The Macro Trading Floor Run It Hot Hot Hot
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Aug 23, 2025 A surprising speech at Jackson Hole hints at potential interest rate cuts, sending shockwaves through the markets. The hosts delve into how fiscal policies could shape the U.S. economy if Trump pushes for a hot economy in 2026. They also explore the vibrant culture of post-COVID Montreal and analyze twists in commodity markets, with a focus on rising coffee futures and real yields. As they unpack the complexities of labor markets, they stress the importance of independent investment advice amidst shifting trends in bonds and stocks.
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Powell's Unexpected Dovish Pivot
- Powell's Jackson Hole tone flipped dovish despite recent Fed messaging and stable unemployment data.
- That divergence raises the risk of a larger market reaction if the Fed truly follows through on cuts.
Dovish Fed + Tight Labor Can Run It Hot
- A dovish Fed while labor and inflation risks remain elevated can create a true 'run it hot' scenario.
- That combination could push inflation and unemployment into a strange coexisting outcome over the next months.
Fiscal, Tariffs And CapEx Can Fuel Nominal Growth
- Fiscal stimulus, tariff rebates and corporate capex (notably AI-related) could lift labor demand and nominal growth next year.
- That mix increases odds of sticky inflation while the Fed talks about cuts.
