprises.” – 02:29

Brian Jacobsen, Chief Economist at Annex Wealth Management, joins Remy Blaire to discuss the current economic landscape as we await a crucial speech from Federal Reserve Chair Jay Powell.

Together, they explore the delicate balance the Fed must maintain amid political pressures, inflation concerns, and an uncertain economic landscape. As Powell prepares to speak, Brian anticipates that he will acknowledge the labor market’s current state, which has shown signs of weakness despite previous assumptions of strength. He suggests that Powell will likely convey that while the labor market remains solid, it is not as robust as initially thought, and the full effects of inflation from tariffs have yet to be fully realized.

The conversation shifts to the expectations surrounding a potential 25 basis point rate cut, with current market predictions hovering around 70%. Brian advises investors to be prepared for surprises, suggesting that the Fed may opt for a more aggressive 50 basis point cut in September, followed by a pause to assess the economic situation.

The discussion then turns to the recent retail earnings reports, which shed light on how consumers are adapting to changing shopping habits and the impact of tariffs on pricing. Brian emphasizes that inflation from tariffs is a gradual process, warning that the creeping costs will eventually affect consumer prices. He notes that while retailers have managed to absorb some costs initially, the full effects are beginning to surface, potentially leading to a challenging third-quarter earnings season.

“There was a multi-directional stream of bad news, or at least negative headlines that hit the really high-flying, AI-driven sector of the tech semiconductor chip market.” – 01:47

Tim Anderson, Managing Director at TJM Investments, joins Remy Blaire at the New York Stock Exchange to discuss the significant economic developments surrounding Federal Reserve Chair Jerome Powell’s highly anticipated speech at the Jackson Hole Economic Symposium. 

Tim shares his expectations for Powell’s speech, suggesting that the Fed Chair will aim for a neutral tone while indicating that more data is needed before the upcoming September meeting. He expresses his belief that a rate cut is warranted, even advocating for a 50 basis point cut, which would mirror the decision made last September.

The conversation then shifts to the stock market, particularly focusing on the recent selloff in the tech sector, especially among AI-driven companies. Tim explains that a series of negative headlines contributed to this downturn, including comments from Citron Research labeling Palantir as overvalued and a report from MIT questioning the profitability of AI investments. He draws historical parallels to the late 1990s internet bubble, emphasizing that while some companies may be overextended, firms like Palantir are well-positioned to benefit from the ongoing AI revolution.

“If Powell does strike a more hawkish tone, that could cool the rally.” – 00:41

Peter Tuchman, Senior Floor Trader at TradeMas, joins Remy Blaire from the New York Stock Exchange to discuss the current dynamics of the U.S. stock market, highlighting a significant rally with the Dow and Nasdaq both experiencing triple-digit gains.

Tuchman expresses his expectation that Powell will set the stage for a potential rate cut, especially in light of disappointing economic data released since the last Fed meeting. He notes the unusual dissent among Fed governors during that meeting, suggesting that there is increasing pressure for a more accommodative monetary policy as economic indicators show signs of weakness.

The conversation shifts to the recent pressure on big tech stocks, which Tuchman interprets as a market rotation. He explains that while these stocks have been strong performers, investors often reposition themselves as the year comes to a close. Tuchman mentions a notable put bet in the options market on the Q’s, indicating that some investors are bracing for a market pullback. Despite this, he remains optimistic, pointing out that stocks like Palantir are already showing signs of recovery after a brief decline.