by Louis Navellier
July 1, 2025
Fed Chairman Jerome Powell is now a “lame duck” leader, with less than a year to go in his term – and his voice is no longer as important as the views of his potential replacements. For starters, Fed Governor Christopher Waller has said that the Federal Open Market Committee (FOMC) may lower rates at its July meeting. In a CNBC interview, Waller said, “We could do this as early as July,” adding, “I think we’ve got room to bring it down, and then we can kind of see what happens with inflation.”
Waller even seemed to be impatient with Powell and the rest of the Board, saying, “We’ve been on pause for six months to wait and see, and, so far, the data has been fine.” How much longer will Powell delay?
Instead of being “too late” in his every move – which is his track record so far – Powell could fight to save his reputation – and promote prosperity – by lowering rates soon. If the Fed starts to cut key interest rates in late July, that could help “turbo boost” our stocks as well as boost overall U.S. GDP growth!
Instead, so far, the Fed has been fearing, predicting and anticipating a return of the inflation “boogeyman” that refuses to arrive, as inflation rates have remained at four-year lows. Meanwhile, central banks around the world continue to cut key interest rates. Deflation, not inflation, is becoming the norm around the world, especially in China. Even if the Fed does as I predict, cutting four times this year (by a full 1%), America will still have higher interest rates than the rest of the world, plus stronger economic growth and the world’s greatest military power. And the resulting dollar surge will naturally promote deflation, especially in raw materials and commodities, as global commodities are all denominated in U.S. dollars.
Due to declining retail sales in Britain and Canada, I expect more central bank rate cuts from them soon, as the collapse in global interest rates continues to unfold. Aging demographics also hinder economic growth in Asia and Europe, while the U.S. has a tremendous advantage: We are both food and energy independent and we still have positive household formation, especially in Southern and Mountain West states, which are more pro-family. Our immigrants are also more easily assimilated into the workforce.
Due to deflation and global uncertainties, I expect most central banks will continue to cut key interest rates and the Fed may start cutting key interest rates at its next FOMC meeting on July 30th. Fed Vice Chairperson Michelle Bowman and Chicago Fed President Austan Goolsbee are now signaling that a key interest rate cut at the July FOMC meeting is becoming more likely, especially if inflation remains low.
Inflation is also low in the Fed’s favorite inflation indicator – the Personal Consumption Expenditure (PCE) index – released last week. It rose by just 0.1% in May. The core PCE, excluding food and energy, rose 0.2%. The PCE and the core PCE rose by 2.3% and 2.7% in the past 12 months, respectively.
Despite this, Fed Chair Powell testified before Congress last week and was grilled about the Fed’s interest rate policy, and Powell continued to repeat that the Fed expects a “meaningful” amount of inflation to materialize in the upcoming months, due to tariffs, so Chairman Powell remains a hawk and continues to ignore favorable inflation data as well as lower Treasury yields at home and in most other nations as well.
Most U.S. Economic Statistics Provide Fuel for a Fed Rate Cut
One more reason for the Fed to cut key interest rates in late July is the Conference Board reported on Tuesday that its consumer confidence index declined to 93 in June, down from 98.4 in May, which was far below the economists’ consensus expectation of a slight increase to 99.8. The “present situation” component declined to 129.1 in June, down from 135.5 in May, while the future expectations component slipped to 69 in June, down from 73.6 in May. However, I suspect when the tax bill gets passed by Congress, which should put more money into consumer pockets, that consumer confidence will perk up.
In addition, the Commerce Department on Thursday announced durable goods orders soared 16.4% in May, as consumer aircraft orders rebounded strongly, but April durable goods orders were revised to a 6.6% decline (from a 6.3% decline previously reported), and the May orders were boosted by commercial aircraft orders rebounding by an astonishing 230.8%, causing transportation orders to rise 48.3% in May. Excluding transportation, durable goods orders rose by a modest 0.5% in May, another sign of weakness.
The Commerce Department also announced on Thursday that the trade deficit surprisingly rose by 11.1% in May to $96.6 billion, as exports declined by 5.2% to $179.2 billion and imports were largely unchanged at $275.8 billion. Economists were forecasting the trade deficit to come in at a far lower $86.1 billion, so second-quarter GDP estimates will have to be revised lower due to this budget deficit forecast failure.
Also, we learned that inflation-adjusted consumer spending declined by 0.3% in May, the first monthly decline in consumer spending this year. Due to all these indicators – with the PCE tame and consumer spending stalling – the Fed should finally be willing to cut key interest rates at its July FOMC meeting, but our Fed and its 400 or so PhD economists don’t seem to see that the bigger risk for central banks and the entire world now is deflation. China is exporting deflation and may have to devalue its currency, since its interest rates are now below those of Japan. And, looking forward, AI will be the key to continued productivity gains, which means more output per worker, especially as AI takes over physical devices.
Robo-taxis and Driver-less Cars Make Their Successful Debut
Speaking of AI, Tesla launched its Robo-taxi service on June 22nd in Austin, Texas. For now, a human sits in the front passenger seat in Robo-taxi – just in case anything goes wrong – but so far, humans have not needed to intervene. One Robo-taxi passenger on YouTube even pointed out that during her Robo-taxi ride, the Model Y stopped for a cat crossing the road, so Tesla’s FSD clearly sees more movement than many human drivers! For now, passengers just tap their destination into the Robo-taxi dashboard computer.
Next year, Uber will launch its autonomous vehicle service with VW’s ID.Buzz vans in Los Angeles. I do not know if Waymo (Google), Tesla or Uber-VW will win the autonomous taxi wars that are unfolding, but eventually, we will just be transported from place to place in Robo-taxis, as Elon Musk has envisioned.
VW is now producing the autonomous ID.Buzz vans that Uber will use. These ID.Buzz vans are Level 4 autonomous, like Waymo, requiring no driver but (for now) it is “geo-fenced” to a particular area that has been mapped in advance. Apparently, the biggest challenge for VW was getting autonomous driving to work in adverse weather, since the primary sensors of the Level 4 ID.Buzz vans are on the car’s roof.
In other AI applications, Elon Musk is now predicting Tesla’s Optimus robots will become commercially available within a decade. The computing power to control Tesla’s Robo-taxis and Optimus robots will be offsite, so they will constantly be updated via online updates. This brave new world of AI is coming and requires massive data centers. (We have several stocks that benefit from the AI data boom).
Navellier & Associates; own Alphabet Inc. Class A (GOOGL), in managed accounts. A few accounts own Tesla (TSLA), per client request. Navellier does not own Uber Technologies, Inc. (UBER), or Volkswagen (VWAGY), in managed accounts. Louis Navellier does not own Uber Technologies, Inc. (UBER), Alphabet Inc. Class A (GOOGL), Volkswagen (VWAGY), or Tesla (TSLA), personally.
The post 7-1-25: Here’s How Jerome Powell Could “Turbocharge” Stocks (and the Economy) in His “Lame Duck” Year appeared first on Navellier.
