Well, let's get to the big story breakdown.
US stock futures are higher this morning, and the S&P 500 is down more than 4% this month, but the index is still up 11% year to date.
Now strong results from Nvidia failed to steady a markets taken by high valuations and questions about huge AI investments.
Now, the wave of backlogged economic data expected in the coming weeks could add even more volatility to the market.
Investors are trying to gauge the health of the economy and the odds that the Fed Reserve.
Cut interest rates at the December meeting.
Well, joining me on this Monday morning as we head into Thanksgiving week is Peter Tuchman, senior floor trader at Trademoss.
Peter, good morning.
Thank you so much for joining me.
Great to be here.
Thanks for having me.
Well, we only have 3.5 trading sessions this week with Thanksgiving falling on Thursday.
But of course we have to keep in mind that today is the MSCI quarterly rebalance.
So how do you think that will affect markets?
I think it's going to affect markets a lot.
Look, we was very, it was made very clear to us last week, you know, we obviously the market was really Wound up about the Pallanttier earnings, right?
They ran up 7 days in a row into the earnings that sold off 8% and that created this insane narrative around the fact that AI was a bubble.
That was madness.
OK, first of all, then everyone's fear was about Nvidia, that they knew Nvidia earnings were going to be just as solid, but they were fearful that the same thing was going to happen, that the market was going to sell off.
But everyone didn't realize was we ran up 7 days into Patier earnings.
Normally it's by the rumor or sell the news.
That made sense.
We sold off 3 weeks into Nvidia earnings and then it came out.
They blew them out of the. especially with data centers, which was their weakest point last time and it ran up.
That was all fine and good, and we were hoping that would affect the market, but it turns out that the market made it very clear to us that all they really care about is interest rates and whether we're getting a cut because that was the that was the pivotal component, right, that you could tell because a lot of the big players are in portfolios that are very interest rate sensitive.
So all that other stuff was chattered to them, even though we're very often bound by, you know, by one stock earnings can, as we know, Nvidia can take the market up or down.
It was made clear to us by the market and the sentiment that it was all about the interest rate cut.
So while we were looking really down as as little as 40% probability of a cut, right?
I mean, we know Dan I've said that the probability of not getting a cut was the same as me playing center for the Knicks in the 25, 26 season.
So we he knew it was going to happen anyway, but now it's spiked up to 79%.
I think the probability in the market.
Suddenly turned over on Friday we saw a bit of a relief rally and we're seeing a follow through here and I think that's what's going to happen.
Today's MSCI rebalance is going to be sizable.
It's the largest global index that we have a rebalance in that with all this volatility is going to be is going to be interesting at best.
It's surely going to be volatile because the numbers have to be rebalanced within the larger index and when we've seen these big moves like we're up 11% for the year, we were up 17%, we've lost 4%.
And all of these things are going to play into the rebounds today.
Yeah, and speaking of volatility, Peter, although the VIX is down about 2% this morning, it is still hovering around 25%, and we do have plenty of earnings as well as economic data before we head into Thanksgiving Day this week.
So what are you watching as we head into the rest of the week?
Look, we know that we had 3 days in a row where VICs were up double digits.
OK.
That was all about that fear about AI being a bubble, which was insanity.
And also about whether the interest rate cuts were going to happen.
I think all of that is settled down.
We're seeing a nice little bit of a relief rally in tech relative to the fact that we did see blowout earnings by Palantir and Nvidia.
We've got a relief rally going on because we've seen that the Federal Reserve made it as clear as they could that we are going to get a cut.
We still are a little bit driving blind in the fact that we don't know a lot of the economic data that's starting to trickle in.
Will be helpful.
Well, look, all eyes are on retail this week, right?
Obviously we want a sense everyone needs to understand that a majority, more than 65% of earnings by retail come on Black Monday, right?
We actually I'm here today with the CEO of Weshop.
It's a retail name that just went public on NASDAQ, our competitor, no disrespect to them, but the bottom line is retail is should be solid.
If the consumer is in good condition, right, and the markets are strong.
We're going to see a big robust holiday season.
I'm hoping for that.
I'm hoping that now that the runway is clear around the interest rate story that retail will be super robust coming into the end of the year.
I'm trying to manifest and you know I do a manifestation of 50,000 on the Dow and 7000 on the S&P.
I printed up the hats.
We're ready to roll.
OK, Peter.
Well, thank you so much for joining me on this Monday morning.
We'll see you again very soon.
Thank you.
