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For years one of my favorite columns in The Wall Street Journal was Dan Henninger’s Wonder Land which he sadly discontinued after 23 years this January. So I’m taking over for the day because yesterday was a whopper! While Henninger focused on cultural and political topics, this blog will lean economic and financial.

Let’s start with the most obvious market headline: The S&P and NASDAQ broke out to new All Time Highs Tuesday on the back of a mild July CPI Report that gives the Fed cover to cut rates on September 17. The market is now pricing in a 96% probability of a 25 basis point cut.

But how mild was the CPI Report actually? Headline CPI rose 0.20% in July to 2.7% annualized while Core CPI rose 0.32% to 3.1% annualized according to The Wall Street Journal’s Nick Timiraos. Is the Fed still targeting 2%?While the narrative was that the report showed mild inflation, Warren Pies chimed in on Twitter: “Ironically, this was the first cpi report this year that actually supports inflation reacceleration.” On the other hand, Treasury Secretary Scott Bessent said that the Fed should consider cutting 50 basis points in September. If Henninger is off the Wonder Land beat, somebody’s got to cover it!

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At any rate, the market latched onto the dovish narrative with the S&P blasting through 6400 on its way to a new all time high. The VIX closed at its lowest level of the year.

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On the earnings front, one of my favorite fast growers – Mediterranean fast casual restaurant CAVA – is getting slaughtered in the premarket after reporting worse than expected 2Q comps Tuesday afternoon. Shares are currently off 24% (6:00am EST) after CAVA reported only 2.1% comps and lowered full year comp guidance from 6-8% to 4-6%.

What Wall Street seems not to understand is that that 2.1% 2Q25 number comes after two monster quarters the previous two years: 14.4% comps in 2Q24 and 18.2% in 2Q23. This is still one of the best fast growers in the market that recently opened its 400th restaurant on its way to 1000 by 2032. As Jim Rogers famously said his investment strategy is to wait until there’s a pile of money in the corner and walk over there and pick it up. Sometimes it really is that easy….

President Trump continues to fire missiles in his press conferences and from his Truth Social account, continually barraging the market with an array of erratic, confusing and borderline dictatorial policy pronouncements. The other day he suggested that the CEO of Intel must resign. Yesterday he went after Goldman Sachs Economist Jan Hatzius for his take on the tariffs.

Last week, Apple CEO Tim Cook made the trip to DC to pay homage to The King – and get tariffs for Apple reduced. And Trump is seeking political influence over government agencies like The Fed and BLS that have long operated mostly independently from the White House. Greg Ip had an excellent column on this in Tuesday’s WSJ calling it “state capitalism with American characteristics” (“US Marches Toward State Capitalism”. I’m not making this stuff up!

Last, Warren Buffett has been secretly acquiring a stock that may be revealed Thursday after the close when Berkshire releases its 2Q 13F. Barron’s did some nice detective work which suggests that the stock is in the category Berkshire calls “Commercial, Industrial and Other”. The other two categories are “Banks, Insurance And Finance” and “Consumer Products”.

My first thought when I saw this was Nike (NKE) – but that would be a Consumer Products stocks. Many are speculating that it’s United Health (UNH) but UNH didn’t get hammered until April and Buffett had already started acquiring this position in the first quarter. The Motley Fool’s Sean Williams thinks its UPS – which Buffett has previously owned and has been hit hard since he sold it in 2023.

Since it appears to be a large position and Buffett would have to report a stake of 5% or greater, the stock is likely a mega-cap. My own speculation is Caterpillar (CAT) and I like the CAT Aug15 $425 Calls for ~50 cents. I have no inside information and this is only a somewhat educated guess so please don’t put a lot of money into it.

And that’s it from Wonder Land. I have to get back to laughing uncontrollably at the absurdity of it all now. But it’s not a bubble until Nvidia (NVDA) reaches a $5 trillion market cap. Thank you for your attention to this matter!

More By This Author:

How Jesse Livermore Timed The Market In 1916 – And Its Relevance To Today
Why I Threw In The Towel On SNAP
The Market Is Expensive And The Risks Are High