What we’re reading (6/19)
“The Fed Waits Out The Tariff Economy” (Wall Street Journal). “Federal Reserve Chair Jerome Powell projected confidence when he insisted the central bank was in a good position to handle whatever the economy does next—all while repeatedly acknowledging the Fed has little idea what’s actually coming…’We haven’t been through a situation like this, and I think we have to be humble about our ability to forecast it,’ Powell said. Inflation has eased recently, but tariff effects loom. The job market shows hints of softness, though unemployment remains low at 4.2%.”
“Profits Of Doom: Why Investors Seem To Shrug Off War” (DealBook). “Stocks tumble when geopolitical crises erupt — and then rebound as investors’ appetite for risk returns. This happened in April 2024, when Israel and Iran last traded strikes and set off fears of wider regional conflict. At the time, the S&P 500 fell by as much as 3.1 percent over five trading sessions, according to data from LPL Research, a market analytics firm. Fourteen trading sessions later, the benchmark index fully recovered. The S&P 500 later set record after record. That was no anomaly. LPL Financial analyzed 25 major geopolitical episodes, dating back to Japan’s 1941 attack on Pearl Harbor. ‘Total drawdowns around these events have been fairly limited,’ Jeff Buchbinder, LPL’s chief equity strategist, wrote in a research note on Monday.”
“Fidelity Fund Bets On Midcaps Saying Worst Of Tariffs Is Over” (Bloomberg). “Financial markets have seen the worst of Donald Trump’s tariff threats, helping make midcap stocks an attractive buy as the outlook improves, according to a Fidelity International money manager”
“Profit Pressure: Why COOs And CFOs Are Bracing For A Tough 2025” (Institutional Investor). “Polling…revealed the majority (68%) of CFOs and COOs [of asset managers] believe industry profits will decrease by as much as 20% at the end of 2025 in relation to the year prior. Another 8% believe the decrease will exceed 20%, reflecting possible growing concern among financial and operational leaders about near-term profitability across industries.”
“Is Washington Open To Railroad Mergers? This Regulator Isn’t Saying No.” (Semafor). “For weeks, railroad executives have played footsie in public, touting the benefits of mergers that would turn regional players into coast-to-coast juggernauts. Investors, too, have caught the bug, bidding up shares of smaller carriers most likely to be acquired. But their enthusiasm hinges on one question: Will the industry’s regulator be on board? Try him. Patrick Fuchs, the 37-year-old chairman of obscure and quaintly named Surface Transportation Board, has signalled what colleagues and industry players are interpreting as an openness to consolidation, or at least a clean break from the reflexive antipathy of his predecessor to deals.”
