Navigating Market Uncertainty: Insights from Goldman Sachs and Morgan Stanley CEOs

Let's get to the big story breakdown.

Well, we are looking at US stock futures lower this morning.

Goldman Sachs and Morgan Stanley CEOs warning of market drawdowns within the next 12 to 24 months.

And as a new trading month is underway in November, historically one of the stronger months for stocks on the heels of the October Fed meeting, all eyes are on a handful of economic data releases as well as.

Speakers this week and the S&P 500 earnings momentum managing to pick up.

Now joining me this morning to weigh in is Michael Rankin, senior market strategist at the New York Stock Exchange.

Michael, good morning.

Thank you so much for joining me.

Good morning, Remy.

Thanks for having me back.

Well, here we are, the month of November.

Hard to believe, but it is under way.

So what do you make of the pullback we're seeing this morning?

Yes, I mean, you know this morning we're seeing.

Some weakness and that's kind of a carry forward of what we've seen kind of over the last week or so.

So we've been noticing some of the breath deterioration kind of under the surface within the market over the last couple of weeks and it's, you know, it's been a theme that has been talked about throughout much of this year, right?

And then last week we had the Federal Reserve meeting the chair Powell really went out of his way to put some Some question back into the market in terms of where the path of policy you know is going forward and we've started to see kind of an unwind right of some of the more speculative kind of pockets of the market, right, we've talked about for the last couple of weeks.

Price action in crypto being a little bit concerning, right, never really being able to, you know, reclaim the sell-off that we had seen kind of from the 1010, the day when you kind of China, China negotiations kind of went sideways the first time.

Um, right, and so we've talked about that and then you started to see some of the more speculative pockets of the market begin to unwind and then you have comments last night, you know, as you pointed out from kind of major CEOs, but I would, I would add there's a lot of qualifiers there, right?

They said there could be a 10 to 20% drawdown at some point in the next year or 2.

10% drawdowns are pretty typical, you know, in a trading year.

We've in fact had one.

You know, this year, so I don't think that's really like kind of necessarily going all that far out on the curve.

Yeah, and Michael, I think perspective is key here because despite seeing red this morning for futures, we have to keep in mind Do Nasdaq S&P 500 are still up double digit percentage gains year to date.

So as we move forward, November is historically a good month for stocks as well as December.

But as we head into those months, we are looking for economic data.

The government shutdown does continue.

So what are you looking for ahead of the December Fed meeting?

Yeah, so I mean I think right now, right?

I mean one of the things that we had talked about like coming out of the August and September time period and we talked about it on air, was that you know that's historically a negative time period for the markets and the markets kind of fuck those trends.

And when you look back at some of the Historical data, when you tend to see markets trade well in those time periods, the back half of the year continues to be positive but not quite as strong as you don't have all that ground to make up from kind of the lost those lost months, right?

So markets have gotten a little bit ahead of themselves, and you've really started to see just all of the headlines from AI kind of really just suck the air out of the room, right?

So.

Every day we're hearing kind of multi-billion dollar kind of partnerships and deals that are happening within the AI complex and that's right, it's just making it hard for anything else in the market to kind of really move higher when you look at sort of you know kind of where we are heading into December, you're really seeing.

Kind of a very, very divided Fed, right, so last Friday we heard from that kind of hawkish contingent, right, and then this week we heard from some of the more doviish contingent, you know, we had Fed Waller saying he still supports the December cut.

Stephen Moran is calling for, you know, a series of 50 basis point cuts, and that's, you know, kind of pretty standard.

But then what you saw yesterday a little bit is that some of the other Doves that have been in the room like in Austan Goolsbee suggested that he was a little more concerned all of a sudden with the inflation side of the story, right?

So once again you know kind of interjecting some question around what happens at that December meeting and we're not going to get a whole lot of data between now and then.

Yeah, and finally, Michael, before I let you go, it is earnings season and we've been hearing from the mega cap tech names last week and it was very interesting to look at the price reaction following the results of some of those mag 7 names.

But here we are, we're digesting more earnings this week.

So when it comes to the S&P 500 sectors, what are you bullish and what do you bearish on in the short term?

Yeah, and so you know what we've seen kind of in Earnings season has been pretty interesting, right?

We're seeing kind of very strong numbers like in general, like pretty, pretty broadly we're seeing strong numbers, you know, the price action that we've seen, you know, kind of on the back of that, it's been a little more questionable, you know, a palantirer, they're kind of overnight, right, where they had strong numbers again, but you know the stock is trading down right and an Uber, right?

I mean those are kind of more examples.

Look, I think.

The idea and the investment that we're seeing kind of from the industrial, you know, in the kind of the reshoring and onshoring and industrialization, kind of bringing in the industrialization of the US back that sets up well for kind of some of those construction areas of the market, you know, and you know the industrial sector is also kind of benefiting from all of the spending that is happening.

Kind of within AI, you know, markets are also starting to look forward to kind of the impact of the big beautiful bill and the tax cuts going into next year and whether or not you know kind of those tax refunds can start to kind of help, at least in the short term help kind of some consumer spending trends.

So that's kind of something else.

OK, Michael, as always great to have you on the show.

Thank you so much for sharing all of your insights today.

Thank you.