Short On Time… Executive Summary
Well, as expected Kevin Warsh talked tough on inflation at Jackson Hole. A rate hike would still surprise me. The bond market has been doing the heavy lifting for the Fed with yields creeping up over the last several months. Warsh will continue his Greenspan-esque type of communication, which is much different than the last three Fed chairs. However, less may be more as Powell tended to over-communicate. Meanwhile corporate earnings still look good. Oil is up today as there were more attacks in Iran. I suspect this is going to be the status quo until midterm elections are over. This is the way Iran can inflict the maximum amount of pain on the Trump administration.
The Week On Wall Street
Stocks rebounded last week as falling bond yields and upbeat AI-related corporate reports rekindled positive market sentiment despite the Fed Chair’s slightly hawkish speech. The Standard & Poor’s 500 Index gained 0.49 percent, while the Nasdaq Composite Index rose 0.85 percent. The Dow Jones Industrial Average added 0.53 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, lost 0.17 percent.
An Active News Week
Chip stocks fell as the week kicked off, dragging down the S&P 500 and Nasdaq. Reports that the Treasury Department may buy back its own bonds helped drive yields lower. Midweek, the Personal Consumption Expenditures (PCE) Report, the Fed's preferred inflation gauge, came in a little hotter than expected. However, core PCE, which excludes food and energy, was in line with forecasts. Market sentiment got a lift on Thursday as investors cheered upbeat Q2 corporate reports. A handful of high-profile tech companies said AI helped drive Q2 results and provided strong guidance. Semiconductor stocks and adjacent names in the AI trade led the rebound, driving broader gains for the Nasdaq and S&P 500. On Friday, stocks initially shrugged off Fed Chair Kevin Warsh’s keynote speech, but sellers gained the upper hand later in the session. Short- and intermediate-term Treasury yields, including that of the bellwether 10-year Treasury note, rose as investors digested Warsh’s comments on inflation.
Signals from Jackson Hole
At the Federal Reserve's 2026 Economic Policy Symposium in Jackson Hole, Fed Chair Warsh expressed concerns about current inflation trends. He also said that he believes “less is more” when it comes to the Fed communicating about future policy moves. In separate speeches, Cleveland Fed President Beth Hammack, Dallas Fed President Lorie Logan, and Minneapolis Fed President Neel Kashkari appeared to support higher short-term rates. Fed Governor Christopher Waller, Kansas City Fed President Jeffrey Schmid, and Vice Chair Philip Jefferson also took a modestly hawkish tone in their statements.
This Week: Key Economic Data
Tuesday: Purchasing Managers Index (PMI)—Manufacturing. Construction Spending. Job Openings & Labor Turnover Survey.
Wednesday: ADP National Employment Report (private sector). Factory Orders. Federal Reserve Beige Book.
Thursday: Trade Balance. Weekly Jobless Claims. Purchasing Managers Index (PMI)—Services. Fed speeches, ‘Connecting Communities’ online event: Beth Hammack (Cleveland), Austan Goolsbee (Chicago).
Friday: U.S. Employment Report.
This Week: Notable Companies Reporting Earnings
Tuesday: Dell Technologies Inc. (DELL), Palo Alto Networks, Inc. (PANW), Medtronic (MDT)
Wednesday: Broadcom Inc. (AVGO), Snowflake Inc. (SNOW), Hewlett-Packard Enterprise Company (HPE)
Thursday: Ciena Corporation (CIEN)
Stay tuned...
