Please see the below article from Brooks Macdonald detailing their discussions on market fluctuations surrounding the Fed’s independence concerns and anticipation of Powell’s Jackson Hole speech. Received today 21/08/2025.
What has happened?
In equity markets, technology stocks sold off early in the day with the Nasdaq down -2% at its weakest, although it subsequently recovered to -0.67% by the close. This may have been triggered by an MIT study which claimed that 95% of enterprises adopting AI were getting ‘zero return’ from their investment, which triggered concerns about the immediate profitability of AI technologies. The market’s reaction over the course of the day likely indicates that investors are willing to take a longer-term view when considering the benefits of AI. Outside of the technology sector, in the US most sectors had a decent day with energy (+0.9%) benefiting as the price of Brent crude rose by 1.6% to $66.84.
Renewed focus on the Fed’s independence
President Trump has posted on social media calling for the resignation of Fed Governor Cook, after Federal Housing Finance Agency (FHFA) Director Bill Pulte wrote a letter to Attorney General Pam Bondi alleging that Cook may have committed mortgage fraud. Cook is seen as mildly dovish, but if she were to resign or be fired, that would create another opportunity (after the appointment of Trump loyalist Stephen Miran) for President Trump to reshape the Board.
What does Brooks Macdonald think?
The path of future US monetary policy continues to be in the spotlight. The Federal Reserve minutes from the 29 – 30 July meeting were published yesterday, with the majority of participants judging the upside risk of inflation to be larger than the risk posed by the slowdown in the labour market. Views on the impact of tariffs were divided, with some FOMC members thinking that tariffs would lead to a one-time increase in the level of prices as opposed to a more persistent increase in inflation. Looking forward, investor’s attention will be on Fed Chair Powell’s speech at the Jackson Hole symposium tomorrow for any indication of the likelihood of future rate cuts.
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Marcus Blenkinsop
21st August 2025