What we’re reading (7/15)
“June Inflation Data Reaffirms Fed Pause As Tariff Uncertainty Grows” (Yahoo! Finance). “June’s Consumer Price Index (CPI) report likely gives the Federal Reserve room to continue its wait-and-see approach to cutting rates amid uncertainty over how President Trump's tariffs will impact inflation. On a ‘core’ basis, which excludes volatile food and energy costs, CPI increased 0.2% from the previous month, slightly lower than economists' expectations but ahead of May's 0.1% gain. Following the report, investors were placing a 97% probability on the Fed holding rates steady at its July meeting, up from 93% on Monday, according to the CME FedWatch Tool. Meanwhile, the chance of a September rate cut dropped sharply after the release, falling below 60% initially and inching closer to 50% as markets digested the data.”
“JPMorgan’s Dimon Warns Against ‘Playing Around With The Fed’ As Powell Pressure Mounts” (Yahoo! Finance). “JPMorgan Chase (JPM) CEO Jamie Dimon said Tuesday that the independence of the Federal Reserve is ‘absolutely critical’ for Jerome Powell and whoever succeeds him as chairman of the central bank. "Playing around with the Fed can often have adverse consequences," Dimon told reporters after JPMorgan reported its first quarter earnings, adding that it can produce ‘the absolute opposite of what may be hoping for.’”
“Trump Executive Order To Help Open Up 401(k)s To Private Markets” (Wall Street Journal). “President Trump is expected to sign an executive order in the coming days designed to help make private-market investments more available to U.S. retirement plans, according to people familiar with the matter. The order would instruct the Labor Department and the Securities and Exchange Commission to provide guidance to employers and plan administrators on including investments like private assets in 401(k) plans, the people said. The details of the order aren’t yet final and are still subject to review, the people said.”
“A Case For Concluding That Over 90% Of Shareholders Reject DEI” (RealClear Markets). “[A]pply a healthy dose of skepticism the next time you see a headline proclaiming that over 90% of shareholders support DEI because an anti-DEI proposal was defeated by that margin. The bottom line is that no corrupted voting regime should convince you that the true owners of corporations think it’s a good idea to discriminate on the basis of race and sex in the name of DEI or to use shareholders’ money to promote gender mutilation surgery in minors. That’s just plain common sense.”
“Why Is Manufacturing Productivity Growth So Low?” (Enghin Atalay, et al.). “We examine the recent slow growth in manufacturing productivity. We show that nearly all measured TFP [total factor productivity] growth since 1987—and its post-2000s decline—comes from a few computer-related industries. We argue conventional measures understate manufacturing productivity growth by failing to fully capture quality improvements. We compare consumer to producer and import price indices. In industries with rapid technological change, consumer price indices indicate less inflation, suggesting mismeasurement in standard industry deflators. Using an input-output framework, we estimate that TFP growth is understated by 1.7 percentage points in durable manufacturing, 0.4 percentage points in nondurable manufacturing, with no mismeasurement in nonmanufacturing industries.”
