Macroeconomic policy and a bit of data drive known policy risk factors this week, buffeted by geopolitical uncertainties. Chairman Warsh’s descriptions of FOMC policy lands one day before PCE data during a busy earnings week. Company fundamentals also add to non-stop artificial intelligence technology and commercial developments ramping pressures on elected Washington to develop domestic and international policies. Oman hopes to facilitate US-Iran talks during a recent pause in military hostilities renewed two weeks ago. Negotiations would follow a week in which President Trump unanticipated attempt to restart Abraham Accord visions by encouraging Saudia Arabia to recognize Israel as precursor to receiving US nuclear science, reactor technology and technical assistance.
Policy AImpulse. Whatever the status of gaps, if any, between US and China AI models and enabling compute capacities, last week brought a flood of activity related to broad technological competition. An OpenAI/Hugging Face friendly fire agentic transgression reminded policymakers of crucial issues beyond geopolitics important to global usage practices. Nearer the end of the article linked below, one expert asserts China later this year will release a frontier model equal to Mythos and less expensive (HERE).
As investors contemplate microeconomic implications of AI competition, policymakers confront unsettled geostrategic and economic consequences. Companies of all sizes recently threw support to open-weight models as the White House continues to lead Congress in the conversation over open versus closed models (HERE and HERE). In the following gift-linked commentary, an asset manager based in Boston observes sovereign fiscal conditions will matter in determining the Pacific superpower contest considering fiscal policy space eases sustained and possibly determinative industrial policy advantages (HERE).
Tariffs. Fiscal and geopolitical impacts on trade policy generated more headlines than volatility last week after the Trump administration announced new Section 301 tariffs on countries allegedly gaining unfair trade advantage by use of forced labor. Compliance, legal challenges already filed, pre-announcement exclusions and possible post-announcement exemptions are among the reasons the new levies are not expected to greatly affect US global effective tariff rates presently hovering around 11-12% (meaningfully but no longer alarmingly 4x the start of last year) (HERE).
Public sentiment. Economics broadly and the costs of common household needs remain poll respondents’ top concern. Pew Research Center analysts last week dropped midterm elections focused survey results 100 days before November 3. Low regard generally for elected federal officials is another unchanged sentiment (HERE).
Jacob Rubashkin of InsideElections returns on August 4 next week for a 22V client webinar to update his work on the midterms and take your questions. Please look early next week for a few opportunities to register for the 10:30am discussion. Of course, notify your 22V sales partner anytime to register.
OUTLOOK (all times Eastern)
Monday
4:00a.m., German IFO business sentiment surveys released.
Tuesday
President Trump leads tributes to the late Senator Lindsey Graham during a Senate Rotunda funeral.
Keiko Fujimori is inaugurated as Peru’s president for a five-year term.
Wednesday
South Korea’s President Lee Jae Myung continues Latin America state visits to Brazil and Chile.
2:00p.m., FOMC decisions announced, followed thirty minutes later by Chairman Warsh’s presser.
11:00p.m., RBA Governor Bullock keynotes the Anika Foundation Fundraising Lunch, Sydney.
11:15p.m., BoJ target rate decision.
Thursday
7:00a.m., BoE bank rate decision.
9:00a.m., Senate Judiciary Committee scheduled vote on Todd Blanche’s AG nomination.
Friday
7:15a.m., BoE’s Huw Pill presser following the central bank’s interest-rate decision on Thursday.
