In an era of populism, distrust in government is rampant. That lack of trust has seeped down into just about everything one reads or hears. Government data is no exception.

 

As I wrote in my last column, our own president fired the head of the Bureau of Labor Statistics, claiming the BLS was "broken." He further claimed it would need new leadership "to restore trust and confidence in the BLS's data."

 

Since then, although there has been an acting BLS commissioner, no permanent replacement has made it past the Senate. Six months ago, Trump picked a veteran economist, Brett Matsumoto, as his nominee. This week, a Senate committee voted (12-11) to advance his nomination, but it is unclear whether the full Senate will vote to confirm the nomination. 

 

In his confirmation hearing, Matsumoto recognized the potential for further manipulation and politicization of the BLS. "It is important for the public to be confident that decisions at the BLS are being driven by science rather than politics," he said.

 

If it is science he is after, he may first need to hire qualified subordinates. Fully one-third of the top leadership positions at the BLS are vacant. That may be difficult, since there is a hiring freeze in effect, plus he must deal with a swath of deferred resignations and early retirements. That could be an uphill battle given that the Supreme Court gave the president carte blanche to fire independent government regulators despite federal job protections. As for the money needed to upgrade the governmental data systems, that too will be problematic.

 

In the meantime, meddling with government data, at least on the inflation front, continues. Last month, the Bureau of Economic Analysis, which calculates the Personal Consumption Expenditures Price Index (PCE), announced changes to how they plan to track data. The new method for capturing data and calculating price changes across three subcategories will be revised. In essence, the changes will make the numbers look better (with less inflation) than in the past.

 

Analysts estimate it will reduce core PCE inflation by about 0.2 percentage points. You may remember that Stephen Miran, a Trump advisor and chief architect of "reciprocal tariffs," was appointed to the Fed for a six-month stint and then replaced by the new Fed Chairman Kevin Warsh, another Trump appointee.

 

Miran, along with two Fed staff economists, is behind this effort to alter the PCE, the Fed's main inflation index used to determine the nation's inflation rate. I am sure the Fed will have logical, technical reasons to justify this improvement in their key inflation indicator.

 

At the same time, Fed Chairman Warsh is creating five new policy review task forces to investigate communications, balance sheet policy, productivity and jobs, inflation frameworks, and data. It seems more tinkering is ahead of us.

 

I guess it is pure coincidence that these changes come at a time when mid-term elections are a few months away. We won't know the result or the changes (if any) that may occur until next year. I'm hoping it helps rebuild trust and accuracy rather than the opposite.

 

In my career, I have seen instances of politically motivated meddling in places like Greece, China, and Argentina, to name just a few. In every case, investors lost faith in the data of the country in question, leading to higher borrowing costs.

 

We already have an almost daily problem with nonpublic information that can move markets coming from both within and without the government. Some of it is legal (if questionable); some of it involves leaked advance information from government sources. It doesn't seem that any of the regulatory agencies is willing or capable of stopping it.

 

Taken together, the leaks and inaccuracies among government agencies, both real and intended, are contributing to a deepening sense of distrust and cynicism among voters. Further neglect and delay in regaining that gold standard of government statistics that the country earned over decades should not be taken lightly.

 

Misery loves company, or so they say. There was plenty of that this week as declining technology stocks dragged down the indexes.

 

While the stock market had been stuck in a rut most of the month, the tone changed this week. Markets felt the pain as the leading AI -fueled semiconductor index was walloped. However, appearances can be deceiving. There were some pockets of safety that did well as rotation strategies replaced momentum plays among traders.

 

Quarterly earnings have begun. The estimates call for a 23-24 percent gain in earnings this season. That follows a 26 percent+ record last quarter. Bank stocks were the first to report, and most did not disappoint. Goldman Sachs' profit, for example, was up 78 percent from the prior year while JP Morgan soared 41 percent. It may come as no surprise that investment banking fees had a lot to do with those results.

 

The large-cap banking index made new highs for the year even as AI technology and the semiconductors index suffered additional selling. Boring old utilities, consumer staples, and health care outperformed as most of the AI darlings languished.

 

SpaceX, the Musk deal-of-the-century IPO that I warned readers not to chase, is now down to $124/share, well below the $135/share IPO price. Last week's broker-hyped offering, the "must have" Korean-based ADR, SK Hynix, has also been a dud (minus-37 percent).

 

Not all technology has done poorly. After being ignored or sold down for weeks, the Magnificent Seven stocks have added $1.5 trillion in market value in July, while semiconductor stocks, excluding Nvidia, have erased nearly $1.7 trillion in market value. Software companies, another casualty of AI predominance, have come back from the dead. Forty-four out of 51 software stocks in the Yahoo Finance industry basket are up for July with a median gain of 6 percent.

 

Given the high valuations of most stocks, it seems investors are quick to punish and just as quick to reward. Those companies that disappoint, failing to live up to investors' expectations, are quickly taken to the woodshed. IBM announced weak preliminary results, and the stock fell 25 percent, the largest decline since at least 1968. Netflix also disappointed and opened down 10 percent on Friday.

 

The next two weeks should be interesting as more companies report. I warned readers in weeks past that, this time around, quarterly earnings will see investors take a much more selective approach to companies based on their results and guidance. Evidence so far indicates I am not far off the mark.

 

This week, we also had the results for both the Consumer Price and Producer Price Indexes for last month. As I predicted, both numbers fell well below street expectations. I also expect next month's numbers to be weak as well (unless Trump's Forever War pushes oil prices higher still). Markets pushed higher for a day in celebration, but it didn't last long.

 

Kevin Warsh, in his first appearance as Federal Reserve Chairman before the House Financial Services Committee, threw cold water on the monthly inflation numbers. He pointed out that one or two data points do not make a trend.

 

Warsh said, "The longer prices have been above the inflation target, it's usually a bit harder to dislodge them and get them lower. Our job, my commitment to you, is to take sticky prices and to unstick them." That may be music to the ears of Main Street (and me) but do nothing for the financial market's hopes of easier monetary policy this year.

 

The bullish tone of the markets preceding and just after the Fourth of July has come and gone. As readers know, I have approached July and August with caution. Since the holiday, investor sentiment and fund flows have waned, while the technology sector has come under more pressure.

 

This week, we saw further evidence of that as the Nasdaq declined more than 3 percent, the S&P 500 dropped 1.43 percent, and the Russell small-cap index, the best of the bunch, maintained its bullish posture. It declined by less than half a percent.

 

It is no surprise to see the areas that went up the most experience the most severe declines. It is how markets work. Profit-taking in semiconductors was in full force this week. While I do expect bounces along the way, I think over the next few weeks we will see further downside.

 

The data system supporting U.S. economic decisions is losing staff and funding. What's worse is the diminished trust the financial markets have placed in that data.

 

There are roughly 13 primary statistical agencies embedded within various cabinet departments and federal agencies. There are another 100 or so small decentralized statistical offices scattered across different agencies. A major problem all these agencies face is in data collection. The process is antiquated, and the system overall is worse.

 

It is a system badly in need of modernization, innovation, and a huge technological overhaul. The introduction of artificial intelligence might help. To do so, we need to bring in outside partners in the private sector. The government needs to identify state-of-the-art players in AI but also in other areas. Those that have the ability and experience in data gathering necessary to come up with new methods and strategies to obtain data in the most efficient and accurate ways possible.

 

Currently, in this age of cost-cutting through bureaucratic reductions, there is little enthusiasm in Congress or the White House to address the problem. Few data advocates exist in today's mostly populist Congress. Since bureaucrats rarely, if ever, get to talk to legislators, it's an out-of-sight, out-of-mind kind of situation.

 

As things continue to fester, another issue has also seeped into the equation. A growing belief among many is that this data is trustworthy. Is this data truly unbiased, or has it become politicized?

 

Readers may recall that a year ago, President Trump fired the head of the Bureau of Labor Statistics, Erika McEntarfer. Trump, fresh off his second presidential win, was incensed when the BLS released a revised employment statistic. The BLS reduced the number of jobs thought to have been created from March 2024 to March 2025 by 91,000.

 

Those 91,000 ghost jobs rank among the largest revisions in recent decades. "Biden's economy was a disaster, and the BLS is broken," Trump claimed, "This is exactly why we need new leadership to restore trust and confidence in the BLS's data on behalf of the financial markets, businesses, policy makers and families that rely on this data to make major decisions."

 

Trump had a point. Ever the political animal fresh off a tight race, the president recognizes the iron law of American politics — economic conditions drive election results. Historically, good economic indicators (such as low unemployment, rising wages, and low inflation) often help incumbents, while poor performance hurts them.

 

Conspiracy theorists immediately accused the former administration of padding the numbers in hopes of tilting the voters toward the Democrats' candidates. Whether that was true or not, experts insist that the process that produced that number, while imperfect, was transparent and has been used by the agency for decades. This conclusion was largely echoed by the Chairman of the Federal Reserve.

 

Back in December 2025, former Fed Chairman Jerome Powell explained that the BLS has consistently overstated jobs by at least 60,000 per month since April of 2025. The culprit was a monthly BLS estimate of how the labor market is affected by business openings and closings. The estimate, known as the birth-death model, guesses at the jobs gained and lost due to closings. This, Powell said, was "something of a systematic overcount" that would likely see big revisions to job growth numbers.

 

Nonetheless, Trump, without any evidence, fired the BLS chief, claiming the data was being rigged. That move had ramifications that reverberate today. New research by four economists at the Center for Economic and Policy Research indicates that because of Trump's claims, there was a sharp increase in policy uncertainty among American businesses. That reduction in trust and increased uncertainty depressed economic activity as corporations pulled back on investment. 

 

The hit to the economy was in the vicinity of $20 billion. Next week, I will discuss additional ramifications of doing nothing to change the status quo of how government data is gathered and distributed. 

 

The above risks can be a lethal brew for investors. And yet, markets barely budged by the end of the week. Quarterly earnings expectations are buoying the averages, with 23 percent earnings growth expected to vindicate the bulls.

 

Markets have moved beyond Trump's War despite this week's conflict. They are focusing instead on the upcoming inflation data, the start of quarterly earnings next week, and another Fed meeting. In the meantime, technology still struggles.

 

Volatile moves have sent the Nasdaq and the semiconductor index plummeting only to see them spike higher on a day-by-day basis. Traders call it a calm session if these stocks close with less than a 1 percent move each day. Last month's mega IPO is a case in point.

 

Readers recall all the hype over the SpaceX IPO. Priced at $135 a share, opened at $150 and skyrocketed to $212. Friday it traded at $147-$148. Not pretty, if you chased it. Today, we have another one.

 

This time, it's the listing of a South Korean memory chip leader, SK Hynix (SKHYV). It is the largest American Depository Receipt (ADR) offering ever ($26.5 billion) and one of the largest equity offerings in history. It is the global leader in High-Bandwidth Memory (HBM). Why is their product so important? Because without HBM, there would be no AI.

 

At $149 per ADR, it will be equal to 1/10th of a South Korean share. With a market value of more than $1 trillion, it is the second-most valuable company in South Korea. The media claims the offering is seven times oversubscribed (versus SpaceX's five times). And like SpaceX before them, chasers ‘gotta get some.'

 

No, never mind that the memory stock has garnered a sevenfold increase in its stock price over the past year. If it performs the way Elon Musk's SpaceX ("to the moon and beyond") did, we could see another price spike before traders cash in. At around midday, the ADR was up $17 percent from its listing price. And while the financial media focuses on this offering, it wasn't the only event of the week.

 

The president and his forever war kept investors on their toes. He now says the ceasefire that never was is over, but the talks will continue. How bombing more Iranian military targets is going to do anything to change the status quo is beyond me. As this week's NATO conference has shown, despite Trump's bravado, most nations still need to flatter, or at least humor him, if they want to remain under the U.S. military umbrella. Strategically, they need to maintain that relationship, at least in the short term.

 

Fortunately, the markets have moved on. The rotational trends in the markets have helped keep the main averages steady most of the time, despite Trump's social media posts and comments. The oil price has risen slightly (over $71.80 a barrel) from $67, but the technical trend still points to further downside.

 

Bond yields have risen to the top of their range with the U.S. 10-year Treasury bond hitting a high of 4.57 percent this week. As you might imagine, Trump's military strikes and the subsequent short-term rise in oil prices immediately had traders rushing for the exits in some areas and chasing stocks on what had been the ‘war trade'.

 

Here's how it works. The narrative is quite simple, really: missiles fly, oil prices spike, inflation expectations rise, and so the story changes to the Fed having to raise rates. That's it in a nutshell. The opposite occurs whenever the narrative shifts toward peace, the opening of the Straits of Hormuz, etc.

 

Next week will be critical for the bulls. We get another Consumer Price Index reading. The Street is expecting cooler inflation numbers for June. I agree. I expect weaker numbers in July as well. That should be good for the markets.

 

Stock prices have already been bid up in anticipation of good earnings. If management's ‘beat' and talk up future guidance on sales and earnings, then all is well with the world. The rally continues as the indexes grind higher. We all know what happens if companies fail to live up to expectations. We may see investors become a little more selective. The AI trade may shift from buying "everything AI-related" to buying stocks worth holding, rather than those that are not.

 

It has been 10 years since Brexit took center stage in the politics of the Western world. The populist furor of an unhappy electorate triggered Great Britain's exit from the European Union. How has that worked out for the Brits?

 

The populist rhetoric of a "Global Britain," their answer to MAGA, was supposed to secure their borders by reducing immigration. Bureaucracy would be jettisoned; regulations and the budget would finally be restored after 14 years of Conservative Party mismanagement.

 

It would be the first populism-led attempt to overhaul one of the world's oldest and wealthiest democracies. A decade later, it appears the nation is up to its ears in chaos. Prime Minister Keir Starmer resigned this month after serving less than two years despite a landslide Labor Party victory. He was supposed to save the country from years of successive Conservative Party prime ministers.

 

Instead, the country is struggling with low growth, higher inflation, faltering public services and an electorate that is every bit as angry and partisan as our own. Over the past decade, the country has had six prime ministers. David Cameron, Theresa May, Boris Johnson, Liz Truss, Rishi Sunak and now Keir Starmer are some of the names you may recognize. Brexit itself, scandal, market panic, immigration, and electoral rejection are just some of the factors that have sunk Britain's leaders.

 

Back when, many economists were predicting an immediate recession if the country left the EU. It didn't happen. What happened was that, over time, the British economy grew far less than it might have if it had stayed in the trade bloc. At the same time, business investment and productivity slumped as trade suffered. The typical family is worse off by thousands of pounds per year.

 

The pound dripped sharply after the Brexit vote, collapsing by 10 percent, the largest one-day drop in its history. That triggered a sharp increase in import prices, leading to an inflation shock that affected everyone across the board. The exit from the EU also involved erecting trade barriers that hit goods exports, since the EU was still the UK's largest trading partner until last year.

 

The problem deepened since no one in government had a clear plan on what to do once the votes were counted. This led to years of political infighting and indecision. A weaker currency should have led to a surge in exports, but the uncertainty around Britain's future clouded business judgment and investment. Investment is estimated to be almost 18 percent lower and productivity 4 percent lower than it would have been if a plan had been forthcoming.

 

The currency has never recovered.

 

The Office for Budget Responsibility, the independent watchdog of the UK Treasury, predicts that the UK is on track to suffer a 4 percent hit to national income over a 15-year period. A U.S. National Bureau of Economic Research report claims that the country's GDP per head is between 6 percent and 8 percent lower than it would have been without Brexit.

 

As for unemployment, that fell dramatically in the initial Brexit days to the lowest rates since the 1970s. However, COVID took its toll on the labor market. The employment rate has never really recovered and remains between 3 percent and 4 percent below what it would be under a "remain" decision.

 

Can I extrapolate from the UK's experiences to the present immigration, trade, and tariff policies of the Trump administration? Not really, at least in the short-term. Equity markets in both countries recovered quickly after the referendum and Trump's Liberation Day. Both countries' economists initially predicted a steep decline in economic activity, and both were wrong. However, over the long term (a decade in the UK), large trade policy shocks seem to lead to lower investment, productivity, and employment growth as supply chains and trade patterns unravel.

 

Not surprisingly, public support for Brexit has fallen since the 52 percent versus 48 percent leave vote. Today a majority of voters (56 percent) would back rejoining the EU, according to YouGov, and 70 percent of Britons support a closer relationship with the EU. Support is strongest among Labour and Green Party voters and weakest among Nigel Farage's right-wing, Reform UK party. Reform UK members oppose rejoining the bloc by 83 percent. That party has gained support as immigration and affordability have become major issues for voters.

 

The next candidate for PM, at least among the Labour Party, is Andy Burnham, a Manchester mayor with authentic populist appeal. In a special election, Burnham beat the Reform Party, which pundits believe will clear the way for him to head his party and win the PM title in Britain. The question is how long he can last, given the issues and the populism in his country and around the world.

 

Readers may recall several of my past columns in which I have explained the populist wave of discontent in the U.S. and worldwide. I wrote that, here at home, over a 20-plus-year period, no single president survived to serve a second term, except Richard Nixon (who was impeached without completing his second term).

 

Populist voters have a very short fuse. Promises are made, but unless real progress is made within four years, the electorate has no patience for incumbents who can't or won't deliver. Overseas, beyond the UK, France, Germany, and Hungary, several other countries are facing populist challenges to incumbent parties.

 

We are seeing this here in the U.S. as we head into the midterms. Promises made but not kept have sent President Trump's approval ratings into the 30s. Within the Democrat Party primaries, a war is already brewing between a growing populist wing of the party and the more conservative incumbents. Established Democrats, their critics say, offer failed 40-year-old policy solutions that have been rejected out of hand by younger generations of disenfranchised voters.