Stocks Rally on Miran’s Nomination to Fed, Kyiv Peace Progress: Aug. 8, 2025

Stocks are nearing records following President Trump’s nomination of Stephen Miran to the Fed’s Board of Governors. The current chair of the Council of Economic Advisors is expected to offer another dovish voice at the central bank, alongside Michelle “Miki” Bowman and Christopher Waller, since Miran adamantly maintains that the White House’s tariffs have not generated any meaningful inflation. Risk appetites are also benefiting from reports that Washington and Moscow are making progress on ending the Kyiv conflict. Investor sentiment is additionally being bolstered by robust corporate earnings and buoyant outlooks overall as Wall Street raises expectations for future profits. Every equity sector ex real estate is advancing, bullish forecast contracts are getting scooped up and the greenback is being helped by rising rates driven by firmer growth projections. In the commodity space, copper, gold and silver are catching bids while energy supplies are seeing lower prices in light of geopolitical improvements; lumber is unchanged. Treasuries are facing selling pressure at the margins quite evenly across the curve, although longer maturities are slightly weaker. Bitcoin is down on the day, too. 

Miran Is Right, Tariffs Haven’t Produced Significant Inflation

This Tuesday’s July Consumer Price Index (CPI) will offer additional clues on whether the White House’s trade policies are pushing up costs across sectors. Tariffs have not produced significant inflation thus far and I don’t anticipate them to in the future. Something I keep repeating is that core goods, the area most sensitive to duties, comprise only a fifth of the CPI and that number is trending south as the landscape becomes more services oriented. Meanwhile, an important risk to consider is a Federal Reserve that is way too tight in light of the looming uncertainty, which I argue is unreasonable. A failure to recognize restrictive monetary policy generates heavy vulnerabilities that subdue hiring decisions, investment initiatives and corporate expansion projects. Indeed, while the economy is doing great overall, there are some meaningful weaknesses under the hood, including a real estate recession, a lack of manufacturing orders, job growth sliding to a crawl, the non-cyclical profile of payroll additions and a frail shopper that is paring back discretionary purchases. The Fed is positioned to cut at least twice by year-end while still maintaining a tough stance on financial conditions. We’ll see if Miran’s arguments, alongside Bowman’s and Waller’s, can sway other committee members to resume their walk down the monetary policy stairs.

Check Out IBKR Podcast with Chair Miran

We invited Stephen Miran and Noruiel Roubini to join me and Chief Strategist Steve Sosnick to an Interactive Brokers podcast last summer. The podcast is available here: US Treasury Becomes Activist Debt Issuer to Juice the Economy

International Roundup

Canadian Payrolls Decline Unexpectedly

Canada’s payrolls lost 51,000 full-time employees in July, a surprising result that could entice its central bank to trim its key interest rate next month. Economists anticipated that overall workers would expand by 13,500. In a sign that businesses are apprehensive about the future, part-time workers increased by 10,300 following a 69,500 gain in June, according to Statistics Canada.

Also in July, the country’s participation rate fell from 65.4% to 65.2%, helping to keep the unemployment unchanged at 6.9%. Economists expected a 7% July reading. Despite the payroll weakness, average hourly wages among permanent employees climbed 3.5% year over year (y/y) after a 3.2% gain in June.

BOJ Policymakers Remain Open to Rate Hikes

Bank of Japan policymakers expressed concerns about the uncertainty of higher tariffs and global trade during the organization’s July 30-31 meeting but conveyed support for further interest rate increases, according to a summary of opinions released this morning. Central bankers believe declines in cost pressures as measured by the CPI will be slower and gross domestic product growth will moderate due to cross-border levies. It will take two to three months to assess the impact of tariffs, according to the summary.

Japan Spending and Real Incomes Decline

Consumer spending in Japan sank 5.2% month over month (m/m) in June, considerably worse than the 3% decline estimated by a consensus of economists and a sharp reversal from the 4.6% increase in May. On a y/y basis, retail transactions expanded 1.3%, missing the estimate of 2.8% and falling from 4.7% in May. Meanwhile, real monthly income per household was down 1.3% m/m based on the CPI.

But Bank Lending Climbs

Total lending to Japanese customers climbed 3.2% y/y in July, easily exceeding economists’ expectation for the rate to match June’s downward revised 2.7% print. Foreign bank transactions led with a 21.1% jump while trusts increased their volume by 1.3%. 

While Economic Gauge Stays Negative

The Economy Watchers Index, which tracks sentiment among business such as restaurants and livery companies that directly serve the public, climbed marginally from 45 in June to 45.2 last month but remained below the pessimism/optimism threshold of 50. Additionally, the metric missed the economist consensus estimate of 45.5.

Among categories, consumer spending weakened, with rising prices and international tensions halting the growth of foreigners visiting the country. Survey respondents also said June sales from tourists were soft. Employment was also weak with businesses citing caution about adding workers due to uncertainties regarding the future. Despite hiring concerns, businesses that are expanding are desperate to find workers, which is leading to wage increases in job postings. Fluctuating oil prices and concerns that tariffs will impact foreign demand for equipment were also among categories with negative sentiment. On a positive note, an earlier-than-normal end to the rainy season is likely to increase demand for leisure activities.