Remy Blaire is joined by Michael Reinking, Senior Market Strategist at the NYSE, to discuss the latest economic data and its implications for the upcoming Federal Reserve meeting in December. As the final stretch of November approaches, Remy notes that trading volumes are expected to decline, potentially leading to increased market volatility due to a lack of significant catalysts.
The conversation begins with an analysis of the current market conditions, where stock futures show a mixed performance. Michael highlights the recent volatility in the markets, which has been largely influenced by varying expectations regarding Federal Reserve rate cuts. He explains that earlier in the week, several Fed officials expressed hawkish views against rate cuts, but a pivotal shift occurred when New York Fed President John Williams, a key member of the Fed’s inner circle, voiced his support for further rate cuts. This statement has significantly altered market expectations, raising the odds of a 25 basis point rate cut in December to approximately 85%.
As they look ahead to the December Fed meeting, Remy and Michael discuss the importance of upcoming economic data releases and the Fed’s speech scheduled before the Thanksgiving holiday. Michael emphasizes that this speech will provide valuable insights into the Fed’s sentiment and potential messaging strategies, particularly the distinction between a “dovish hold” and a “hawkish cut.” He suggests that a dovish hold may be easier to communicate, although it might not elicit a positive response from equity markets.
The discussion also shifts to the competitive landscape in the technology sector, focusing on the rivalry between NVIDIA and Alphabet (Google) in the artificial intelligence space. Michael points out that Alphabet’s new offerings are beginning to challenge NVIDIA’s stronghold, indicating a maturation of the industry and the emergence of more competitors.