Upcoming Fed meeting: Could job weakness lead to a half-point cut?

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Wall Street's major averages closed at more record highs on Tuesday, with the S&P 500 (SP500 [https://seekingalpha.com/symbol/SP500]) finishing the session above the 6,500 level. Investors are now clear-minded about a coming cycle of rate cuts after real weakness was confirmed in the labor market amid a record 911K nonfarm payroll revision [https://seekingalpha.com/news/4493474-reaction-roundup-experts-weigh-in-on-record-911k-revision-to-yearly-jobs-growth] to yearly jobs growth. Following the release, JPMorgan's Jamie Dimon also came out with a stance pointing to "weakening economy," [https://seekingalpha.com/news/4493460-jpmorgans-jamie-dimon-says-job-revisions-point-to-weakening-economy] charging up the stimulus bulls who have been eager to see easing monetary policy.

_How much?_ The market still expects the Federal Reserve to trim rates by 25 basis points next week, though there are increasing calls for a larger cut. Standard Chartered has positioned itself in the latter camp [https://seekingalpha.com/news/4493058-standard-charter-is-forecasting-a-50bps-fed-cut-in-september-by-the-fomc], citing weakening economic data as the key driver behind its view. "We think the August labor-market data has opened the door to a 'catch-up' 50bps rate cut at the September FOMC meeting," the team wrote in a research note. "However, we still think sticky inflation and fiscal easing will limit scope for further cuts beyond that."

Another factor to consider is that President Trump hasn't finished remaking the Federal Open Market Committee. Late last night, a D.C. federal judge temporarily blocked [https://seekingalpha.com/news/4493567-federal-judge-rules-fed-governor-lisa-cook-can-stay-for-now] his effort to remove Fed Governor Lisa Cook, as "her purported removal was done in violation of the Federal Reserve Act's 'for cause' provision." The preliminary injunction means that Cook will be able to participate in the crucial Fed Reserve Board policy meeting that will take place Sept. 16-17.

OUTLOOK: The last major data point before the FOMC gathering is set to be released tomorrow. Core CPI, a measure of underlying inflation excluding food and energy, likely rose 0.3% in August for a second month [https://seekingalpha.com/news/4483847-core-cpi-accelerates-to-31-yy-in-july], with the annual rate staying at 3.1%. "A hot CPI may not derail the imminent rate cut, but could limit further cuts in 2025, keeping investors cautious on future Fed policy," SA Investing Group Leader Chris Lau [https://seekingalpha.com/author/chris-lau] wrote in _What Might Make The August CPI Report Come In Very Hot [https://seekingalpha.com/article/4819195-what-might-make-august-cpi-report-come-in-very-hot]_.

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* BLS Employment Data Revisions Worse Than 2009, Setting Record [https://seekingalpha.com/article/4821230-bls-employment-data-revisions-worse-than-2009-setting-record]
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* Federal judge rules Fed Governor Lisa Cook can stay -- for now [https://seekingalpha.com/news/4493567-federal-judge-rules-fed-governor-lisa-cook-can-stay-for-now]
* Trump wants EU to put large tariffs on China, India in Putin pressure tactic [https://seekingalpha.com/news/4493553-trump-wants-eu-put-large-tariffs-china-india-putin-pressure-tactic]