00:00 Speaker A

Well, as of this morning, investors still pricing in the first rate cut of 2025 to come in September. Fed chair Jerome Powell, speaking earlier today at the European Central Bank forum, said the Fed will remain paused until seeing the ultimate impact of President Trump's tariffs.

00:20 Jerome Powell

In effect, we went on hold, uh, when we when we saw the size of the tariffs and where and essentially all all inflation forecasts for the United States went up materially as a consequence of the tariffs. So, uh, we we didn't overreact. In fact, we didn't react at all. We're simply taking some time. As long as the US economy is in a in solid shape, we think the the prudent thing to do is to wait and learn more and see what those effects might be. And again, they haven't really shown up. Uh, and, you know, so we're for now, we're waiting.

01:22 Speaker A

So, with the July 9th tariff deadline bearing down just eight days away at this point, pressure from President Trump and a week of economic data ahead, what should investors be expecting from the Fed? I'm going to bring in my contributor for the hour. We've got Steve Sosnick, who's the Interactive Brokers chief strategist. Steve, great to have you back here in studio.

01:44 Steve Sosnick

Great to be with you, Brad.

01:45 Speaker A

Let's talk through this. What should investors be prioritizing as we go into the back half of this year, kicking off with everything from trade deals that are anticipated to continue to be negotiated, hopefully netted out in some form or another. Also, a Fed that is trying to be looking through and be data dependent as we get this week of economic data on the jobs front that they're paying close attention to. Oh yeah, and then earning season starts in a couple weeks.

02:15 Steve Sosnick

Let's try to lay them out, you know, in terms of chronological order. And and I hope I can do this correctly. We've got job numbers, as you mentioned, on Friday. Market's always looking to them. The jolts were a bit of a jolt this morning. I think I think that's, you know, that that works against the the concept of labor market weakness, but we'll get a clearer picture, uh, on, you know, on Thursday, I should say, not Friday, because it's the holiday. Um, in theory, the the budget bill should be signed at some point, but there's the back and forth. I don't, you know, talk about the not wanting to see the sausage being made, but the there's, uh, you know, there's a lot of stuff going on behind the scenes. I don't, it's too too difficult to figure out exactly how that shakes out, but I think the basic framework is there. Um, then we get into, then we have the tariff moratorium next week. Do those expire or do those get pushed back again? Um, you know, I I I again, the the market seems to be looking through that, thinking that, you know, this will all be fine. There'll be deals done or at least there's enough negotiations to give cover to the idea that they'll be pushed back. So that's there. Oh, and then guess what, it's earning season all over again. You know, it seems like we never left one, but we have that again. And, um, you know, one of my fears is some of the stocks that we've seen recently that have beat on top line, bottom line and guidance, and then still get whacked. We saw it in progress software, uh, we today and we saw it Micron a couple weeks ago. Um, that is a concern going forward. And then we've got then you've got, you know, lurking in the background is what is the Fed going to do? And Powell just said in in in the gathering of central bankers in in Portugal that he's he doesn't expect any tariff effects to really be seen till the summer. So he's very much in wait and see mode. The market may be a little bit ahead of him by by pricing in a full rate cut by September, but then again, markets have always been ahead of the Fed. Remember, remember the eight rate cuts that we were supposed to get in 2024? So, let's all see how this shakes out with so many moving parts, but yet we still, but yet we see a very quiescent market. Vix, you know, 17-ish, um, is not is not expecting too much right now.