What to Expect from Fed Chair Powell's Speech on Friday: 3 Key Scenarios

Economic

Central Bank

Summary:

Fed officials consider high enough to "moderately" weigh on economic growth and put downward pressure on inflation.

Wall Street will be listening closely to Federal Reserve Chair Jerome Powell's speech Friday at the Jackson Hole economic policy summit, where he could signal whether the central bank is ready to cut borrowing costs at its next meeting in September.

Powell is scheduled to deliver a speech entitled "Economic Outlook and Framework Review" at 10 a.m. Eastern Time. The talk could shed light on how the Fed chief is thinking about the central bank's battle to bring down inflation, and whether he thinks the Fed is ready to cut its benchmark fed funds rate from its current range of 4.25% to 4.5%, a level he and other Fed officials consider high enough to "moderately" weigh on economic growth and put downward pressure on inflation.

In recent years, Powell has used the annual Jackson Hole speech to signal major changes in monetary policy. In 2024, he confirmed the Fed was about to cut rates for the first time in more than a year, after holding the Fed funds rate high to stamp out a post-pandemic wave of inflation. This time, Powell could use the summit to signal whether the Fed is ready to resume rate cuts for the first time since December.

Powell may also shed light on how he views the Fed's current dilemma. The central bank is tasked with using monetary policy to keep inflation low and employment high. But lately, both of those economic indicators have gone in the wrong direction after President Donald Trump launched his unprecedented campaign to raise import taxes.

Experts expect the speech to go one of at least three ways:

Signal A Rate Cut Is Coming

Powell could use the speech to signal that the Fed will cut interest rates soon, possibly when its policy committee announces its next meeting in September. Financial markets were pricing in an 83% chance of a rate cut as of Monday afternoon, according to the CME Group's FedWatch tool, which forecasts rate movements based on Fed funds futures trading data.

Powell and other Fed officials have voiced concerns that the recent slowdown in the job market could turn into a more serious wave of unemployment. Those fears were supercharged earlier this month by a Department of Labor report that showed job growth unexpectedly ground to a halt this summer.

"With the labor market already near the limit of what could be called maximum employment, we suspect that weak job growth and concern about further downward revisions and downside risks have already convinced the Fed leadership to resume rate cuts," David Mericle, chief U.S. economist at Goldman Sachs, wrote in a commentary.

Throw Cold Water On Hopes For a Cut

On the other hand, Powell could use the opportunity to remind everyone that the Fed's other economic nemesis, inflation, is far from vanquished, making him reluctant to cut interest rates. Recent reports indicate that tariffs are showing up on store shelves, and, ominously, in wholesale prices. That's fueled concerns about a resurgence of inflation, which is still running above the Fed's goal of a 2% annual rate.

Given the alarming inflation data, market participants may be too optimistic about a September rate cut. Economists at Brean Capital Markets, John Ryding and Conrad DeQuadros, wrote in a commentary that Powell may seek to curb their enthusiasm.

"Powell may not want to say that a cut is off the table on September 17, but he needs to say something like: 'At this point, there are some discomforting readings on inflation that are inconsistent with the attainment of the 2% inflation target and based on the evidence to date, I am not inclined to support a rate cut at the next FOMC meeting,'" they wrote.

Stay Noncommittal, Wait For More Data

With data pulling the Fed in both directions, Powell may be reluctant to signal a strategy just yet, especially since one more round of major economic indicators is due before the FOMC makes its monetary policy decision.

"If Chair Powell carves out part of the speech with an update on the outlook for policy, we expect he remains data dependent," economists at UBS led by Jonathan Pingle wrote in a commentary. "We doubt he commits to a September rate cut specifically."

Source: Investopedia

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Manuel

Stocks

US stocks closed the session little changed on Monday as investors turned their focus to a high-stakes US-Ukraine meeting, kicking off a week dominated by a Federal Reserve speech that could define the outlook for interest rates.

The S&P 500 (^GSPC) fell just below flatline, while the Dow Jones Industrial Average (^DJI) declined nearly 0.1%, coming off a second straight winning week for the major gauges. The tech-heavy Nasdaq Composite (^IXIC) eked out slight gains.

Geopolitics were front of mind on Monday as Volodymyr Zelensky and European allies spoke with President Trump in Washington, D.C., with the Ukrainian president facing US pressure to accept a peace deal that favors Russia. The meeting follows Trump's encounter with his Russian counterpart, Vladimir Putin, at their Alaska summit.

But markets are also looking ahead to the main event this week, Jerome Powell's comments at the Jackson Hole symposium on Friday. His speech — likely to be Powell's last as Fed chair — will be closely followed for clues to the path of monetary policy, after inflation and retail data prompted Wall Street to temper rate cut hopes last week. The annual gathering of central bankers often brings signals of key shifts in Fed thinking, and its policymakers are facing a dilemma over what action to take.

The release of minutes from the Fed's July meeting on Wednesday will set the stage for Jackson Hole in a week light on economic data.

Meanwhile, second quarter earnings season is winding down, with Palo Alto Networks (PANW) and Blink Charging (BLNK) reports on Monday's docket. With most of the reports in, the results have been mostly positive. Highly anticipated earnings from Walmart (WMT), Target (TGT), Home Depot (HD), and Lowe's (LOW) are due later in the week, likely to provide insights into consumer spending.

Shares of Intel (INTC) fell after Bloomberg reported the Trump administration was contemplating a 10% stake in the chipmaker. Last week, shares jumped after reports that Trump was considering using funds from the CHIPS Act to invest in the company.

Source: Yahoo Finance

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Manuel

Stocks

Passive-investment management leader Vanguard plans to launch its first actively managed U.S. stock exchange-traded funds this year, according to filings with regulators on Monday.

The company, which pioneered low-cost, no-frills index-based investment products, intends to roll out ETF versions of three of its existing mutual funds. The funds will be managed by Wellington Management, according to the filings.

While Vanguard has rolled out a handful of active bond ETFs, the new products mark its first push into stock-picking ETFs. They will target dividend growth, growth stock and value stock investment strategies, Vanguard said.

There has been a torrent of new ETFs this year from asset managers trying to capture growing demand for actively managed ETFs that aim to outperform indexes. Actively managed ETFs arose around six years ago. The advent of this strategy in a more tax efficient and lower-cost ETF wrapper has attracted growing investor interest.

Morningstar Direct calculates that there have been 630 new exchange-traded products so far this year, compared to 381 for the same period in 2024. Some 86% of those launches were of actively managed strategies, according to a report published this month by JP Morgan Asset Management, which also found that active ETFs now account for some 37% of total U.S. ETF inflows.

"Until now, Vanguard had been sitting out this rush," said Jeff DeMaso, editor at the Independent Vanguard Advisor.

DeMaso said he expects the new funds will attract a steady if not spectacular flow of assets.

"These are proven strategies," he added.

The new ETFs are "building blocks that reflect our ... commitment to disciplined product development and investor outcomes," said Ryan Barksdale, head of active equity product at Vanguard, in a statement.

Source: Reuters

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Manuel

Cryptocurrency

The total value locked (TVL) in Polygon’s (POL) DeFi ecosystem is up nearly 43% since the start of this year.

According to DefiLlama data, the network recorded $864 million in TVL on Jan. 1, and added roughly $400 million in the following months to hit $1.23 billion as of Aug. 18.

Furthermore, the POL price reflected the TVL growth in the past 30 days, rising above the sector’s average.

Growth driven by traditional protocols

In the past 30 days, Polygon’s TVL increased 7% and reached its highest level since mid-December. The network’s flagship DEX, QuickSwap, and the prediction market Polymarket were the two main drivers behind the $80 million increase.

QuickSwap registered approximately $52 million in TVL inflows in the past 30 months, growing 13.4% in the period. The increase marked the first time QuickSwap has surpassed $440 million in total deposits since May 2022.

Furthermore, Polymarket drew around $28 million in bettors’ money in its 30.2% growth registered in the past 30 days.

Notably, there is potential for more TVL growth. Data from Artemis shows $123 million in netflows directed to Polygon in the past 30 days. The movement suggests that funds are moving on the blockchain that could still be allocated to decentralized applications.

POL outperforms peers

POL’s price increased 6.6% in the past 30 days. Although the number is not a typical two-digit run seen in tokens with small market caps, it was enough for POL to outshine its peers in the sector.

Artemis groups tokens such as POL, Solana, Sui, and other smart contract-focused blockchains in the “Smart Contract Platform” category. Among the 46 tokens tracked in this category, the average weighted performance was 4.5% in the past 30 days.

As a result, POL’s performance stands nearly 50% above the sector’s monthly average gain. Additionally, considering the 22 sectors tracked by Artemis, together with Bitcoin and Ethereum, the average performance was less than 0.5%.

Despite the rough price action POL experienced since 2024, the past 30 days were relatively good enough, likely fueled by on-chain action.

Source: Cryptoslate

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Adam

Cryptocurrency

It’s been a summer to remember for crypto.

Bitcoin is eclipsing record highs, shares in crypto-related companies are soaring and Wall Street is rethinking its stance on the industry.

Once on the fringes of finance, cryptocurrency is now being embraced by a growing base of enthusiastic investors — and that’s driven in large part by the White House’s support. It’s integrating with traditional finance more than ever before, bolstered by sweeping legislative changes in Washington.

For example, President Donald Trump recently issued an executive order that opened the door for digital assets like crypto to be included in 401(k)s. This boosted bitcoin — the world’s largest cryptocurrency by market value — to a record high of $124,000 last week.

Anything related to bitcoin has been on fire this year as investors continue to pour money into crypto-related companies. Meanwhile, skeptics who warn of crypto’s flaws are raising concerns about heightened risks for consumers.

Shares in Robinhood (HOOD), a trading platform that includes cryptocurrencies, have soared 200% this year. Coinbase (COIN), a crypto exchange, has gained 28%.

Strategy (MSTR), a company that purchases bitcoin, is up 26% this year. And BitMine Immersion Technologies (BMNR), a company that mines bitcoin, has surged 625%.

In comparison, the benchmark S&P 500 is up 10% this year. The Nasdaq 100, an index tracking the 100 largest tech companies in the United States, is up 13%.

Crypto is climbing into unprecedented territory. Google is part of a multibillion-dollar deal with a bitcoin mining company called TeraWulf, helping drive enthusiasm about the industry.

“Institutional adoption and strategic infrastructure deals have propelled crypto markets well beyond summer expectations,” said Brian Dobson, head of disruptive technology equity research at brokerage firm Clear Street. “We see this as the early stages of a broader cycle.”

A persistent rally

The current crypto mania has the makings of a classic speculative rally, supported by intense bullishness on tech, AI and crypto, according to Steve Sosnick, chief strategist at Interactive Brokers, a trading platform.

“The (Trump) administration proclaimed that it would be crypto-friendly,” Sosnick said. “Markets have been very much willing to embrace speculation of any kind.”

Circle (CRCL), a stablecoin issuer (a type of crypto coin), has surged 80% since it debuted on the New York Stock Exchange on June 5. The latest crypto-related company to debut on the New York Stock Exchange is called Bullish (BLSH).

Retail investors have been big buyers. However, 9% of global fund managers surveyed by Bank of America in August had exposure to cryptocurrency.

“One factor is just pure excitement around the potential diversification of 401(k)s into alternative assets,” said Michael Green, chief strategist at Simplify Asset Management. “The growing acceptance and awareness of crypto in that space has really powered flows into bitcoin in particular this year.”

BlackRock has also propelled bitcoin’s ascent. The asset management firm launched its own bitcoin exchange-traded fund in January 2024 after the Securities and Exchange Commission greenlit bitcoin-focused ETFs.

The ETF is up 137% since its launch, and it’s become the primary vehicle for investors to get exposure to bitcoin without purchasing the cryptocurrency, Green said. The S&P 500, in comparison, has gained 37% across the same period.

Wall Street is taking notice

Another crypto win came on July 18, when Trump signed the GENIUS Act into law, laying out regulations for stablecoins.

Stablecoins are a type of crypto pegged to another asset, like the US dollar, to keep its value steady. The “stable” value gives it potential use in digital payments.

JPMorgan Chase CEO Jamie Dimon on his company’s earnings call in July said the bank is going to be involved in stablecoins to “understand it” and “be good at it.”

“The way to be cognizant is to be involved,” Dimon said. “We’re going to be in it and learning a lot.”

JPMorgan on July 30 also announced a partnership with Coinbase “to make buying crypto easier than ever.” Beginning this fall, Chase customers will be able to fund their Coinbase accounts to purchase crypto with their Chase credit cards.

Rewards and risks

With all the crypto changes this year, it’s important for investors to “seek as much education as possible” on new technologies and assets like bitcoin to better grasp “all of the opportunities and risks involved,” said Chris Kuiper, vice president of research at Fidelity Digital Assets.

The Trump family has been active in the crypto industry. World Liberty Financial, a company tied to the Trump family, has issued its own stablecoin.

Treasury Secretary Scott Bessent on Thursday said in a social media post that the government aims “to execute on the President’s promise to make the United States the ‘Bitcoin superpower of the world.’”

While markets cheer developments in the space, others are warning of crypto’s flaws and raising concerns about potential financial risks. The GENIUS Act, for example, has been heralded by proponents of the crypto industry. Yet some policy advocacy groups are drawing attention to what they call the lack of consumer protections.

“The GENIUS Act does not really offer much in the way of consumer or investor or financial stability protections beyond what already exists,” said Amanda Fischer, policy director at Better Markets, a nonprofit advocacy group.

“I do not think that this bill should be viewed as regulating stablecoins, so much as it is the government endorsing stablecoins and importing crypto risks into the regular financial system,” Fischer said.

Source: cnn

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Devin

Political

Oil prices edged up on Monday as investors awaited talks between U.S. President Donald Trump and his Ukrainian counterpart after an inconclusive U.S.-Russia summit in Alaska on Friday

Brent crude futures rose 34 cents, or 0.52%, to $66.19 a barrel by 12:00 p.m. EDT (1600 GMT). U.S. West Texas Intermediate crude was up 38 cents, or 0.61%, at $63.18.

Last week Brent eased by 1.1% while WTI dropped 1.7%.

Ukrainian President Volodymyr Zelenskiy said on Monday he was ready to work to end the war with Russia ahead of a meeting with Trump where he could face pressure to accept terms favourable to Moscow.

Investors are watching for clues on potential ramifications for global oil supply, with potential for either a tightening of sanctions or steps toward reconciliation.

"The market is still locked in a speculative fervour right now," said Phil Flynn, a senior analyst with Price Futures Group. "Traders seem to be very pessimistic on prices, which either meant they were expecting a cease fire deal or they think President Trump won't follow though with the tough sanctions."

Trump told Ukraine on Monday to give up hopes of getting back annexed Crimea or joining NATO, emerging more aligned with Moscow on seeking a peace deal instead of a ceasefire first after his meeting with Russian President Vladimir Putin in Alaska on Friday.

The Alaska summit ended with no agreement to resolve or pause the war, though Trump emerged from talks more aligned with Moscow on seeking a peace deal rather than a ceasefire first.

Meanwhile, White House trade adviser Peter Navarro said India's purchases of Russian crude were funding Moscow's war in Ukraine and had to stop, reviving concerns about supply flows.

"India acts as a global clearing house for Russian oil, converting embargoed crude into high-value exports while giving Moscow the dollars it needs," Navarro said.

Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova, said: "The U.S. adviser's sharp words on India's Russian crude imports, paired with postponed trade talks, revive concerns that energy flows remain hostage to trade and diplomatic frictions, even as peace prospects in Ukraine brighten."

Investors are also watching for clues on U.S. interest rates from Federal Reserve Chairman Jerome Powell's comments at this week's Jackson Hole meeting.

Source: Reuters

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Adam

Economic

Emerging-market funds are pivoting to capture the artificial intelligence craze, with some investors predicting that booming technology spending will drive returns for years to come.

Encouraged by the success of Chinese AI developer DeepSeek and Asia’s powerhouse semiconductor firms, asset managers like AllSpring Global Investments and GIB Asset Management are concentrating more of their portfolio in AI stocks. That’s been a winning trade, with AI companies being the six biggest contributors to the rally in Bloomberg’s EM stocks index this year.

“This trend could last for the next 10 to 20 years,” said Alison Shimada, head of total emerging markets equity at AllSpring, which oversees $611 billion. “The impact on local populations within EM will be transformational.”

AI Boom Seen Driving Next Decade of Emerging-Market Returns_1

AI Craze Drives Earnings Bets | Tech index beats broader EM in profit projections

While much of the AI investment frenzy has focused on a handful of Silicon Valley firms, EM companies that can harness the technology or supply crucial components are benefitting. AI servers, for example, have become the main growth driver for Taiwan’s Hon Hai Precision Industry Co., which is known as Foxconn.

The top contributors to Bloomberg’s EM stock index this year are Taiwan Semiconductor Manufacturing Co., Tencent Holdings Ltd., Alibaba Group Holding Ltd., Samsung Electronics Co., SK Hynix Inc. and Xiaomi Corporation, together accounting for 37% of the index’s rally.

Emerging-market stocks that are highly exposed to AI have even outperformed the so-called Magnificent Seven megacap tech firms so far this year, according to equities strategists at Citigroup Inc.

“You cannot invest in emerging markets without having a sanguine and optimistic view of what this AI story can evolve into from a corporate earnings perspective,” said Kunal Desai, London-based co-portfolio manager for global emerging markets equities at GIB Asset Management.

On Monday, MSCI Inc. gauges for emerging-market stocks rose on optimism over easing China-US trade tensions, but the MSCI EM IT Index declined due to levies on semiconductors. Chipmakers Samsung and SK Hynix led a selloff in South Korea.

Desai said that Taiwan and South Korea will be “central drivers” of the EM market story over the next two to three years, with Malaysia, China, India, parts of Latin America and the Middle East seeing “disproportionate gains” due to their exposure to AI data and applications. His fund has invested in AI stocks during recent market dips, predicting that a third of emerging market returns will come from AI-related stocks in the coming years.

There are signs that the momentum will continue as AI adoption accelerates across segments including cloud computing and electrical vehicles. The average estimate of forward 12-month earnings for EM tech stocks has increased 15% since the start of the year, compared to 6% for EM stocks overall.

“The share of AI contribution from the performance standpoint will only grow from here,” said Xingchen Yu, an emerging markets strategist at UBS Global Wealth Management. “The rise of AI and tech is creating a new layer of secular growth, especially in North Asia.”

AI Boom Seen Driving Next Decade of Emerging-Market Returns_2

Performance Boost for IT | Info-tech companies are consistently meeting earnings expectations

The AI revolution could help EM stocks overcome a key obstacle: earnings performance. Company results have lagged forecasts every quarter since early 2022, with MSCI EM Index companies collectively missing profit expectations by more than 12%, according to data compiled by Bloomberg.

But firms in the AI-heavy information-technology sector have consistently met earnings projections since the fourth quarter of last year, boosting investor confidence.

“This sector has been expected to grow explosively and will continue to do so in the future,” said Young Jae Lee, senior investment manager at Pictet Asset Management Ltd. “AI will continue to be a key sector within emerging markets.”