The world is watching! Countdown to the Jackson Hole annual meeting, Powell's speech may focus on five major themes

According to the Zhitong Finance APP, the 2025 Jackson Hole Global Central Bank Conference will be held from August 21 to 23 in Wyoming, with the theme "The Labor Market in Transition: Demographics, Productivity, and Macroeconomic Policy." Federal Reserve Chairman Jerome Powell will deliver a speech at 10:00 PM Beijing time on August 22, where he is likely to discuss high inflation, rising producer prices, and a weak job market. Based on his 2024 speech, he is unlikely to address the White House or tariff policies, nor will he discuss the ongoing pressure from U.S. President Trump for him to step down.

Seeking Alpha contributor Chris Lau believes Powell may discuss five major themes at the Jackson Hole conference:

Producer Inflation

The U.S. Bureau of Labor Statistics reported on August 14 that the Producer Price Index (PPI) rose 0.9% month-on-month in July. Among these, commodity prices increased by 0.7%, while service prices surged by 1.1%. The Bureau noted that the increase in service PPI is the largest since March 2022. That year, Powell stated in his speech that interest rate hikes, slowing economic growth, and a weak labor market would reduce inflation.

In terms of month-on-month percentage changes, the price increases for finished foods and crude oil were prominent. If energy-related costs decline in the coming months, monthly PPI data may weaken. This would require OPEC+ to commit to increasing production, the U.S. to ramp up production, the resolution of the Russia-Ukraine war, and U.S. tariffs to lead to a slowdown in the global economy. If companies pass more tariff-related costs onto customers, demand should decline.

Examples of price increases include Nike (NKE.US). The company stated that the prices of some of its sneakers will rise by $5 to $10. Adidas confirmed in July that U.S. consumers would pay higher prices to offset an additional $218 million in tariff-related costs. Companies like Walmart (WMT.US) and Ford (F.US) also indicated they would raise prices to offset tariff costs.

Investors should be prepared, as companies selling large-ticket items will be the first to announce declines in sales and operating profit margins. Home appliance company Whirlpool (WHR.US) stated that tariffs would increase raw material costs by about 50 basis points.

E-commerce giant Amazon (AMZN.US) initially planned to disclose tariff information on product price tags. However, the White House deemed this approach hostile.

Consumer Price Index

The U.S. Bureau of Labor Statistics announced on August 12 that the Consumer Price Index (CPI) rose 0.2% month-on-month in July, down from 0.3% in June. Over the past 12 months, the unadjusted overall CPI increased by 2.7%.

Powell may comment on the unadjusted 12-month CPI.

Similar to the PPI report, energy service prices also drove the 12-month CPI increase. During this period, the increase in electricity prices ranked third. Notable electricity companies include Talen Energy (TLN.US) and Vistra Energy (VST.US), which have seen increases of 88% year-to-date 44%. In contrast, AES Corporation (AES.US) has only increased by 8% this year.

In contrast, natural gas and energy commodities have seen the largest declines in the CPI over the past 12 months. The downward trend in clothing prices may continue. The stock prices of Gap (GAP.US) and Abercrombie & Fitch (ANF.US) are on a downward trend. However, consumers tend to purchase cheap branded goods at TJX Companies (TJX.US), driving the company's stock price up nearly 11% this year.

Weak U.S. Job Market

On August 1, the U.S. Bureau of Labor Statistics reported that non-farm payrolls increased by 73,000 in July. As expected, employment in the healthcare and social assistance sectors improved. Additionally, measures related to the U.S. Department of Efficiency (DOGE) led to federal government layoffs. Once the paid leave and severance costs for laid-off government workers are accounted for, the U.S. employment report will worsen. The U.S. Bureau of Labor Statistics considers these individuals as employed in its survey.

The U.S. Bureau of Labor Statistics revised down May's job figures by 125,000 and June's by 133,000. This adjustment in employment data led to the dismissal of the Bureau's director.

Interest Rate Trends

Powell did not mention interest rates in his speech last year, and it is expected to be the same this year. The market generally predicts that the Federal Reserve will cut rates by 25 basis points at the meeting on September 17.

The yield on U.S. Treasury bonds shows a mixed trend, with the 1-month Treasury yield rising compared to last month, while the yields on 10-year, 20-year, and longer-term Treasuries have declined.

Artificial Intelligence Replacing Workers

Seeking Alpha observed that since the so-called "Liberation Day" on April 2, ten stocks, including the seven major tech giants as well as Broadcom (AVGO.US), Oracle (ORCL.US), and Palantir (PLTR.US), have contributed approximately 80% of the S&P 500's gains.

These companies' massive investments in artificial intelligence are closely related to the theme of this seminar, "The Labor Market in Transition." Microsoft (MSFT.US) laid off 9,000 employees globally, accounting for 4% of its total workforce, replacing some employees with AI technology.

Amazon, Alphabet (GOOG.US), and Meta Platforms (META.US) have cut middle management positions. Powell may mention the impact of artificial intelligence on the job market Summary

Powell may review the latest CPI, PPI, and non-farm payroll reports at the Jackson Hole seminar. This will convey his views on inflation and employment issues to investors.

He does not need to mention interest rate policy. The Federal Reserve watch tool shows that the probability of a 25 basis point rate cut in September exceeds 90%. The S&P 500 index and the Nasdaq index rose nearly 1% last week, while the Dow Jones Industrial Average increased by 1.74%. The Russell 2000 index rose by 3.09%. Small-cap companies are most affected by tariffs, but a rate cut will benefit them