August 25, 2025 • 12 mins
In this episode of Paramount Wealth Perspectives, host Chris Coyle and Chief Investment Officer Scott Tremlett unpack Jerome Powell’s latest remarks and what they mean for markets. From the Fed’s balancing act between sticky inflation and a slowing labor market, to the credibility challenges of shifting policy in an election year, we explore the forces shaping monetary policy.
We also dive into the impact of tariffs on consumer prices, the growing risk of stagflation, and how global central banks are moving at a different pace than the Fed. Scott shares how investor psychology is influencing equities, bonds, and cash positioning—and why staying disciplined through volatility is key.
Whether you’re focused on Fed decisions, market rotations, or the long-term impact of AI on corporate earnings, this episode offers insights to help investors navigate uncertainty with confidence.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Chris Coyle (00:00):
Intro song
Hello everyone.
Welcome to Paramount WealthPerspectives, your go-to podcast
for the latest updates on globalmarkets and current economic
events.
This is your host, Chris Coyle.
(00:20):
I'm the marketing director and afinancial advisor here at
Paramount Associates WealthManagement.
And today I'm joined by ScottTremlett, chief Investment
Officer here at ParamountAssociates Wealth Management.
Let's start where the marketsare focused.
Chair Powell's latest remarks.
He struck a cautious tone sayingtariffs are pushing up prices,
(00:41):
but also suggested that a ratecut could be on the table as
soon as September.
What's your take, Scott?
Thanks, Chris.
Well, Powell is definitelywalking a very narrow path.
On one side, inflation remainssticky because tariffs are
feeding directly into consumerand producer prices.
On the other hand, the labormarket is clearly losing steam.
(01:03):
Job gains slowed sharply in.
In prior months were reviseddownward.
What's tricky here is that theparticipation rate is following,
particularly in July, so thesmaller pool of workers could be
masking some of the weaknessunderneath Powell's comments
reflect that tension.
The Fed doesn't want tooverreact to temporary shocks,
(01:24):
but it also can't afford to fallbehind if the economy weakens
further.
That's the balancing act, butwhat about their credibility?
How important is the Fed'sreputation at this moment?
It's critical.
The Fed is judged not only onits results, but also on how
consistent and believable itspolicy framework appears after
keeping rates higher for longer.
(01:45):
Powell doesn't want to signalpanic by cutting too
aggressively at the same timewaiting too long could repeat
last summer's mistake when theyunderestimated how quickly the
labor market was cooling.
So credibility.
Isn't just about fightinginflation.
It's about convincing marketsthat the Fed can respond nimbly
(02:05):
to both inflation and growthrisks.
It seems like there's apolitical layer here, isn't
there?
Exactly.
Tariffs are political decisionsfirst and economic realities
Second, the Fed doesn't settrade policy, but has to live
with the consequences.
Powell can't ignore the factthat tariff related inflation is
(02:25):
different from wage driven ordemand-driven inflation.
Rising rates won't undo tariffs,but if households start
believing those higher pricesare permanent inflation
expectations rise, and that'sthe Fed's nightmare.
Add in the political pressure ofan election cycle.
Impala's trying to stay abovethe fray.
While keeping the Fed'sindependence intact.
(02:48):
I see.
And how does this compare towhat Central Banks abroad are
doing?
There's a sharp contrast inEurope and parts of Asia.
Fiscal spending is offsettingtrade headwinds and central
banks are already signaling,they're closer to the.
And of their cutting cycles.
The US is unique in jugglingboth strong fiscal stimulus and
(03:09):
heavy tariff pressures.
That means the Fed has less roomto maneuver.
If Powell cuts too soon, herisks fueling inflation.
If he waits too long, he riskstipping the economy into a
harder slowdown than necessary.
The diversions makes the Fed'spath both more complicated and
more critical to the globalmarkets.
(03:30):
Let's talk about investorpsychology.
How are the markets interpretingPowell's comments?
Markets are hypersensitive tofed language.
When Powell hinted at apotential cut.
Equities rallied into theweekend, especially small caps
and cyclical sectors.
Investors wanna believe the Fedwill step in if conditions
(03:50):
worsen, but there's caution tolonger term bond yields remain
elevated.
Long-term bonds act like kind ofa scoreboard for inflation
expectations.
When yields climb, it's often asign.
Investors think prices will stayhigher for longer.
This reflects skepticism todaythat inflation will fall
quickly.
So we're seeing this tug of waroptimism around cuts versus
(04:14):
realism about sticky inflation.
That's uncertainty alone andthat's keeping volatility high.
I see.
And some economists are warningabout stagflation a mix of
slowing growth and persistentinflation.
Do you see that as a risk atall?
It's definitely on the radar.
Uh, growth is slowing.
The labor market is softening,and yet prices are still being
(04:35):
pushed higher by tariffs.
That's a stagflation setup.
Now we're not.
In the 1970s.
Productivity gains innovationand fiscal spending are cushions
today, but if tariffs keepinflation elevated.
While hiring weakens further,Powell may be forced to choose
between stabilizing prices andprotecting jobs.
(04:56):
That's the stagflation trap, andit's why his cautious tone
matters so much.
From my conversations, I knowthat everyday households.
The Fed can feel distant.
How do these decisions hitpeople directly?
Look Chris, it really shows upeverywhere.
Mortgage rates, credit cardcosts, auto loans are all
(05:16):
influenced by Fed policy.
Right now, mortgage rates arestill high, keeping pressure on
the housing market.
Credit card rates have jumped inrecent years weighing on
consumers.
If the Fed does cut rates,households could see some
relief.
But it will really comegradually.
On the other side, savers havebenefited from higher yields and
(05:37):
money market funds and CDs, sothe Fed's moves are not just
abstract.
They touch nearly every cornerof family budgets.
It's worth keeping in mind.
The Fed doesn't cut ratesbecause everything's great.
They usually do it when they seetrouble ahead, and that's why
markets sometimes take a cut asa warning sign.
(05:57):
Not just good news.
I agree.
And Powell often repeats thatthe Fed is that quote unquote,
data dependent.
How should we interpret thatphrase?
In practice, data dependencemeans they aren't committing to
a preset course.
Every jobs report, everyinflation print, every consumer
spending.
(06:17):
Could tilt the debate one way oranother.
It's a way of saying, we'lladjust as the facts adjust, but
it's also a communicationstrategy By staying vague,
Powell preserves flexibility.
The risk is that the marketsover-interpret each piece of
data leading to swings andexpectations.
That's part of why volatilityhas been so pronounced, because
(06:40):
data dependence, lease room.
For interpretation.
We've talked about monetarypolicy, but what about fiscal
policy?
How does government spending andborrowing interact with what the
Fed is trying to do?
Well, fiscal policy is playing abig role right now with deficit
spending, subsidies andindustrial programs pumping
money into the economy.
(07:02):
Demand is getting a boost.
That's good for growth, but italso means more government
borrowing, which pusheslong-term rates higher again.
So in a sense, Powell's swimmingupstream.
If fiscal keeps running hot, theFed has to work even harder to
cool down inflation.
And globally, how does Fed movesspill over into other markets?
(07:24):
Can you please provide anexample or two?
Well fed policy sends shockwavesreally worldwide.
A rate cut could weaken thedollar, giving emerging markets
some breathing room on debtrepayments, but staying tighter
for longer keeps the dollarstrong.
Which pressures countries thatborrow in dollars.
That and can lead to capitaloutflows from their markets.
(07:47):
In Asia, for example,policymakers are watching the
Fed closely because their owncurrencies and trade balances
are really sensitive to USpolicy.
So Powell's words don't justmove Wall Street, they move
exchange rates, commodity flows,and capital globally.
Now, let's shift gears slightly.
How are these fed dynamicsshowing up in markets right now?
(08:09):
Well, you can definitely see itin positioning.
Equities overall are holding up,but beneath the surface there is
rotation.
Small caps rallied strongly lastweek, while large tech names
pulled back.
Investors are cautious.
They're holding more cashbecause yields are attractive
and liquid while shying awayfrom long-term bonds that are
vulnerable to.
Higher government borrowing andinflation risk.
(08:32):
It's a market that doesn't wantto bet too heavily on one
outcome until the Fed'sdirection is really clear.
Yeah, certainly.
And what about on the sectorside?
Well, I feel as if technologystill has momentum, but
valuations are definitely richand investors are more
selective.
International equities,especially in Europe and
emerging markets look morereasonably priced, but risks do
(08:55):
remain there as well.
Commodity demand in Australia issoft and China's housing sector
is still a drag.
And the Fed's decisions aren'tjust domestic.
They spill across global sectorsand capital flows.
Since you mentioned tech, let'stalk about ai.
How is this way of changing thecalculus for investors?
Well, AI is really adouble-edged sword.
(09:18):
For some software companies, itmeans fatter margins and new
revenue streams.
Think co-pilots, workflowautomation, faster upgrades, but
it also threatens incumbentsbecause startups without legacy
systems can scale fast, and evenlarge corporations may build ai.
Solutions in-house.
What's interesting is thepotential shift in pricing
(09:39):
models.
The old per user subscriptionmight give way to more of a
usage based fees.
If AI lets firms accomplish thiswith fewer employees, that could
reshape how investors valuethese companies.
Finally, let's bring this backto individual investors.
With all this volatility, whatmissteps are people making
(10:01):
currently?
A common mistake is waiting forthe all clear before investing.
Markets often rise amiduncertainty, so staying out.
Can mean missing gains.
Another is parking too much inshort-term vehicles like CDs
safe, but they don't keep pacewith long-term growth.
And a third mistake is trying totime the market.
(10:23):
Investors jump in and out onheadlines, but history shows
it's staying invested thatreally builds wealth.
Absolutely that is a commonmistake.
So how should investors balanceshort-term volatility with
long-term confidence?
Well, short-term, Chris willreally always feel noisy.
Powell's, every word, tariffnegotiations, labor market data.
(10:45):
These all drive headlines anddaily market swings, but over
longer Horizon.
The market tends to rewarddiscipline.
That means diversification,staying invested through cycles
and not letting fear dictatedecisions.
The Fed can influenceconditions, but no single policy
decision changes.
The fundamental principle,long-term investors benefit most
(11:08):
by keeping perspective andstaying patient to close.
If you had to sum up the currenteconomic landscape in one theme.
What would it be?
I, I guess I'd call it havingstrengthened the storm.
The Fed is under pressure toprove it, manage both inflation
and growth without losingcredibility.
The labor market is bending butnot breaking.
(11:31):
Tariffs are stressing.
Global trade but not collapsingit.
And investors, whetherinstitutions or households are
adapting by staying flexible.
Success in this environment isabout being ready to pivot
without abandoning long-termgoals.
Well, thank you, Scott, fortaking the time to share your
(11:51):
thoughts.
Thank you to our audience fortuning in.
And remember to please submityour questions via email to
general@paramountassoc.com.
For now, stay informed.
Stay ahead and join us next timefor more key updates shaping the
global economy.
Intro song
Hello everyone.
Welcome to Paramount WealthPerspectives, your go-to podcast
for the latest updates on globalmarkets and current economic
events.
This is your host, Chris Coyle.
(00:20):
I'm the marketing director and afinancial advisor here at
Paramount Associates WealthManagement.
And today I'm joined by ScottTremlett, chief Investment
Officer here at ParamountAssociates Wealth Management.
Let's start where the marketsare focused.
Chair Powell's latest remarks.
He struck a cautious tone sayingtariffs are pushing up prices,
(00:41):
but also suggested that a ratecut could be on the table as
soon as September.
What's your take, Scott?
Thanks, Chris.
Well, Powell is definitelywalking a very narrow path.
On one side, inflation remainssticky because tariffs are
feeding directly into consumerand producer prices.
On the other hand, the labormarket is clearly losing steam.
(01:03):
Job gains slowed sharply in.
In prior months were reviseddownward.
What's tricky here is that theparticipation rate is following,
particularly in July, so thesmaller pool of workers could be
masking some of the weaknessunderneath Powell's comments
reflect that tension.
The Fed doesn't want tooverreact to temporary shocks,
(01:24):
but it also can't afford to fallbehind if the economy weakens
further.
That's the balancing act, butwhat about their credibility?
How important is the Fed'sreputation at this moment?
It's critical.
The Fed is judged not only onits results, but also on how
consistent and believable itspolicy framework appears after
keeping rates higher for longer.
(01:45):
Powell doesn't want to signalpanic by cutting too
aggressively at the same timewaiting too long could repeat
last summer's mistake when theyunderestimated how quickly the
labor market was cooling.
So credibility.
Isn't just about fightinginflation.
It's about convincing marketsthat the Fed can respond nimbly
(02:05):
to both inflation and growthrisks.
It seems like there's apolitical layer here, isn't
there?
Exactly.
Tariffs are political decisionsfirst and economic realities
Second, the Fed doesn't settrade policy, but has to live
with the consequences.
Powell can't ignore the factthat tariff related inflation is
(02:25):
different from wage driven ordemand-driven inflation.
Rising rates won't undo tariffs,but if households start
believing those higher pricesare permanent inflation
expectations rise, and that'sthe Fed's nightmare.
Add in the political pressure ofan election cycle.
Impala's trying to stay abovethe fray.
While keeping the Fed'sindependence intact.
(02:48):
I see.
And how does this compare towhat Central Banks abroad are
doing?
There's a sharp contrast inEurope and parts of Asia.
Fiscal spending is offsettingtrade headwinds and central
banks are already signaling,they're closer to the.
And of their cutting cycles.
The US is unique in jugglingboth strong fiscal stimulus and
(03:09):
heavy tariff pressures.
That means the Fed has less roomto maneuver.
If Powell cuts too soon, herisks fueling inflation.
If he waits too long, he riskstipping the economy into a
harder slowdown than necessary.
The diversions makes the Fed'spath both more complicated and
more critical to the globalmarkets.
(03:30):
Let's talk about investorpsychology.
How are the markets interpretingPowell's comments?
Markets are hypersensitive tofed language.
When Powell hinted at apotential cut.
Equities rallied into theweekend, especially small caps
and cyclical sectors.
Investors wanna believe the Fedwill step in if conditions
(03:50):
worsen, but there's caution tolonger term bond yields remain
elevated.
Long-term bonds act like kind ofa scoreboard for inflation
expectations.
When yields climb, it's often asign.
Investors think prices will stayhigher for longer.
This reflects skepticism todaythat inflation will fall
quickly.
So we're seeing this tug of waroptimism around cuts versus
(04:14):
realism about sticky inflation.
That's uncertainty alone andthat's keeping volatility high.
I see.
And some economists are warningabout stagflation a mix of
slowing growth and persistentinflation.
Do you see that as a risk atall?
It's definitely on the radar.
Uh, growth is slowing.
The labor market is softening,and yet prices are still being
(04:35):
pushed higher by tariffs.
That's a stagflation setup.
Now we're not.
In the 1970s.
Productivity gains innovationand fiscal spending are cushions
today, but if tariffs keepinflation elevated.
While hiring weakens further,Powell may be forced to choose
between stabilizing prices andprotecting jobs.
(04:56):
That's the stagflation trap, andit's why his cautious tone
matters so much.
From my conversations, I knowthat everyday households.
The Fed can feel distant.
How do these decisions hitpeople directly?
Look Chris, it really shows upeverywhere.
Mortgage rates, credit cardcosts, auto loans are all
(05:16):
influenced by Fed policy.
Right now, mortgage rates arestill high, keeping pressure on
the housing market.
Credit card rates have jumped inrecent years weighing on
consumers.
If the Fed does cut rates,households could see some
relief.
But it will really comegradually.
On the other side, savers havebenefited from higher yields and
(05:37):
money market funds and CDs, sothe Fed's moves are not just
abstract.
They touch nearly every cornerof family budgets.
It's worth keeping in mind.
The Fed doesn't cut ratesbecause everything's great.
They usually do it when they seetrouble ahead, and that's why
markets sometimes take a cut asa warning sign.
(05:57):
Not just good news.
I agree.
And Powell often repeats thatthe Fed is that quote unquote,
data dependent.
How should we interpret thatphrase?
In practice, data dependencemeans they aren't committing to
a preset course.
Every jobs report, everyinflation print, every consumer
spending.
(06:17):
Could tilt the debate one way oranother.
It's a way of saying, we'lladjust as the facts adjust, but
it's also a communicationstrategy By staying vague,
Powell preserves flexibility.
The risk is that the marketsover-interpret each piece of
data leading to swings andexpectations.
That's part of why volatilityhas been so pronounced, because
(06:40):
data dependence, lease room.
For interpretation.
We've talked about monetarypolicy, but what about fiscal
policy?
How does government spending andborrowing interact with what the
Fed is trying to do?
Well, fiscal policy is playing abig role right now with deficit
spending, subsidies andindustrial programs pumping
money into the economy.
(07:02):
Demand is getting a boost.
That's good for growth, but italso means more government
borrowing, which pusheslong-term rates higher again.
So in a sense, Powell's swimmingupstream.
If fiscal keeps running hot, theFed has to work even harder to
cool down inflation.
And globally, how does Fed movesspill over into other markets?
(07:24):
Can you please provide anexample or two?
Well fed policy sends shockwavesreally worldwide.
A rate cut could weaken thedollar, giving emerging markets
some breathing room on debtrepayments, but staying tighter
for longer keeps the dollarstrong.
Which pressures countries thatborrow in dollars.
That and can lead to capitaloutflows from their markets.
(07:47):
In Asia, for example,policymakers are watching the
Fed closely because their owncurrencies and trade balances
are really sensitive to USpolicy.
So Powell's words don't justmove Wall Street, they move
exchange rates, commodity flows,and capital globally.
Now, let's shift gears slightly.
How are these fed dynamicsshowing up in markets right now?
(08:09):
Well, you can definitely see itin positioning.
Equities overall are holding up,but beneath the surface there is
rotation.
Small caps rallied strongly lastweek, while large tech names
pulled back.
Investors are cautious.
They're holding more cashbecause yields are attractive
and liquid while shying awayfrom long-term bonds that are
vulnerable to.
Higher government borrowing andinflation risk.
(08:32):
It's a market that doesn't wantto bet too heavily on one
outcome until the Fed'sdirection is really clear.
Yeah, certainly.
And what about on the sectorside?
Well, I feel as if technologystill has momentum, but
valuations are definitely richand investors are more
selective.
International equities,especially in Europe and
emerging markets look morereasonably priced, but risks do
(08:55):
remain there as well.
Commodity demand in Australia issoft and China's housing sector
is still a drag.
And the Fed's decisions aren'tjust domestic.
They spill across global sectorsand capital flows.
Since you mentioned tech, let'stalk about ai.
How is this way of changing thecalculus for investors?
Well, AI is really adouble-edged sword.
(09:18):
For some software companies, itmeans fatter margins and new
revenue streams.
Think co-pilots, workflowautomation, faster upgrades, but
it also threatens incumbentsbecause startups without legacy
systems can scale fast, and evenlarge corporations may build ai.
Solutions in-house.
What's interesting is thepotential shift in pricing
(09:39):
models.
The old per user subscriptionmight give way to more of a
usage based fees.
If AI lets firms accomplish thiswith fewer employees, that could
reshape how investors valuethese companies.
Finally, let's bring this backto individual investors.
With all this volatility, whatmissteps are people making
(10:01):
currently?
A common mistake is waiting forthe all clear before investing.
Markets often rise amiduncertainty, so staying out.
Can mean missing gains.
Another is parking too much inshort-term vehicles like CDs
safe, but they don't keep pacewith long-term growth.
And a third mistake is trying totime the market.
(10:23):
Investors jump in and out onheadlines, but history shows
it's staying invested thatreally builds wealth.
Absolutely that is a commonmistake.
So how should investors balanceshort-term volatility with
long-term confidence?
Well, short-term, Chris willreally always feel noisy.
Powell's, every word, tariffnegotiations, labor market data.
(10:45):
These all drive headlines anddaily market swings, but over
longer Horizon.
The market tends to rewarddiscipline.
That means diversification,staying invested through cycles
and not letting fear dictatedecisions.
The Fed can influenceconditions, but no single policy
decision changes.
The fundamental principle,long-term investors benefit most
(11:08):
by keeping perspective andstaying patient to close.
If you had to sum up the currenteconomic landscape in one theme.
What would it be?
I, I guess I'd call it havingstrengthened the storm.
The Fed is under pressure toprove it, manage both inflation
and growth without losingcredibility.
The labor market is bending butnot breaking.
(11:31):
Tariffs are stressing.
Global trade but not collapsingit.
And investors, whetherinstitutions or households are
adapting by staying flexible.
Success in this environment isabout being ready to pivot
without abandoning long-termgoals.
Well, thank you, Scott, fortaking the time to share your
(11:51):
thoughts.
Thank you to our audience fortuning in.
And remember to please submityour questions via email to
general@paramountassoc.com.
For now, stay informed.
Stay ahead and join us next timefor more key updates shaping the
global economy.
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