CBO Director Phillip Swagel addresses accusations of being partisan
Congressional Budget Office Director Phillip Swagel joins 'Squawk Box' to discuss criticism of the latest CBO report, his expectations for the Federal Reserve, accusations of partisanship, and more.
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CNBC
2 hours ago
- CNBC
The Israel-Iran conflict and the other big thing that drove the stock market this week
It's been a tense and dynamic week for the world at large. The market action on Wall Street over the past four sessions was been anything but that. For the week, the S & P 500 lost 0.15%, the tech-heavy Nasdaq ticked up 0.21%, and the Dow Jones Industrial Average was basically flat, up a mere 0.02%. Beneath the surface, though, there was plenty of news for investors to digest. Here's a closer look at the biggest market themes during the holiday-shortened trading week. 1. Geopolitics: The major news story was — and still is — the intensifying war between Israel and Iran. The big question on everyone's mind is whether the U.S. will get involved. As of Friday, reports indicate that while President Donald Trump is actively reviewing options to attack Iran, nothing has been authorized. The White House has said Trump he will make a decision in the "next two weeks". As a result of the Israel-Iran conflict, investors spent the week keeping an extra close eye on the movement in safe-haven assets like gold and the dollar, as well as risk assets such as oil. Gold prices pulled back this week after their initial spike last Friday, which is when Israel's first attack on Iranian nuclear infrastructure jolted markets. The U.S. dollar index , meanwhile, strengthened this week but still remains near multiyear lows. Oil rose again for the week, with international benchmark Brent crude climbing nearly 4%. For those looking to gauge what the market thinks will happen with Iran, look to oil. The commodity is currently acting as something of proxy on the odds of the conflict intensifying and America directly entering the fray. 2. Fed updates: The other big theme of the week centered on the health of the U.S. economy in the lead up to Wednesday afternoon, when we got the Federal Reserve's latest interest rate decision and revised economic projections. Ultimately, the Fed kept its benchmark lending rate unchanged on Wednesday following its two-day policy meeting. The decision followed lackluster updates on the state of the consumer and the housing market , along with lower-than-expected inflation readings the week prior. As we outlined earlier this week , the Fed is in a tough spot when it comes to abiding by its dual mandate of ensuring price stability and low unemployment. The state of play requires nuance. On the one hand, there is evidence in support of rate cuts, namely some cracks in the consumer — even if the consumer has remained largely and impressively resilient — and the Fed's own updated outlook for lower real GDP growth and higher unemployment this year. On the other hand, the Fed is now expecting higher inflation this year than it did in March, which would support the need for higher interest rates. Given these dueling dynamics and the uncertainty around tariff impacts, the central bank's decision to keep interest rates steady makes sense. While the Fed certainly doesn't want to wait too long and make the same mistake we saw coming out of the Covid-19 pandemic, we must acknowledge that the causes of a potential rebound in inflation are different this time around. Tariffs will likely push up prices, but that may be a one-time increase, as opposed to the sustained inflation we saw exiting the pandemic, which was driven by massive supply chain disruptions and shifts in consumer behavior. As a result, we believe the apparent bias to be more worried about the job market and overall economic growth — and therefore cut rates later this year — makes sense, too. Indeed, the Fed's updated projections still pencil in two rate cuts in 2025, the same as in March despite the aforementioned revisions to its inflation and growth outlook. Fed Governor Christopher Waller made the case Friday that the cuts should start as early as July, arguing that the inflation risk posed by tariffs is not significant and ensuring resiliency in the labor market should be a higher priority. Waller's argument is basically that it's better to move now than wait for a jump in unemployment. Our biggest focus at the Club is staying nimble, given the highly volatile nature of geopolitics at the moment. No doubt, rate decisions are important to think about, but they're only one small part of the investing puzzle to navigate each day. For this reason, we continue to focus more on individual company fundamentals and industry trends rather than higher-level dynamics, important as they are to shaping our worldview. Cybersecurity stocks are one example that we highlighted this week. Another example would be the news we got from Club names Meta Platforms and Amazon this week on their artificial intelligence efforts. We think the implications that AI will have on the cost structures, revenue opportunities and efficiency gains should weigh far more heavily in the minds' of long-term investors than whether the Fed will cut in July or September. (Jim Cramer's Charitable Trust is long META, AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Yahoo
3 hours ago
- Yahoo
Stock Market's Path Depends on Fed's View of What We Don't Know
(Bloomberg) -- For investors and traders trying to game out where the US economy, the stock market or interest rates are headed in the second half of 2025, good luck. There's simply too much uncertainty to be sure of anything right now. Security Concerns Hit Some of the World's 'Most Livable Cities' One Architect's Quest to Save Mumbai's Heritage From Disappearing JFK AirTrain Cuts Fares 50% This Summer to Lure Riders Off Roads NYC Congestion Toll Cuts Manhattan Gridlock by 25%, RPA Reports Taser-Maker Axon Triggers a NIMBY Backlash in its Hometown Take it from Federal Reserve Chair Jerome Powell, who used variations of the word 'uncertain' nearly 20 times in his post-meeting press conference on Wednesday. Wall Street pros were looking to Powell and the Fed for clues about what's next in a world beset by risks — from escalating war in the Middle East to rising trade tensions between the US and China. But the answer they got was a resounding 'we don't know,' with the central bank remaining in wait-and-see mode before deciding whether it can safely start to lower interest rates. 'If anything, the Fed's read-and-react stance showed just how clueless everyone is right now,' said Scott Ladner, chief investment officer at Horizon Investments. 'As an investor, you cannot trade this, you cannot get ahead of it.' The S&P 500 Index is within 3% of a record high, but it's been holding tight in a narrow range lately. There have been just two sessions this month with moves of more than 1%, and the benchmark has barely budged over the past two weeks. It's been a surprisingly stagnant period considering oil has soared and the dollar has plunged on the global developments. Headline Swings The problem for equity traders appears to be a lack of clarity as sentiment changes from one headline to the next. You could see it in the stock market action late this week. On Thursday, which was a market holiday in the US, futures contracts on the S&P 500 sank more than 1% in the morning following reports that US officials were preparing for a possible strike on Iran in the coming days. Then, President Donald Trump signaled that he wanted to give diplomacy a chance, which halted the decline. And Friday morning Fed Governor Christopher Waller said he could see interest-rate cuts starting as soon as July, which sent S&P futures jumping into the beginning of the regular session. But those gains turned out to be short-lived as Iran and Israel traded missile attacks and news hit that the Trump administration is ready to crack down on semiconductor plants in China. After all the back-and-forth, the index closed down 0.2% on the day. 'The S&P 500 is not breaking out one way or another because we've got crosswinds,' Ladner said. Fed officials left interest rates unchanged this week, with the majority of voting members seeing at least two more quarter-point cuts this year. Those views are essentially guesses, however, because the pace of inflation in the coming months and the resilience of the labor market remain unknown in the face of mounting risks. 'No one holds these rate paths with a lot of conviction,' Powell said at his press conference. 'We expect a meaningful amount of inflation in the coming months, and we have to take that into account.' And Wall Street is positioning accordingly. A gauge of equity positioning fell this week, led by discretionary investors who went from slightly below neutral to more notably underweight, data compiled by Deutsche Bank AG strategists including Parag Thatte show. With that cut, aggregate equity positioning now sits in the middle of the bottom-half of its usual band, the data show. The mood among Wall Street prognosticators is equally mixed. Swaps traders are pricing in a roughly 62% chance the Fed will lower rates in September, but there isn't a lot of conviction backing those positions. Michael Feroli, chief US economist at JPMorgan Securities wrote in a note to clients Wednesday that he foresees one cut this year, at the Fed's December meeting. UBS's senior US economist Brian Rose said that while the bank's base case still calls for 100 basis points of cuts starting in September, he sees risks skewed toward a later start to easing. And Bank of America economists led by Aditya Bhave wrote in a note on Wednesday that they aren't expecting any rate reductions this year. Uncharted Territory 'The Fed too is facing an uncharted territory,' said Bill Sterling, global strategist at GW&K Investment Management in Boston. 'We haven't had tariff hikes this large in modern history, and there isn't an easy model they can go to.' The S&P 500 is up 1.5% for the year after a stunning rebound from the brink of a bear market in April, when Trump unveiled his sweeping global tariffs. The gauge soared 19% from April 8, just before Trump paused the bulk of his levies, through the end of May on hopes that the trade war wouldn't turn out to be as bad as feared. But since then, the S&P has been pretty much stagnant, taking a few steps forward and a few steps back as each new headline rolls in. 'Long-term investors will be wise not to make abrupt shifts in portfolio allocations due to news headlines,' Sterling said. The challenge for investors is that the same dynamics that powered the S&P 500 to gains of more than 20% in 2023 and 2024 — the emergence of artificial intelligence, strong corporate fundamentals, and a resilient consumer — remain intact. But what's holding back optimism is everything else, the uncertainty around policy, geopolitics, slowing growth and creeping signs of stress at the bottom end of consumer spending. At their meeting this week, Fed officials downgraded their estimates for economic growth this year and lifted their forecasts for unemployment and inflation. Economic data hasn't offered much help either, with indications heading in divergent directions. A slew of figures pointed to early signs of the economy slowing down. US factory activity contracted in May for a third consecutive month. Industrial production declined in May for the second time in three months. A gauge of imports fell to a 16-year low. Job growth moderated. And May retail sales fell by the most since the start of the year. But that flies in the face of the latest reading in the consumer price index, a key inflation gauge, which showed US prices in May rose by less than forecast for the fourth month in a row, suggesting consumers have yet to feel the pinch of tariffs. Of course, those numbers can change quickly if higher levies set in and inflation jumps. All of which makes a hard road even tougher for traders trying to figure out how to position for the second half of 2025. 'The Fed has laid out its reaction function,' said Kevin Brocks of 22V Research. 'But investors will have to wait and see what the impact of tariffs on inflation actually is.' Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? The US Has More Copper Than China But No Way to Refine All of It Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump? ©2025 Bloomberg L.P. 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Yahoo
3 hours ago
- Yahoo
Stock Market's Path Depends on Fed's View of What We Don't Know
(Bloomberg) -- For investors and traders trying to game out where the US economy, the stock market or interest rates are headed in the second half of 2025, good luck. There's simply too much uncertainty to be sure of anything right now. Security Concerns Hit Some of the World's 'Most Livable Cities' One Architect's Quest to Save Mumbai's Heritage From Disappearing JFK AirTrain Cuts Fares 50% This Summer to Lure Riders Off Roads NYC Congestion Toll Cuts Manhattan Gridlock by 25%, RPA Reports Taser-Maker Axon Triggers a NIMBY Backlash in its Hometown Take it from Federal Reserve Chair Jerome Powell, who used variations of the word 'uncertain' nearly 20 times in his post-meeting press conference on Wednesday. Wall Street pros were looking to Powell and the Fed for clues about what's next in a world beset by risks — from escalating war in the Middle East to rising trade tensions between the US and China. But the answer they got was a resounding 'we don't know,' with the central bank remaining in wait-and-see mode before deciding whether it can safely start to lower interest rates. 'If anything, the Fed's read-and-react stance showed just how clueless everyone is right now,' said Scott Ladner, chief investment officer at Horizon Investments. 'As an investor, you cannot trade this, you cannot get ahead of it.' The S&P 500 Index is within 3% of a record high, but it's been holding tight in a narrow range lately. There have been just two sessions this month with moves of more than 1%, and the benchmark has barely budged over the past two weeks. It's been a surprisingly stagnant period considering oil has soared and the dollar has plunged on the global developments. Headline Swings The problem for equity traders appears to be a lack of clarity as sentiment changes from one headline to the next. You could see it in the stock market action late this week. On Thursday, which was a market holiday in the US, futures contracts on the S&P 500 sank more than 1% in the morning following reports that US officials were preparing for a possible strike on Iran in the coming days. Then, President Donald Trump signaled that he wanted to give diplomacy a chance, which halted the decline. And Friday morning Fed Governor Christopher Waller said he could see interest-rate cuts starting as soon as July, which sent S&P futures jumping into the beginning of the regular session. But those gains turned out to be short-lived as Iran and Israel traded missile attacks and news hit that the Trump administration is ready to crack down on semiconductor plants in China. After all the back-and-forth, the index closed down 0.2% on the day. 'The S&P 500 is not breaking out one way or another because we've got crosswinds,' Ladner said. Fed officials left interest rates unchanged this week, with the majority of voting members seeing at least two more quarter-point cuts this year. Those views are essentially guesses, however, because the pace of inflation in the coming months and the resilience of the labor market remain unknown in the face of mounting risks. 'No one holds these rate paths with a lot of conviction,' Powell said at his press conference. 'We expect a meaningful amount of inflation in the coming months, and we have to take that into account.' And Wall Street is positioning accordingly. A gauge of equity positioning fell this week, led by discretionary investors who went from slightly below neutral to more notably underweight, data compiled by Deutsche Bank AG strategists including Parag Thatte show. With that cut, aggregate equity positioning now sits in the middle of the bottom-half of its usual band, the data show. The mood among Wall Street prognosticators is equally mixed. Swaps traders are pricing in a roughly 62% chance the Fed will lower rates in September, but there isn't a lot of conviction backing those positions. Michael Feroli, chief US economist at JPMorgan Securities wrote in a note to clients Wednesday that he foresees one cut this year, at the Fed's December meeting. UBS's senior US economist Brian Rose said that while the bank's base case still calls for 100 basis points of cuts starting in September, he sees risks skewed toward a later start to easing. And Bank of America economists led by Aditya Bhave wrote in a note on Wednesday that they aren't expecting any rate reductions this year. Uncharted Territory 'The Fed too is facing an uncharted territory,' said Bill Sterling, global strategist at GW&K Investment Management in Boston. 'We haven't had tariff hikes this large in modern history, and there isn't an easy model they can go to.' The S&P 500 is up 1.5% for the year after a stunning rebound from the brink of a bear market in April, when Trump unveiled his sweeping global tariffs. The gauge soared 19% from April 8, just before Trump paused the bulk of his levies, through the end of May on hopes that the trade war wouldn't turn out to be as bad as feared. But since then, the S&P has been pretty much stagnant, taking a few steps forward and a few steps back as each new headline rolls in. 'Long-term investors will be wise not to make abrupt shifts in portfolio allocations due to news headlines,' Sterling said. The challenge for investors is that the same dynamics that powered the S&P 500 to gains of more than 20% in 2023 and 2024 — the emergence of artificial intelligence, strong corporate fundamentals, and a resilient consumer — remain intact. But what's holding back optimism is everything else, the uncertainty around policy, geopolitics, slowing growth and creeping signs of stress at the bottom end of consumer spending. At their meeting this week, Fed officials downgraded their estimates for economic growth this year and lifted their forecasts for unemployment and inflation. Economic data hasn't offered much help either, with indications heading in divergent directions. A slew of figures pointed to early signs of the economy slowing down. US factory activity contracted in May for a third consecutive month. Industrial production declined in May for the second time in three months. A gauge of imports fell to a 16-year low. Job growth moderated. And May retail sales fell by the most since the start of the year. But that flies in the face of the latest reading in the consumer price index, a key inflation gauge, which showed US prices in May rose by less than forecast for the fourth month in a row, suggesting consumers have yet to feel the pinch of tariffs. Of course, those numbers can change quickly if higher levies set in and inflation jumps. All of which makes a hard road even tougher for traders trying to figure out how to position for the second half of 2025. 'The Fed has laid out its reaction function,' said Kevin Brocks of 22V Research. 'But investors will have to wait and see what the impact of tariffs on inflation actually is.' Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? The US Has More Copper Than China But No Way to Refine All of It Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump? ©2025 Bloomberg L.P.
