Dave Portnoy says legacy media faces ‘big time distrust' amid CNN's ‘really grim' morale
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Yahoo
15 minutes ago
- Yahoo
Strong June jobs report won't sway Fed on rate cuts: Analyst
The US labor market showed more resilience than expected in June, complicating the interest rate outlook for the Federal Reserve just as cracks in the economy are starting to widen. The economy added 147,000 nonfarm payroll jobs last month, topping the Dow Jones consensus of 110,000, according to the US Bureau of Labor Statistics. The unemployment rate held steady at 4.1%, better than forecasts for a rise to 4.3%. Markets saw initial data as a sign of economic resilience, but the future is still cloudy. 'This was a good number for today,' George Goncalves, head of US macro strategy at MUFG, said Thursday on Yahoo Finance's 'Opening Bid.' "There are still big cracks in the labor market, and we shouldn't overread this report." Goncalves noted that many of the job gains came from non-private sectors, suggesting that underlying hiring momentum in the broader economy remains weak. 'It's a better-than-expected number, sure, and it likely keeps the Fed in a wait-and-see mode,' he said. However, continued weakness in consumer spending and a rise in jobless claims are signs of a cooling economy, per Goncalves. 'In our view, the Fed is still about 100 basis points too tight.' Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments He added that inflation fears, particularly from tariffs, may be overstated. 'We're seeing substitution effects or exporters eating some of the costs. Inflation just doesn't seem like the main issue anymore, it's really about jobs.' There are risks if the Fed waits too long, as consumers are clearly feeling fatigued and stretched, Goncalves wrote in a note prior to Thursday's job report. "Consumer spending trends are falling fast to the lowest level in a decade," he said. MUFG's base claim remains that the Fed cuts rates in July, but today's job upside may delay the action until September. The fastest-growing line of the government's balance sheet is interest expense, Goncalves said, adding that there is a real economic case for lower rates, even if the Fed waits another meeting or two. Read more: How jobs, inflation, and the Fed are all related On the policy front, Goncalves acknowledged the Trump administration has racked up some victories, such as finalized trade deals with the UK and Vietnam, and progress on the sprawling One Big, Beautiful Bill. Treasury Secretary Scott Bessent has called on lawmakers to eliminate the Section 899 provision, commonly known as the 'revenge tax." If passed, the legislation could unlock new federal spending just as the economy begins to stumble, or potentially overheat again, depending on how quickly it gains traction. 'Like it or not, the deals are happening,' Goncalves said. 'The big, beautiful bill will likely pass at some point.' He warned that a short-term boost isn't guaranteed and there may be an economic "gap" during retooling, emphasizing the importance of continued fiscal support. Francisco Velasquez is an Associate Reporter at Yahoo Finance. You can reach him via LinkedIn and X. Click here for in-depth analysis of the latest stock market news and events moving stock prices
Miami Herald
28 minutes ago
- Miami Herald
Fannie Mae Chair Pulte drops grim message to Fed Chair Powell
It's getting real. The Trump administration's war of words targeting Fed Chairman Jerome Powell's stance on interest rate cuts ramped up this week. Fannie Mae Chairman and Director of the Federal Housing Finance Agency Bill Pulte released a statement calling on Congress to investigate Powell. Pulte suggested that Powell should vacate his role at the Fed because of multibillion-dollar plans to renovate the Federal Reserve building and comments to Congress regarding the upgrades. Don't miss the move: Subscribe to TheStreet's free daily newsletter The formal statement increases the heat on Powell, who has drawn the ire of Donald Trump for refusing to lower interest rates in 2025. Pulte has questioned the Fed's decision to shift to the sidelines as politically motivated because the Fed reduced interest rates by 1% late last year when President Biden was still in office. The Fed's dovish tilt in 2024 led many to expect the Fed would announce additional cuts in 2025, providing mortgage relief to home buyers and those hoping to refinance their mortgages. However, the Fed has instead put rate cuts on hold, which could have dire consequences for the economy if it weakens. Image source: Williams/CQ-Roll Call, Inc via Getty Images Powell infamously incorrectly labeled inflation in 2021 as transitory, a major miscalculation that allowed inflation to take hold and accelerate to over 8% in 2022. If Powell had acted faster to raise rates, the Fed may have avoided embarking on the most hawkish rate policy since former Fed Chair Paul Volcker fought inflation in the 1980s by sending interest rates to double digits. Related: Veteran analyst sets eye-popping S&P 500 target The Fed's rate hikes in 2022 and 2023 successfully lowered inflation below 3%, but higher rates have caused cracks in the job market. The unemployment rate was 4.1% in June, up from 3.4% in 2023. The Fed's dual mandate is low inflation and unemployment, two often contrary goals. When the Fed raises rates, it lowers inflation but slows economic activity, increasing unemployment. The opposite occurs when it lowers rates. Changes to the Fed Funds Rate influence everything from credit card interest to mortgage rates because it's the interest rate that banks charge each other when lending or borrowing reserves from each other overnight. There's been significant debate over the Fed's interest rate policy this year, mainly because of President Trump's tariffs. Since February, the White House has placed 25% tariffs on Mexico, Canada, and autos. It has also enacted a 30% tariff on China and a 10% baseline tariff on all imports. Most economists agree that tariffs can increase consumer costs. However, there's disagreement over whether their impact on inflation is temporary or lasting. More Federal Reserve: Fed interest rate cut decision resets forecasts for the rest of this yearFederal Reserve prepares strong message on long-term interest ratesFed official revamps interest-rate cut forecast for this year Companies will likely absorb some tariffs, but most, including Walmart, have suggested that at least some of the import taxes will be passed along to buyers. Chairman Powell decided to keep rates at their current range of 4.25% to 4.5% last month, citing uncertainty over the impact of tariffs on inflation. Powell's refusal to cut rates has led to sharp criticism from President Trump, who has called Powell "Mr. Too-Late" and a "numbskull" over his policy decision. President Trump has also threatened to remove Powell from his role at the Fed, despite the Fed's long-standing autonomy. Related: Bank of America sends bold message on looming jobs report Rumors have also swirled that President Trump may try to appoint a shadow Fed chairman, and some suggest Treasury Secretary Scott Bessent could win the nomination for the Federal Reserve when Powell's term expires in May 2026. President Trump isn't the only member of the administration on the offensive. Bill Pulte has recently ratcheted up rhetoric, too, saying Powell should resign from office immediately for keeping rates high. High rates hit home buyers hard because the Fed Funds Rate helps determine Treasury bond yields, and banks often use the 10-year Treasury Note yield when setting mortgage rates. On July 2, Pulte released a statement from the Federal Housing Finance Agency (FHFA) asking Congress to investigate Powell, and calling for Powell's dismissal: Pulte focused particularly on Powell's role in overseeing a major $2.5 billion renovation project on the Federal Reserve building. Given his social media comments, Pulte's statement likely won't be the last we hear on the matter. "How does one spend $2.5 billion on a building renovation? Something smells," wrote Pulte on X. "Where did the $2.5 Billion go?" Pulte's barrage continued on July 3, with him posting on X, "It's funny to see elite commentators try to justify Powell's Renovation Scandal, as if spending $2.5 billion on a building renovation isn't corruption or at a minimum, malfeasance." Related: Federal Reserve chair sends strong message on July interest rate cut The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Business Insider
36 minutes ago
- Business Insider
The jobs report has dashed hopes of a rate cut this summer
Say goodbye to the prospect of a rate cut this summer. Investors have slashed the odds of an interest rate cut from the Federal Reserve this month after data released Thursday indicated the job market was unexpectedly strong in June. The robust jobs report gives the central bank room to keep interest rates elevated, with employment strong and inflation remaining above its 2% target. The report indicated that employers added 147,000 jobs to the economy last month, handily beating expectations of 110,000. In another sign of strength, payrolls for May were revised upward to 144,000, and the overall unemployment rate unexpectedly ticked down to 4.1% from 4.2%. According to the CME FedWatch tool, the perceived chances of the Fed cutting rates by 25 basis points plunged Thursday morning, dropping from a 23.8% chance Wednesday to 6.7% after the release of the jobs report. Markets still see a September rate cut as likely, with odds of about 71% after the jobs report. Stocks moved slightly higher as traders cheered the strong data, but dimmer rate-cut views kept a lid on more pronounced gains. Still, the S&P 500 managed to rise to a fresh intraday record of 6,271. The bigger reaction to the jobs data was in the bond market. Yields jumped on the prospects for the Fed to keep rates higher for longer. The 10-year US Treasury yield jumped 4 basis points to about 4.34%. The yield on the 2-year Treasury, which is the most sensitive to Fed policy, spiked 9 basis points to 3.88%. "The firm June unemployment rate waves the Federal Reserve off the possibility of a July rate cut, which shifts the spotlight to September," Mark Hamrick, a senior economic analyst at Bankrate, wrote in a note. "If businesses keep expanding payrolls like they've done so far this year, the Fed can comfortably sit in 'wait and see' mode at the upcoming policy meeting. Uncertainty around tariffs and trade have apparently not spooked businesses into shedding workers," said Jeffrey Roach, the chief economist at LPL Financial. Pressure on Powell The report is unlikely to lead to rate cuts this month, which means the Trump administration's withering criticism of Fed Chair Jerome Powell could intensify. Powell has signaled the central bank is comfortable holding interest rates steady while the central bank monitors the path of inflation and any impact from tariffs. This week, Powell said the Fed would have cut rates already were it not for Trump's trade war. Trump, who has harangued Powell to cut rates for years, posted on Truth Social on Wednesday suggesting the Fed chief leave his position. "' Too Late ' should resign immediately!!!" Trump wrote, referring to the nickname he has frequently called Powell to express his annoyance at not cutting interest rates earlier. Trump's post also linked to an article detailing a post on X from William Pulte, the FHFA director, who suggested that Congress should investigate Powell. Pulte has criticized Powell for hurting the housing market by keeping rates high. "Like this tweet if you think it's time for Jerome Powell to resign," Pulte said in a separate post Wednesday evening. According to the latest Freddie Mac survey, the 30-year US fixed mortgage rate hovered at about 6.77% last week. Still, Powell looks likely to stand pat on interest rates, even amid escalating political pressure, Bankrate's Hamrick said. "He is determined to serve out the remainder of his term not being swayed by political pressure or blunt criticism from the president," he added. "Indeed, the president's pressure could have the opposite of the intended impact." Others have speculated that Trump's criticism only makes it less likely that Powell will bend and lower rates. Observers say Powell may now be more focused on his legacy of protecting Fed independence.
