Let's get to the big story breakdown.
More economic data streaming in this morning ahead of the December Fed meeting.
The final stretch of November could be challenging as trading volumes drop and few catalysts emerge before the Fed's policy meeting next month, potentially boosting volatility.
This morning, the odds of a December Fed rate cut of 25 basis points stands right around the 85% level.
Well joining me this morning here at the New York Stock Exchange is Mike.
Ryan King, senior market strategist at the New York Stock Exchange.
Good morning, Michael.
Thank you so much for joining me.
Good morning, Remy.
Thanks for having me.
Well, we are looking at a mixed open in terms of stock futures, and this does come on yesterday's performance.
So what do you make of the latest batch of data?
Yeah, so we've had a very volatile kind of couple of weeks, right?
And if you kind of look back to last week, right, we had quite a bit of volatility and a lot of that was kind of centering.
Around the market expectations for the Federal Reserve to either cut or not, right?
And so during the front half of that week, we had kind of quite a bit of hawkish commentary with multiple officials coming out and saying that they don't support a cut and then on Friday we had New York Fed President Williams, who's part of the Fed's troika, right, so which is the chairman, the vice chair, and then the president of the New York Fed.
Uh, you know, the closest inner circle, you know, he came out and said he supported further rate cuts and suggested that there could be further cuts in the near term.
Now he carries some extra weight, you know, kind of given his position.
The other piece of that is that his speeches get reviewed by the chairman.
Before you before he presents them, right, so there was this view that you know with him supporting cuts that is clearly where kind of the top of house lives and we had the expectations for rate cuts shift from about 1 in 3 to about 85% now, right?
So you know it's.
It's an interesting setup as we as we head into that meeting in that there's kind of two ways this can play out, right?
You can either have them cut rates and then kind of offish hawkish commentary on the back end, so the hawkish cut or the the kind of the dubish hulk, right, and um.
I would say the messaging for a doubish hold is probably easier, but markets are clearly kind of you kind of starting to price in that cut.
This morning we had ADP numbers come in.
A little bit weaker on the jobs front.
The retail sales number kind of a little bit weaker, when you kind of look at Xaus, but those numbers are pretty stale, so I don't think they're really kind of moving markets.
Yeah, and speaking of which, we have 15 days to go until the December Fed meeting, and by then we'll get more economic data releases.
But as you mentioned, a lot to keep our eyes on tomorrow.
We get the Fed speech, but.
Or we all go away for the Thanksgiving Day holidays.
So how important will that be?
Yeah, I mean that gives you kind of a, kind of some of the sentiment and kind of you know more real time, right?
And you know it's that that survey data, it's like softer data, right, it is like a good indicator for the Federal Reserve to see how you kind of things stand, you know, like going back to that idea of you know kind of the dovish hole right.
The Federal Reserve can can kind of suggest, look, we're going to get a lot of data between that December meeting and the January meeting for us to really make a more informed decision.
So I mean like I said, I think that's the easier set of messaging.
Um, it will probably, if that were the way things kind of played out, especially with positioning and how things have shifted now, that would probably get not such a great response from equity markets, you know, but the messaging that would go along with that, I think would be a little bit easier.
And of course speaking of markets, we are paying close attention to levels for the major US stock averages and this morning it does seem as though Nvidia versus Alphabet or Google in the boxing ring, doesn't it?
Yeah, yeah, absolutely.
So you know, especially kind of at the top of this you know kind of AI trade, right, we're seeing some shift, right?
So you kind of pointed to the two main kind of aspects of that, right?
Gemini taking some of the kind of shine off of OpenAI's Chey BT, right, and then also kind of the the TPUs from from Alpha.
That you know starting to threaten you know kind of Nvidia and kind of their stronghold on kind of all this capital spending, right, so you're you know it's not surprising that as you're seeing kind of this this kind of industry start to mature a little bit right we're still very, very early stages that you're seeing, you know, kind of more competitors come in right and now you're kind of shaking things up kind of at the at the very, very top and you kind of.
Everybody's been chasing OpenAI up until this point, right, and now you know you've already got, you know, kind of one of the kind of most well funded uh you know kind of companies out there that that's showing that they can compete right and a lot of the narrative that was out there for Google earlier this year being, you know, kind of quickly dispelled, um, you know, we'll have to see kind of how that shakes out.
Last Friday.
You know, we once again for the 3rd Friday in a row we had markets kind of by the dip right and you had a very strong kind of by the dip response, you know, after breaking the 100 day moving average earlier in the week for the first time in 6 months, we did kind of reclaim that that 6550 level, you know, to the downside for the S&P 500, that's kind of really, I think you know the key level to kind of pay attention.
Well, a lot to keep our eyes out as we head into the holiday weekend, so I will see you back when it's December.
So happy holidays, Michael.
Happy holidays and have a happy Thanksgiving.
Thank you so much.
