Too Long; Didn't Read - Canadian Markets and Politics

I have a very exciting announcement for our subscribers.Starting this week I will be releasing a bi-weekly podcast with my good friend Melissa Caouette, Founder of Pocket Lobbyist and Principal at MC Consulting.subscribe hereWe will be bringing you a regular diet of Canadian market and political insights to help you better navigate your business and portfolio of investments.On to the Market Update:As I always say, if you must panic… panic first.At close on friday, the $VIX was sitting in the $14 range.I do not make market ‘top’ or ‘bottom’ calls. That would be silly.However, a few times a year the market starts to scream - “be careful and/or take some extra risk.” Once or twice a year when the $VIX spikes to 30 we get an opportunity to hold our noses and buy stocks. And during those times, I am generally looking to add stocks rather than sell them…There has been three opportunities since 2008 where the $VIX spiked above 60.* The Great Financial Crisis of 2008* March 2020 Covid Shutdown* Liberation Day Tariffs of April 2025.On it’s own, a $VIX 14-16 means very little. If you added stocks when the $VIX was 60, you have been rewarded as the $VIX calmed back down the last four months. A low $VIX does not mean I want to sell stocks, but it is the reward for buying the spike in March and a much better moment to ‘panic’ if you must sell.Here’s a list of… interesting things that are concerning me.* For some reason people are chasing/piling into Cathie Woods ETF’s again at record pace…It’s not just that degenerates still trust Cathie after years of awful returns…but penny stock trading has been accounting for 30 percent of market volume throughout this summer. Summers may just be the new season for extra degeneracy as the institutions vacay.* Next up… Chamath is floating another SPAC. He thinks it’s ok because he calls the market a ‘casino’(never mind his horrendous track record).Chamath KNOWS that YOU KNOW that he is a grifter and he can still do this and the SEC does not care.This is the darkside of the degenerate economy. Do not expect guardrails or a bailout.The warning signs are accumulating.* Lastly, let’s take one quick look at the mechanics of growth and expectations one should consider. Robinhood has had the run of a lifetime. Based on the numbers, it has made total sense. But, can the background that helped them post these numbers continue?Decoding the Jackson Hole Message and NonFarm Payrolls: Beyond the Hawkish HeadlinesThe dust has settled on Fed Chair Powell's highly anticipated speech at the Jackson Hole Economic Symposium. While initial reactions were mixed, a closer look at the text reveals a more nuanced and ultimately dovish stance than many are reporting.The speech was not a "pounding the table" moment. No new policy was made, and it was certainly not a policy mistake—the FOMC meeting is still weeks away.Here’s a pragmatic breakdown of the key takeaways and what they signal for the path ahead.1. The Fed's Core Message: A Clear Nod to the Jobs MandateInstead of a hawkish warning, Powell's concluding remarks pointed directly toward a policy adjustment, emphasizing the Fed's concern for its employment mandate. His final line before discussing the new consensus statement was pivotal:"Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance."This language signals a clear predisposition to ease policy, contingent on incoming data. The market reaction confirmed this, with the probability of a September rate cut ending the week largely where it started (around 83%), despite some intra-day volatility.2. The Path to a September Rate CutThe message from the Fed is clear: policy is data-dependent, but the bar for not cutting rates is now extremely high. A rate cut in September seems to be the baseline scenario unless the next cycle of data comes in exceptionally hot across the board.The Fed will cut rates in September unless we see a combination of:* Strong employment data (in all its forms).* Hot inflation reports (CPI, PPI, and Import Prices) in the week before the meeting.Barring this "fire hot" scenario, the Fed appears poised to act.3. Debunking the 2% Inflation Target MythA significant misinterpretation circulating is that the Fed has abandoned its 2% inflation target. This is incorrect. The FOMC's new consensus statement is about flexibility, not abandonment.* What Changed: The framework moved away from rigid "inflation averaging" and now allows for more flexibility to tolerate inflation above 2% specifically when the labor market is weak.* What Didn't Change: The official target remains 2%. The speech did not confirm a commitment to permanently run inflation hot or an abandonment of the target altogether. It's a strategic shift to avoid tightening policy prematurely during a potential downturn.Looking Ahead: My PerspectiveI believe the Fed is slowly and steadily moving toward a view that is more cautious about the real economy and less concerned about persistent inflation. This speech was another step in that direction and the market is pricing in 3 cuts to end this year. and 2 more in 2026.While I remain critical of the Fed's long-term balance sheet policy, which has contributed to asset inflation, the near-term outlook for monetary policy is leaning dovish. A potential cut is not a policy mistake; it's a pragmatic adjustment to a shifting balance of risks.The key now is the data. If it doesn't show significant re-acceleration, the Fed has given itself the green light to begin easing.What was your main takeaway from Jackson Hole? Do you believe a September cut is locked in for this week?#JacksonHole #FederalReserve #JeromePowell #MonetaryPolicy #Economics #Inflation #InterestRates #MarketOutlook #Finance #InvestingBest Links of The Week🔮:* Oracle’s move off OpenAI Contracts: Oracle (48), led by founder Larry Ellison (81), added half of ten year old OpenAI’s $500 billion recent valuation this week in two days. All over its erupting AI Data Center Building revenue backlog from its $300 billion OpenAI Stargate buildout deal. Source: Bloomberg* Apple continues to have a unique set of advantages vs its peers in this AI Tech Wave. Especially as AI capabilities truly ramp up across their ecosystem. Won’t have to squint hard to find them. Apple is poised to deliver bottom up AI applications and services to billions in the months ahead. With a laser focus on Design in the hardware and software. - Apple Product Launch Source: Bloomberg* “A rally that put stocks on the brink of all-time highs sputtered and bond yields rose as euphoria around Federal Reserve rate cuts eased just days ahead of a key inflation reading... Traders are bracing for a not-so-friendly price reading later this week. The Fed’s preferred gauge of underlying inflation probably ticked higher last month, with the personal consumption expenditures price index excluding food and energy rising 2.9% from a year ago. That would be fastest annual pace in five months.” Source: Bloomberg* “Banks are pushing to change new US stable coin rules over fears they will spark trillions of dollars’ worth of outflows, underlining growing competition between Wall Street and the [virtual] currency industry. Banking lobbies including the American Bankers Association, the Bank Policy Institute and the Consumer Bankers Association last week warned lawmakers of a “loophole” in regulation that will let some [virtual currency] exchanges indirectly pay interest to stable coin holders.” Source: FT* “Elon Musk’s artificial-intelligence startup xAI sued Apple and OpenAI Monday, alleging the companies are illegally thwarting competition for AI companies. The lawsuit says the iPhone-maker’s partnership with OpenAI makes the startup’s ChatGPT the “only generative AI chatbot that benefits from billions of user prompts originating from hundreds of millions of iPhones.” That enables OpenAI to use the prompts and feedback to improve its model, a significant advantage, according to the complaint. The suit also says Apple is deprioritizing the apps of competing chatbots in its App Store rankings.” Source: WSJ This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit reformedmillennials.substack.com