As Taylor Swift fans celebrate news of her forthcoming album, Wall Street is also in a party mood.
The S&P 500 and Nasdaq hit record highs yet again Tuesday after monthly inflation data signaled that sweeping tariffs aren’t causing a big spike in consumer prices, boosting hopes that the Federal Reserve is about to start cutting interest rates.
The working thesis is that the soft July jobs report means the central bank will prioritize supporting the labor market by lowering borrowing costs, even if the trade-off is inflation running a little hotter than its target. Treasury Secretary Scott Bessent even called for a half-point cut, which would be quite the change of pace given the Fed has yet to lower rates at all this year.
Still, both investors and the Trump administration should know all too well by now that Fed Chair Jerome Powell may not yet be singing from the same hymn sheet.
Powell said last month that the central bank would probably have eased monetary policy already if it were not for tariffs, and the market could be in for a rude awakening if he sticks to that argument at next week’s Jackson Hole Economic Symposium.
It’s been anything but a love story between Trump and Powell. With the Street now pricing in three straight rate cuts, the Fed chair needs to come round to the president’s way of thinking, otherwise the stock market will face a major disappointment.
Swift’s mega-tours have lifted countries’ GDP in the past. Investors will be hoping the Fed is about to give the U.S. economy an even bigger boost by cutting rates, but it wouldn’t take much of a pushback for Powell to become the anti-hero.
—George Glover
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CONTENT FROM: Blue Owl Capital
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Asset-Based Finance: Private Credit’s Next Chapter
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As private markets expand, Asset-Based Finance is emerging as a key focus in private credit—offering new opportunities for investors. Blue Owl’s Ivan Zinn shares what’s driving this evolution and how he believes the firm is positioned for what’s next.
Learn more
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Perplexity Bids for Google Chrome Amid Wait for Judge’s Decision
Artificial-intelligence start-up Perplexity AI has offered Alphabet $34.5 billion to buy Google’s Chrome browser. Perplexity CEO Aravind Srinivas wrote in a letter to Alphabet CEO Sundar Pichai that the proposal would satisfy an antitrust remedy in the
event a federal judge rules Google must sell the browser.
- Google has been waiting for U.S. District Judge Amit Mehta’s decision on the remedies it must make to restore competition after ruling the company ran a monopoly in search. The Justice Department urged the judge this spring to force Google to sell its Chrome web
browser.
- In the letter outlining its $34.5 billion proposal on Tuesday, Perplexity called itself a “capable, independent operator focused on continuity, openness, and consumer protection,” and said it was committed to “maintaining, supporting, and promoting Chromium” as the open-source project that underlies many web browsers.
- Although the proposed purchase amount is larger than Perplexity’s own $18 billion valuation, the company told The Wall Street Journal that several investors including large venture-capital funds have agreed to back the transaction in full.
- Google hasn’t indicated it’s interested in a sale of Chrome. Lee-Anne Mulholland, Google’s vice president of regulatory affairs, told Barron’s last November that being forced to spin off Chrome or Android would “harm consumers, developers and American technological leadership.”
What’s Next: Perplexity offered to invest $3 billion over 24 months for reliability, performance, security, and customer support, and to maintain “uninterrupted availability and support for existing customers for at least 100 months post-close.” Srinivas asked Pichai for a response by Friday, Aug. 15.
—Janet H. Cho
Inflation Has Been Tame, Though Tariff Effects Are Visible
Inflation is not surging out of control, with the headline number holding steady 2.7%
in July from a year ago. That should provide some flexibility for Federal Reserve officials to cut interest rates in September if the job market continues to weaken. Core inflation rose 3.1% on an annual basis in July, up from June’s 2.9% pace.
- Nationwide economist Oren Klachkin said inflation remains “well-behaved,” as price
growth largely met expectations. While the effect of higher import tariffs are visible in the July consumer price index data, the rate at which they are flowing through to consumers remains manageable, at least for now.
- Fitch Ratings chief economist Brian Coulton notes the annual rate of core goods inflation was 1.2% in July, a notable rebound considering it had been negative as recently as March. Used car prices, in particular, rose 0.5% in July after several months of decline, gaining
nearly 5% annually.
- Prices for some products that had risen sharply in May and June, including major appliances, fell in seasonally adjusted terms last month. Specifically, washer and dryer prices fell by 2.2%. Prices for personal care products were flat on the month. Apparel prices also rose by a more muted 0.1%.
- Services inflation is also helping keep inflation above the Fed’s 2% target. After a couple of months of decent readings, the gain in services prices accelerated again to 0.4% in July from June, for an annual growth rate of 3.6%. Services inflation excluding shelter rose 4% in July from a year ago.
What’s Next: Still, while today’s data are certainly not a deterrent to rate cuts, there is another inflation report and another report on nonfarm employment before the next Fed policy meeting on Sept. 16-17. For more on Tuesday’s CPI report, read here.
—Megan Leonhardt
Oklo Among Nuclear Startups Racing to Build New Reactors
Nuclear start-up Oklo is among the 11 companies chosen by the Energy Department for a test reactor program that is striving to have at least three advanced nuclear reactors running at America’s national laboratories by July 2026. Achieving that deadline would be a year ahead of Oklo’s internal targets.
- Nuclear is a red-hot sector, no pun intended, but still largely untested. Nuclear reactors ordinarily take about a decade to get licensed and built, but President Donald Trump wants to speed up the process with a streamlined regulatory review process. Trump also says current reactor radiation emissions standards are unrealistic.
- While some nuclear experts have raised concerns about the risks of bypassing traditional regulatory procedures and safeguards, there is a growing industry of newer start-ups aiming to build nuclear reactors using designs they say are
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