The Federal Reserve’s role is frequently summed up as taking away the punch bowl just as the party gets going. Right now it’s the opposite—the Fed probably needs to add more punch, but it’s not clear how much.
There are plenty of economic
warning signs. The Fed’s Beige Book—which compiles anecdotal reports from its 12 regional banks—showed “little or no change” in activity across the majority of districts and warned of wages failing to keep up with price rises. Consumer sentiment is down, even if spending is holding up for now. Hiring data suggests a slowing labor market ahead of Friday’s crucial jobs report for August.
The market is pricing in Fed action. There’s a 98% probability of a quarter-point rate cut this month, according to the CME FedWatch tool. Higher gold prices are another indication, boosted by rate reduction
expectations sinking the dollar.
While there is consensus around the need for rate cuts, what’s contentious is how far the cutting needs to go. Fed Gov. Christopher Waller is energetically making the case for multiple cuts over the next six months, and as a front-runner to replace Fed Chair Jerome Powell next year, the market is listening to his words.
A change in tone at the Fed could be amplified by Stephen Miran, President Donald Trump’s pick to join the central bank’s governing board. Miran’s Senate Banking Committee hearing on Thursday will likely inform the market’s views on how a reshaped Fed will react to Trump’s calls for drastically lower rates despite the risk of tariff-driven inflation.
For this month at least, the market is likely to cheer for resumed rate cuts. But even when parties are in full swing and the mood is good, not all are in harmony. Some typically have had enough while others are left wanting more.
—Adam Clark
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Senate Takes Up Miran Nomination as Fed Decision Nears
The Senate Banking Committee is set to consider Stephen Miran’s nomination to serve on the Federal Reserve’s Board of Governors later this morning. Central bank independence and proposed restructuring plans will likely be the main themes of the conversation as the Fed faces its next crucial decision.
- Miran is nominated to the seat vacated by Adriana Kugler. But President Donald Trump’s attempt to oust sitting Fed Gov. Lisa Cook could open another seat, and Trump has repeatedly pressured the Fed to cut interest rates. In prepared testimony, Miran said monetary policy independence is critical to its success.
- Fed officials will face their next rate decision later this month. Fed Gov. Christopher Waller, a contender to succeed Chair Jerome Powell, is pushing for lower rates, seeing a weakening labor market as a primary reason. And he sees multiple cuts on the table over the next three to six months.
- Others are more cautious. St. Louis Fed President Alberto Musalem didn’t outline a specific rate policy prescription on Wednesday, but said that available data indicate a labor market that’s close to
full employment, though employment risks are rising.
- Atlanta Fed President Raphael Bostic says employment is cooling, not collapsing. He sees one cut this year—though he didn’t put a timeline on when that cut would happen. He did acknowledge that if Friday’s jobs report is really weak, that would put a September rate reduction in play for him.
What’s Next: Two Republicans on the Senate Banking Committee suggested on Wednesday they wouldn’t consider a successor to Gov. Cook at the Fed until a legal battle over her firing is resolved. Sen. Mike Rounds (S.C.) told CNBC Cook hadn’t had her due process and her status at the board hadn’t changed.
—Megan Leonhardt and Liz Moyer
‘Tariffs’ Cited In Hundreds of S&P 500 Companies’ Earnings
Company executives have been mentioning the word “tariff” a lot on their earnings conference calls since President Donald Trump took office. Trump has repeatedly called it his favorite word and a solution to closing the federal debt deficit. Public company executives are evoking it for another reason.
- For the earnings season just passed, the word “tariff” or “tariffs” has come up at least once on 355 calls by S&P 500 companies through Sept. 2,
according to John Butters, senior earnings analyst at FactSet. That’s less than 455 calls in the first quarter, but more than seven times a year ago.
- Condensed-soup maker Campbell’s said Wednesday that it expects its fiscal 2026 earnings to decline 18% to 21%, largely because 50% steel tariffs have raised its soup can costs. Campbell’s said about two-thirds of its projected 9% to 13% drop in full-year adjusted EPS is attributable to tariffs.
- Last week, J.M. Smucker Co., maker of Folgers, Café Bustelo, and Dunkin’ coffee sold in stores, said tariffs forced it to raise prices for the second time this year in August, and that those increases are starting to show up on grocery store shelves.
- The Fed said in its Beige Book that contacts in its 12 regional districts frequently cited economic uncertainty and tariffs as “negative factors.” Tariffs hurt consumer spending in Boston, household budgets in Philadelphia, prices in St. Louis, and the economic outlook in Dallas, the survey said.
What’s Next: While some firms told the Fed they are passing along all their tariff costs, others said they were hesitant to raise prices because of price-sensitive customers. Most Fed districts expect price hikes to continue in coming months, and three districts expect the pace of price increases to accelerate.
—Janet H. Cho and Nate Wolf
ConocoPhillips Will Slash Up to 25% of Global Workforce
Crude oil exploration and production company ConocoPhillips will slash up to a quarter of its global workforce, including employees and contractors, by the end of 2025. The move comes as major oil producing nations consider whether to raise production.
- ConocoPhillips had about 11,800 employees as of Dec. 31, 2024.
A spokesman told Barron’s that it is always looking for ways to be more efficient. But the move mirrors industry practice. Marathon Oil laid off 500 employees last year before ConocoPhillips completed its $22.4 billion acquisition.
- President Trump has promised a renaissance for fossil fuel producers, though
