Fed’s Powell Warns Stocks Are ‘Highly Valued.’ He Said Something Even More Worrying.
Sep 24, 2025 06:39:00 -0400 | #Markets #The Barron's Daily
Federal Reserve Chair Jerome Powell (Chip Somodevilla/Getty Images)
The stock market looks like a locomotive in danger of running out of steam and Federal Reserve Chair Jerome Powell may be the one to apply the brakes.
His speech Tuesday contained several warnings, including that the markets’ view on aggressive rate cuts is far from guaranteed. He spoke of the “challenging situation” the central bank faces—with upside risks to inflation and downside risks to the labor market.
“Two-sided risks mean that there is no risk-free path,” he said. That dilemma is only compounded by how divided the central bank appears to be on the issue.
Just yesterday Fed Gov. Michelle Bowman suggested more cuts may be needed to support the jobs market, while Atlanta Fed President Raphael Bostic said inflation has been too high for a long time and was more cautious. Friday’s PCE data, the Fed’s preferred inflation metric, will add to the argument but they are unlikely to decide it.
Traders expect another two quarter-point cuts this year and are split on the prospect of a third in January, according to CME’s FedWatch tool. But Powell’s remarks suggest even an October cut isn’t a done deal.
That’s a potential problem for stock markets, given they’ve rallied to record highs partly on the assumption multiple cuts are coming.
This is where another of Powell’s warnings comes in—stocks appear to be “fairly highly valued,” he said. It’s a concern shared by fund managers as Bank of America’s monthly survey found the net share of investors who believe stocks to be overvalued hit a record high in September. It didn’t stop them buying, the survey added, but eventually it might.
The AI-driven tech rally, responsible for most of those overvaluation concerns, cooled off Tuesday.
If the recent tech strength falters and rate cuts don’t materialize as expected, the rally won’t just come to a screeching halt—it could quickly derail.
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Fed’s Powell Points to Darkening Economic Picture
Federal Reserve Chair Jerome Powell said the combination of a weakening labor market and economic outlook alongside elevated prices puts policymakers in a tough position. His comments at an event in Rhode Island on Tuesday come a week after the central bank approved its first interest-rate cut of 2025.
- While the U.S. economy is showing resilience despite big changes to trade and immigration policies, and in fiscal, regulatory and geopolitical arenas, the longer term implications of those shifting federal policies make it difficult to predict what comes next, Powell said.
- Recent data show economic growth moderating, unemployment edging up, weak housing data, and slowing consumer spending, Powell said. Joe Brusuelas, chief economist at RSM US, calls the situation “stagflation-lite,” where the economy wavers while prices remain high.
- Powell stressed that the central bank wouldn’t be swayed by political pressure, emphasizing that the Fed is “never, ever thinking about political things.” That may not be believable to outsiders who believe they are political, he said, but that’s just a “cheap shot.”
- The Organization for Economic Cooperation and Development forecasts that the U.S. economy will grow 1.8% this year and 1.5% next year, after expanding by 2.8% last year. Economic growth is expected to lose momentum as higher tariffs take their toll on activity.
What’s Next: Powell offered few clues about the Fed’s Oct. 28-29 policy meeting. September’s updated projections see three cuts in 2025, up from two in June. But there is a razor-thin 10-9 split among those making the projections over how deeply to cut, suggesting deep uncertainty and little consensus.
— Nicole Goodkind and Janet H. Cho
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Trump Offers U.N. a Warning on Energy Purchases From Russia
President Donald Trump told the United Nations the U.S. is prepared to impose “powerful tariffs” if Russia doesn’t end its war in Ukraine. He called out European countries’ purchases of Russian energy and said Europe would need to act alongside the U.S. for the tariffs to be effective.
- Europe has cut the amount of energy it buys from Russia since the current Ukraine war began in 2022. Hungary and Slovakia are the main remaining buyers of Russian oil while France, Belgium, and Spain still buy its natural gas, said Liana Fix, a senior fellow for Europe at the Council for Foreign Relations.
- The EU has stepped up efforts to pressure Russia in recent days. Last week, it announced fresh sanctions that included provisions to pressure companies in India and China to stop buying Russian oil and restrictions on crypto platforms that enable transactions with Russia.
- And on Tuesday, the EU said it would cut off all Russian energy purchases by 2026, moving up the date from 2027. Trump didn’t call out Russia for recent interference in airspace of NATO members during his speech. That raises the question whether he will step up pressure on Russia itself, Fix said.
- While the U.S. has imposed a 25% penalty on India for its Russian oil purchases, it has spared China so far, though it is the bigger buyer. Analysts noted the administration’s efforts to secure an in-person meeting between Trump and Chinese leader Xi Jinping to craft a bigger trade deal.
What’s Next: Trump met with Ukraine President Volodymyr Zelensky during the U.N.’s annual meeting and said it could win back all of its territory with the support of the European Union, a shift that raises pressure on Russia’s President Vladimir Putin.
— Reshma Kapadia and Liz Moyer
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Work Begins on the Oracle, OpenAI Stargate Facility Buildout
ChatGPT parent OpenAI, cloud giant Oracle, and the Japan-based investment firm SoftBank are opening five new data centers across the country, expanding the footprint of the government-backed artificial intelligence venture called Stargate. On Tuesday, they walked reporters through the first site in Texas.
- OpenAI and Oracle will build three sites, which will be located in Shackelford Co., Texas; Doña Ana Co., N.M.; and somewhere not yet announced in the Midwest. Two other sites, built by OpenAI and SoftBank, will open in Lordstown, Ohio, and Milam Co., Texas.
- Stargate’s goal is to invest $500 billion over the next four years to build out 10 gigawatts of capacity for AI operations in the U.S. The five new sites bring the Stargate project to nearly 7 gigawatts of capacity and over $400 billion in investment over the next three years.
- The Abilene, Texas, site is set to be completed in 2026. Part of that data center is currently up and running on Oracle Cloud Infrastructure. Oracle and OpenAI said they are also looking into a potential expansion of the Abilene site to produce 600 more megawatts.
- The three sites being built by OpenAI and Oracle, along with the existing Abilene center and the potential expansion site, will be able to deliver over 5.5 gigawatts of capacity, the companies said, and are expected to create over 25,000 on-site jobs.
What’s Next: There isn’t yet a specific timeline for the buildout of the New Mexico or Midwest centers that are also being built by OpenAI and Oracle. The two other sites being built with SoftBank are expected to start scaling next year.
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Lithium Miner Gets Boost as U.S. Proposes Equity Stake
Lithium Americas , which is developing a lithium deposit in Nevada to supply the critical mineral for batteries, got a boost Tuesday after the U.S. government said it is in negotiations to take a stake in the mining company. The U.S. proposed an equity stake as a way to renegotiate a $2.3 billion Energy Department loan granted during the Biden administration.
- “This is a great critical minerals deal,” a Trump administration official told Barron’s while declining to provide the exact share of the company the government is seeking. “It’s a small stake,” the official said, adding that negotiations are ongoing. Reuters reported that the U.S. government was considering a stake in the project of as much as 10%.
- The Canada-based company announced in December it had entered into a joint venture with General Motors in which Lithium Americas owns 62% of the project known as Thacker Pass in Humboldt County, Nevada, while General Motors owns the rest. The mine is expected to be operational by 2028.
- Lithium Americas said in a statement that it remained “in active discussions with the DOE and our partner, GM.”
What’s Next: The Trump administration aims to boost manufacturing in the U.S. through increased investment from both domestic and international companies. It has recently announced stakes in companies including 10% in Intel, which it secured by converting a grant issued during the Biden administration into an equity stake. In July it invested $400 million in rare earth miner MP Materials.
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Disney Broadly Raising Its Streaming Prices. It Isn’t Alone.
Walt Disney is raising the price of its streaming subscriptions, from its stand-alone Disney+ product to several premium bundles that include Hulu and ESPN offerings. It’s the fourth time since 2021 Disney has raised streaming prices. But the move also comes as it faces controversy in late-night broadcasting.
- The increases just happen to coincide with the controversy at Disney-owned ABC’s “Jimmy Kimmel Live!” which returned to the air Tuesday. The show had been suspended last week after pressure by Federal Communications Commission Chair Brendan Carr over host Jimmy Kimmel’s comments about slain conservative activist Charlie Kirk.
- Ross Benes, senior analyst, TV and streaming, for EMarketer, said that although price increases are planned months ahead, this timing “isn’t ideal when many customers are already frustrated with Disney.” The show’s suspension prompted a wave of streaming subscription cancellations.
- Starting Oct. 21, Disney+, the platform that gives subscribers access to movies, series, and originals from Disney, Pixar, Marvel, Star Wars, National Geographic, and other shows, is increasing by $2 a month to $11.99 (with ads). Premium (without ads) is going up $3 a month, to $18.99.
- Disney’s bundled premium-tier subscribers will also see increases starting next month: The Disney+, Hulu, and ESPN Select bundle is increasing $3 a month to $19.99 (with ads) or $3 a month (without ads) to $29.99 a month.
What’s Next: Apple already notified subscribers that its Apple+ subscriptions are increasing to $12.99 a month starting Oct. 5, from $9.99 a month now. Benes expects more media companies to raise their streaming prices as they compete to wring more profit out of the platforms.
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Dear Quentin,
I am 70 years old and living with Alzheimer’s disease. I live in Florida.
My son lives in Oregon. I have a wonderful spouse who takes good care of me and cooks all meals, etc. My son is my only offspring and he is slightly autistic. He is 50 years old. He receives financial benefits from his stint in the Army. However, I have always paid his real-estate taxes, and auto-insurance premiums on two vehicles. I have also provided him with a credit card to pay for unexpected expenses above his financial needs. I have also paid for substantial repairs to his home. He has never used the card for frivolous things.
Growing up in severe poverty, I have amassed a substantial sum of money. I saved over $1 million, in addition to buying real estate so that I can die knowing my son will have financial backing. However, I now see that is possibly the worst decision I can make. My spouse and I have always kept our finances separate. My son has a live-in girlfriend. I was always happy he had someone in his life and we got along well. However, she recently purchased $750 in lotto tickets using my credit card that I provide for emergencies.
I contacted the credit-card company, but was advised they could not reimburse me for the theft because she lives in the home and has access to the card. My son was very angry that I might charge her for theft or do anything adverse to her. He said he would never see nor speak to me again if I proceeded with legal action. I know this is elder abuse because of my age and my Alzheimer’s is getting worse. I am certain I will need home care or nursing-home care in the future. But what should I do about my son?
— The Mother
Read the Moneyist’s response here.
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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner