Squawk on the Street SOTS 2nd Hour: PPI Concerns, Charles Schwab’s Chief Strategist, & LIVE: St. Louis Fed President Musalem 8/14/25
Aug 14, 2025
In this discussion, Alberto Musalem, President and CEO of the Federal Reserve Bank of St. Louis, shares crucial insights on inflation and labor market dynamics. Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, analyzes how producer price data is affecting financial markets. They delve into the implications of tariffs on consumer prices and the delicate balance policymakers must strike amid economic uncertainties. Together, they explore potential rate adjustments by the Fed and the overall market's reaction to these economic indicators.
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Services, Not Just Goods, Drove PPI
- Services drove most of July's PPI increase, complicating the narrative that tariffs are the main culprit.
- Markets should weigh service inflation separately when judging Fed cut odds.
Mega Caps Are Flattering Index Gains
- Index gains are narrow and driven by mega-cap leadership, masking weak broad participation.
- Under the surface, breadth metrics show many stocks are not keeping pace with the rally.
Favor Quality Within Small Caps
- Avoid leaning into low-quality small caps that lack profits or cash flow.
- Instead, favor higher-quality small- and mid-cap names for ballast during volatility.