Wall Street is digesting earnings after yesterday's rally, and with the government shutdown entering week 4 and the Fed decision on October 29th, spooky season is turning out to be full of tricks and treats where any surprise can haunt or boost sentiment.
And here in the Big Apple, the New York City mayoral debate between Zoran Mandami, Andrew Cuomo, and Curtis did not shut the odds much.
Mandami's lead keeps growing, hitting a record high of 88% with 4.3 million votes up for.
Grabs New Yorkers in all five boroughs head to the polls in just 18 days on November 4th.
Joining me to talk markets and probabilities in New York City is Jose Torres, senior economist at Interactive Brokers.
Jose, great to have you here.
Thank you so much for joining me.
Hi Remy.
Great to be here.
A little update.
Mamdani's odds went up to 93% yesterday and today.
So essentially our forecast trade or prediction market is essentially predicting that Mamdani is going to win the election in a few days.
Yeah, so we have a lot coming down the pike, don't we?
At the Federal Reserve as well as the APEC summit and of course the mayoral elections here in New York City, but what do you make of what's happening underneath the surface first with the elections and the markets?
Well, the markets, you know, yesterday we saw this big rally and Wall Street doesn't want to make October negative.
You know, it looked like October could have been a down month, first one from April, a little spooky, spooky, but no, really big green candle yesterday.
We'll see if we get continuation today.
Regional bank worries were quelled.
Because you have these lenders come out with profitability results and it's sort of pointed to the fact that these are isolated incidents.
It's not a widespread issue.
U.S.China relations also look like they're improving incrementally.
Data from China yesterday very weak on retail sales, very weak on fixed investment.
That sort of investors are seeing that that that's sort of playing into the US's hands from a leverage perspective.
Overall though, markets bullish CPI out on Friday, going to be around 3%.
Fed's still cutting.
With CPI at 3% in October, also heavy odds that they'll cut in December.
That's a great backdrop for risk assets for crypto, for gold, and for stocks.
Yeah, let's talk about what we're seeing in gold as well as crypto because after that Friday sell off, not last week but the week before that, we've been seeing this difference when it comes to gold rallying and clearing 4000 and even 4300 while we're looking at Bitcoin lower this morning below that 110 level.
So given everything that's happening.
Backdrop you're talking about.
Do you expect this to continue?
No, I think Bitcoin is actually going to reverse and it's going to start adding to gains.
I think the speculative fever is going to come back into the market into year end.
October is spooky, but November and December, that's turkeys and Santa Claus.
So that's a more bullish seasonal perspective.
When you look historically, those months are very strong.
You have bed cuts, central banks tolerating above target inflation.
That's why gold is rallying so much because liquidity. is seeking a safe haven asset, gold versus crypto similarities, but crypto is much more speculative still, and that's why sometimes it gets caught up in its own little volatility and you know that kind of those kinds of patterns.
But overall you have rate cuts, you have earnings that are coming in strong. tech sector providing good outlook.
We'll see what the Magnificent Seven say in a few days.
You know, bullish environment, I think you can see S&P 500 7000 by year end.
That'll be great three years in a row of Gains around 20% or so.
Yeah, so Jose, a lot to keep our eyes on this week when it comes to earnings as well as economic data, but that APEC summit that's coming up.
So of course we're going to be paying attention to the discussions between Trump and Xi Jinping.
But also there's a lot of interesting action in bonds and FXs, especially given the political climate.
So what are you watching out for?
You know, I feel like currency markets and fixed income markets, they've been snoring the last two weeks.
Because especially in the US, because you don't have the economic data, and that's really what pushes the DXY, the dollar index up or down as well as treasuries is really they focus a lot more on the economic data, whereas like the stock market and crypto, they focus more on enthusiasm and animal spirits.
We're thinking of the government shutdown.
Our prediction market says it's going into November, most likely.
So the 10 years have been sort of around 42 years been sort of around 3.5, and the G. has been around 9899.
I think you need to get that economic data Friday with CPI.
I think that will really help investors choose one direction or the other.
And Jose, less than 30 seconds here, but what do you think is going to happen when it comes to the December Fed meeting?
I think the December is going to be a cut, you know, payrolls have been decelerating rapidly.
Immigration restrictiveness, AI adoption, rate sensitive sectors, construction, manufacturing, small businesses aren't.
Comfortable expanding their rosters in this environment, so the Fed here is fine cutting twice, waiting to see if inflation starts to cooperate next year.
I think that's the outlook.
So do you think 25 or 50 in December?
Oh, definitely 25.
I don't think 50.
I think you know they already did September.
This month will be 25.
December is 25.
That'll bring the Fed funds bottom range down to 350 with the CPI at around 3.
That's only a little bit of restriction.
I think that's appropriate.
OK, Jose, great having you here.
Thank you so much for joining me.
Terrific.
