Hope you are all doing well. Stocks rallied on Friday reversing the downward drift that had sent the S&P 500 to a five-session negative streak. The Dow outperformed, generating a 1.6% return for the week and posting its first record high of 2025. The S&P 500 ended up fractionally higher while the NASDAQ was down slightly. Cracker Barrel was in the news this week after announcing a controversial rebranding. I have broken down this week’s update using Cracker Barrel menu items.
Old Timer’s Breakfast
The Federal Reserve is considered an old timer at the Jackson Lake Lodge having gone every summer for more than four decades. Stocks surged on Friday after Chair Jerome Powell spoke at the central bank’s annual conference in Jackson Hole, Wyoming. Discussing the prospect of a rate cut at its September 16–17 meeting, the Fed chair emphasized recent labor market weakness and said that “the balance of risks” relative to inflationary pressures “appears to be shifting.” That comment sent stocks higher. It also increased market expectations for a September rate cut. At Friday’s close, prices in rate futures markets implied an 83.1% probability that the Fed would cut a quarter-point in September. Powell was clear that the Fed remains cautious. So expect one or two quarter point cuts at the most between now and the end of the year. Inflation is likely to rise in the months ahead. A cooling labor market is why investors think multiple cuts are imminent. However, 12,000 Americans turn 65 every day, many of them are retiring and leaving the workforce. That will keep unemployment from jumping too much. Ultimately, I think the Fed will disappoint the market by not cutting as much as is predicted.
Momma’s Pancake Breakfast
We may soon be able to make pancakes great again with Canadian maple syrup. Canada’s government on Friday announced that it was removing many of the retaliatory tariffs that it had imposed five months ago on imports from the United States. However, Canada said its 25% tariffs on U.S. autos, steel, and aluminum will remain in place for now. U.S. officials said they will continue negotiations with Canada. Perhaps the ice is thawing on our trade relations with our Northern neighbor.
Grandma’s Sampler
We got a large serving of earnings reports from various big box retailers like Walmart and Target. Both companies reported stronger than expected results. This means consumers are still spending. So far retailers seem willing to or maybe scared not to absorb some of the tariff-related cost increases. I will be curious to see if this trend holds when it comes time for these huge retailers to replenish their inventory.
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