Latest / Finance TL;DR Daily / Kashkari Wants Rate Hikes While Hiring Stalls and Tariff Refunds Hit $100 Billion
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- Kashkari Wants Rate Hikes While Hiring Stalls and Tariff Refunds Hit $100 Billion 2026-08-05 Alex: Welcome to Finance TL;DR Daily, the podcast where we break down the biggest stories in finance. It's Wednesday, August fifth. And today we've got a Fed official openly pushing for rate hikes, a hiring report that missed badly, a hundred billion dollars in tariff refunds nobody at home is going to see, and Eli Lilly's weight-loss drugs printing money. Riley: Here's what's moving today. Alex: Let's start with the Fed, because Neel Kashkari just said the quiet part out loud. He's the Minneapolis Fed president, and he told CNBC, quote, "I would rather get going now in small steps than wait till later, then we have a really entrenched inflation problem." He wants hikes starting as early as the September meeting. Riley: And this isn't just a talking head musing on television. He was one of three officials who actually dissented at the July thirty-first meeting, pushing for a quarter-point hike while the other nine voters chose to hold. Alex: Right, so the committee held rates steady in the three-and-a-half to three-and-three-quarters percent range, and Kashkari's now publicly making the case that the minority was right. Riley: What strikes me is the timing. Markets had been leaning toward the Fed being done tightening for a while, maybe even cutting eventually. This is a voting member saying, actually, no, we should be moving the other direction. Alex: And he's explicit about why — he doesn't want to wait until inflation is entrenched and then have to slam the brakes with big aggressive hikes. Small steps now, in his view, beat a bigger shock later. Riley: The obvious question is whether he's got company. One dissent plus some strong words is one thing. Whether the other eight who held steady start shifting is quite another. Alex: That's the thing to watch heading into September fifteenth and sixteenth. If Kashkari's tone spreads across the committee, that's a real repricing of what the second half of the year looks like. Riley: And it lands awkwardly right alongside today's jobs data, which is telling a rather different story about the economy. Alex: Which is your story. Riley: It is. So, ADP's National Employment Report — private companies added just 44,000 jobs in July. The Dow Jones consensus was for 75,000. That's not a small miss, that's roughly half. Alex: And June wasn't great either, if I remember right. Riley: June was revised down to 95,000, so July's 44,000 is the smallest monthly gain since January. Hiring is very clearly losing momentum. Alex: So that's the cooling-labor-market half of the story. What's the other half? Riley: Wages. Annual pay for people staying in their jobs held steady at 4.4 percent, nothing dramatic there. But for job-switchers, pay accelerated to 7 percent — the biggest jump since August of last year. Alex: That's a strange combination. Fewer new jobs being created, but if you do jump ship, you're getting paid a lot more to do it. Riley: ADP's chief economist, Nela Richardson, put it well — she said job-changers are highly sensitive to real-time conditions, and that rapid pay growth implies supply constraints in parts of the labor market. So it's patchy. Hiring overall is soft, but certain skills or certain roles are still being fought over. Alex: Which makes Kashkari's argument a little more interesting, doesn't it. He wants to hike because he's worried about entrenched inflation, and here's a wage number that could feed exactly that worry. Riley: Exactly the tension. A headline hiring number that looks like the economy's cooling, sitting right next to a wage number that looks like it isn't cooling at all. The Fed doesn't get a clean read from this report — it gets ammunition for both sides of its own argument. Alex: Which is probably why Kashkari felt like today was a good day to make noise. Riley: Quite possibly. Alex: Let's move to tariffs, because there's a genuinely large number here. The Treasury has now refunded about a hundred billion dollars in "Liberation Day" tariffs. Riley: A hundred billion is not a rounding error. Where's it coming from? Alex: Back in February the Supreme Court ruled that the Trump administration's use of emergency powers to impose those tariffs was unconstitutional. So companies that paid them are getting money back. This hundred billion is about sixty percent of the hundred and sixty-five billion that was originally collected. Riley: And who actually gets the check? Because I'd guess it isn't showing up in anyone's grocery budget. Alex: No, it's going to the corporate importers who paid the tariffs in the first place. Apple, for example, is getting back an estimated 2.2 billion dollars. Households who paid higher prices at the till while the tariffs were in effect see none of it. Riley: Treasury Secretary Scott Bessent more or less admitted that himself, didn't he — he called it "ultimate corporate welfare" and said, quote, he's got a feeling the American people won't see the money. Alex: Which is a fairly blunt thing for a Treasury Secretary to say about his own department's payout. Riley: It's refreshingly honest, I'll give him that. But it does raise the fiscal question — is this actually stimulative? Alex: It is, in effect. A hundred billion dollars landing in corporate accounts acts like stimulus, and the government's still sitting on the unpaid balance accruing roughly 650 million dollars a month in interest. Riley: So you've got a chunk of unplanned cash hitting corporate balance sheets right as the Fed is debating whether to tighten policy over inflation risk. Those two things don't sit comfortably together. Alex: No — extra money sloshing around the corporate side of the economy is exactly the kind of thing that could complicate Kashkari's entrenched-inflation worry. Riley: On to something a bit more straightforward — Eli Lilly, which had a very good day. Revenue jumped 48 percent to 23 billion dollars for the quarter, and non-GAAP earnings per share rose 33 percent to $8.38. Alex: Those are big numbers for a company this size. What's driving it? Riley: The weight-loss and diabetes franchise. Mounjaro, the diabetes drug, revenue up 91 percent to $9.94 billion. Zepbound, the obesity treatment, up 46 percent to $4.93 billion. Alex: And they didn't just beat the quarter, they raised guidance too. Riley: They did — full-year revenue guidance moved up to a range of 85 to 87 billion dollars, from a prior 82 to 85 billion. CEO David Ricks said the company delivered 48 percent revenue growth and raised full-year guidance, which is about as clean a quarter as you'll see. Alex: Is there any competitive risk here, given how crowded the GLP-1 space has gotten with other drugmakers piling in? Riley: There's plenty of competition, but Lilly's holding roughly 60.9 percent market share in the U.S. obesity and diabetes drug market. So for now the demand is simply outrunning the competitive noise. Alex: So the read for investors is less about whether the market's growing — it clearly is — and more about whether Lilly can keep manufacturing enough to meet demand. Riley: That's really the crux of it. Guidance keeps going up because the drugs keep selling, and the question becomes supply, not demand. Alex: A Fed voter pushing for hikes, a jobs report that can't decide if the labor market is weak or tight, a hundred billion going to corporations instead of consumers, and Lilly showing just how strong parts of this economy still are. Riley: Plenty of threads pulling in different directions today, and the Fed's got to make sense of all of them by September. Alex: This has been Finance TL;DR Daily. We'll see you tomorrow.