Wed, August 6, 2025 | 7:50AM ET

President Trump to announce new Fed Chair by end of week, likely view as dovish by markets.

VIDEO: Tuesday on CNBC Squawk Box, President Trump announced a new Fed Chair by the end of the week. This might be possibly viewed as a dovish development, as yields continue to creep lower.

Please click below to view our Macro Minute (duration: 3:28).

President Trump to announce new Fed Chair by end of week, likely view as dovish by markets.

We are in the “dog days of August” and that means less investor participation (vacation) and stocks can be more easily swing up or down. But as we said previously, we expect August to be an up month for stocks, which is counter to consensus views and general expectations:

There were 3 things we want to flag from Tuesday:
– President Trump said he will announce new Fed Chair by Friday
– ISM Services showed a rise in “prices paid” yet interest rates did not care
– Goldman Sachs Prime Brokerage data shows last few weeks saw a sharp degrossing matching March 2020
President Trump was on CNBC Squawk Box this am in an extended interview. Among the things discussed, he said he would announce a new Fed Chair by the end of the week. In our view, the announcement of a Fed Chair replacement (presumably taking role in 2026) means the “shadow Fed Chair” is now a possibility. This new candidate will be viewed as the leading voice of monetary policy going foward. And overall, we think markets will view this dovishly. Meaning, we see this as positive for stocks.
President Trump said there are 4 candidates and Bessent declined.
As for July ISM Services, the headline missed and prices paid rose. And this led to many pundits giving a bearish take. And saying inflation is coming. Yet, the number of expected Fed cuts in 2025 did not change and still stands at 2.3. And 10-year yields stand at 4.20%. This was at 4.57% at the start of the year.
So, to me, the bond market is saying there is not any real inflation ahead. Or at least, whatever we see will not cause markets to see sustained gains in inflation. In other words, the inflation coming is “transitory.”
Lastly, Goldman Sachs Prime Brokerage data shows the gross exposure declined in the past few weeks at the fastest pace since March 2020. Recall, that was the COVID low and stocks surged for the next 18 months.
We don’t expect stocks to surge similar to the March 2020 lows. But this speaks to the macro cautiousness out there. First, many expected August 1 tariff deadlines to hurt stocks. Second, we have August seasonals. But we think this cautiousness is the exact reasons stocks can do well this month.
This week is light in macro data:
– 8/4 Mon 10:00 AM ET: Jun F Durable Goods Orders MoM   -9.4% vs -9.3%
– 8/5 Tue 8:30 AM ET: Jun Trade Balance   -60b vs -61be
– 8/5 Tue 9:45 AM ET: Jul F S&P Global Services PMI   55.7 vs 55.2e
– 8/5 Tue 10:00 AM ET: Jul ISM Services PMI   50.1 vs 51.5e
– 8/7 Thu 8:30 AM ET: 2Q P Nonfarm Productivity QoQ   2.0%e
– 8/7 Thu 8:30 AM ET: 2Q P Unit Labor Costs   1.50%e
– 8/7 Thu 9:00 AM ET: Jul F Manheim Used Vehicle Index
– 8/7 Thu 11:00 AM ET: Jul NY Fed 1yr Inf Exp

BOTTOM LINE: Still “most hated rally”

This still remains the “most hated” V-shaped stock rally. We view Bitcoin as a leading indicator and thus, we expect stocks to reattain all time highs, which Bitcoin achieved last week. We see S&P 500 reaching 6,600 by year-end.

And the expected drivers for this upside are:

Still most hated rally
Sizable perception gap: Tariff “bark worse than bite”
Hedge funds increased short interest recently
$7 trillion cash on sidelines
Investment outlook better now than in Feb 2025:
– tariff visibility
– tax and de-regulation visibility
– US cos survived 5^th major “stress test”
– Fed more dovish in 2026

As for what we would buy

Washed out stocks
MAG7 & Bitcoin
Industrials
Financials: Large-cap and regional banks
Small-caps

The bull market has proven itself intact. We previously identified two lists of “washed out” stocks, both large-cap (22 names) and SMID-cap (27 names). We want to look at stocks which did not make a new low between April 1-April 8, even as the S&P 500 fell to new lows.
The large-cap criteria are as follows:

Current Market Cap >$15 Billion
Declined more than 30% before Feb 18th
Didn’t make new closing low between April 1st & April 8th
Current price down more than 25% from 52W High

The large-cap “washed out” tickers are:
WBD LULU TSLA DKNG DG DLTR BF STZ RKT COIN HOOD HUM UAL LDOS TEAM HUBS MSTR CRM NET SMCI EIX VST
The SMID-cap criteria are as follows:

Current Market Cap <$15 Billion
Declined more than 30% before Feb 18th
Didn’t make new closing low between April 1st & April 8th
Current price down more than 25% from 52W High
Short interest Day to Cover Ratio >2

The SMID-cap “washed out” tickers are:
DJT ROKU AS LCID RIVN LKQ CROX NCLH WBA CELH SOFI MKTX COLB GRAL INSP PRGO CNXC DAY LUV LYFT CFLT DT ESTC PCOR LITE ALAB AES

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45 SMID Granny Shot Ideas: We performed our quarterly rebalance on 5/22. Full stock list here -> Click here

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Key Incoming Data August:

~~8/1 8:30 AM ET: Jul Non-farm Payrolls~~ Mixed
~~8/1 9:45 AM ET: Jul F S&P Global Manufacturing PMI~~ Tame
~~8/1 10:00 AM ET: Jul F U. Mich. 1yr Inf Exp~~ Tame
~~8/1 10:00 AM ET: Jul ISM Manufacturing PMI~~ Tame
~~8/4 10:00 AM ET: Jun F Durable Goods Orders MoM~~ Tame
~~8/5 8:30 AM ET: Jun Trade Balance~~ Tame
~~8/5 9:45 AM ET: Jul F S&P Global Services PMI~~ Tame
~~8/5 10:00 AM ET: Jul ISM Services PMI~~ Tame
8/7 8:30 AM ET: 2Q P Unit Labor Costs
8/7 8:30 AM ET: 2Q P Nonfarm Productivity QoQ
8/7 9:00 AM ET: Jul F Manheim Used Vehicle Index
8/7 11:00 AM ET: Jul NYFed 1yr Inf Exp
8/12 6:00 AM ET: Jul Small Business Optimism Survey
8/12 8:30 AM ET: Jul Core CPI MoM
8/14 8:30 AM ET: Jul Core PPI MoM
8/15 8:30 AM ET: Aug Empire Manufacturing Survey
8/15 8:30 AM ET: Jul Retail Sales
8/15 10:00 AM ET: Aug P U. Mich. 1yr Inf Exp
8/15 4:00 PM ET: Jun Net TIC Flows
8/18 10:00 AM ET: Aug NAHB Housing Market Index
8/19 9:00 AM ET: Aug M Manheim Used Vehicle Index
8/20 2:00 PM ET: Jul FOMC Meeting Minutes
8/21 8:30 AM ET: Aug Philly Fed Business Outlook
8/21 9:45 AM ET: Aug P S&P Global Services PMI
8/21 9:45 AM ET: Aug P S&P Global Manufacturing PMI
8/21 10:00 AM ET: Jul Existing Home Sales
8/25 8:30 AM ET: Jul Chicago Fed Nat Activity Index
8/25 10:00 AM ET: Jul New Home Sales
8/25 10:30 AM ET: Aug Dallas Fed Manuf. Activity Survey
8/26 8:30 AM ET: Jul P Durable Goods Orders MoM
8/26 9:00 AM ET: Jun S&P CS home price 20-City MoM
8/26 10:00 AM ET: Aug Conference Board Consumer Confidence
8/26 10:00 AM ET: Aug Richmond Fed Manufacturing Survey
8/28 8:30 AM ET: 2Q S GDP QoQ
8/28 11:00 AM ET: Aug Kansas City Fed Manufacturing Survey
8/29 8:30 AM ET: Jul Core PCE MoM
8/29 10:00 AM ET: Aug F U. Mich. 1yr Inf Exp

Economic Data Performance Tracker 2025:

Economic Data Performance Tracker 2024:

Economic Data Performance Tracker 2023:

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