Markets climb higher as Powell faces his legacy moment
Despite a late round of profit-taking on Friday, U.S. equity markets delivered another strong week, with the S&P 500 closing at 6,450. That’s up 9.7% year-to-date! Few would have predicted such resilience back in April, when the administration’s tariff announcement triggered a sharp selloff. But today the twin drivers of market optimism — anything connected to artificial intelligence and the hope of Federal Reserve interest rate cuts — are proving enough to keep pushing stocks higher.
That raises a critical question: What should investors do when markets are setting new records almost daily?
Chief Investment Officer Thierry Hasse
At Elevage Partners, this is where our daily work matters most. Behind the scenes, our investment team is constantly reviewing portfolios. We’re rebalancing when it makes sense, trimming back areas that have run ahead of fundamentals and reallocating between stocks and bonds when conditions warrant. Some positions are harvested for gains, others are sold when they no longer meet expectations. These may not be headline-grabbing moves, but they are the steady adjustments that are designed to help manage risk and support long-term success.
Inflation Still Clouds the Picture
Last week’s inflation data offered more confusion than clarity. The Consumer Price Index (CPI) rose 2.7% in July, slightly below expectations, sparking optimism that the Federal Reserve might act with a bold rate cut at its September meeting. But just two days later, the Producer Price Index (PPI) delivered a surprise, with wholesale prices up 0.9% in July, well above forecasts. On a year-over-year basis, producer prices jumped 3.3%, raising concerns that businesses are absorbing tariff-driven cost pressures, potentially squeezing profit margins.
As Reuters noted, “the mixed signals leave markets without a clear narrative, amplifying the importance of [Fed Chairman Jerome] Powell’s remarks at Jackson Hole” (Reuters, Aug. 15, 2025). In other words, inflation remains an unresolved story, and investors are left waiting for clarity.
Powell’s Speech: A Legacy in the Balance
Against this backdrop, all eyes now turn to the Federal Reserve’s annual symposium in Jackson Hole, Aug. 21–23. While the official theme is “Labor Markets in Transition: Demographics, Productivity and Macroeconomic Policy,” the central moment will be Powell’s speech on Friday, Aug. 22.
For Powell, this address is about more than economic forecasts. As Barron’s recently put it, “his legacy and the Fed’s independence are on the line at Jackson Hole” (Barron’s, Aug. 15, 2025).
Facing political pressure from the administration and an uncertain path for both inflation and employment, Powell is trying to thread the needle between the two competing mandates of price stability and maximum employment. The Federal Reserve’s independence — long viewed as essential to maintaining credibility in financial markets — now hangs in a delicate balance.
Too aggressive a rate cut could undermine the Fed’s credibility; too cautious a stance risks economic slowdown. Either way, criticism is guaranteed. What matters most for investors is that Powell’s message will shape expectations heading into fall, and potentially mark a defining moment of his tenure.
What We’re Watching
At Elevage Partners, our philosophy remains steady: investing for your WHY requires patience, discipline and preparation. Our investment team’s responsibility — and our daily focus — is to ensure that portfolios remain aligned with your goals, even as markets react to headlines and policymakers face difficult choices.
This week, we’ll be watching Powell’s Jackson Hole remarks, corporate earnings reports from major retailers and technology companies, plus the evolving signals on inflation. Each will add texture to the economic story, but none will change our commitment: to prepare portfolios thoughtfully so that short-term uncertainty never overshadows long-term success.
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