Markets prioritize AI, then geopolitics, then tariffs. Questions why markets don't care about tariffs this morning.

Markets care about three things in order: AI, not geopolitics, not tariffs. The administration changes its mind often, so markets don't take tariff announcements seriously. The single biggest driver is AI boosting productivity and earnings growth; as long as earnings growth is achievable, markets stay bid despite excessive valuations.

Job openings jumped to highest in almost two years, layoffs falling, reinforcing case for a rate hike. Plays clip from Cleveland Fed President Beth Hammack.

Beth Hammack: It's reasonable to keep rates steady given uncertainties, but if recent trends continue, it may soon be appropriate to act. More concerned about persistently elevated inflation than full employment risk; policy may not be sufficiently restrictive to bring inflation to 2%.

Asks if we are bracing for Fed tightening now, given the resilient labor market.

Labor market has been resilient with no major headwinds for US economy. Fed is at 3.625% neutral rate, exactly where they need to be based on their own projections. But if inflation overshoots the 2.7% PCE projection from March, Fed absolutely needs to raise rates; neutral rate is around 4.25%. There is a case for the Fed to tighten. Bank of England's Megan Green says case for a hike is strengthening. Risk of sooner-than-September hike is real. Mood music is changing. Bailey had nuanced message but even he said can't wait for second-round effects. Sooner BOE acts, better to contain inflation; they learned from 2022 when slow tightening caused double-digit inflation. Demand is weaker now so no double-digit inflation, but solid case to act sooner rather than later. September rate pricing may be tested in coming weeks.