Goldman Sachs' Alexandra Wilson-Elizondo: We expect a rate cut & 'hawkish tone' during the presser

Federal Reserve Expectations - The company expects a 25 basis point cut from the Federal Reserve in the upcoming meeting [1] - There is an anticipation of a hawkish tone from the Fed, particularly in comments from Jay Powell and the forward dots [2][3] - The Fed is addressing both sides of its dual mandate, indicating that inflation is still not close to the 2% target, despite some structural improvements [4] Economic Projections - Current economic indicators show a trend towards a 4.5% unemployment rate and core PCE around 3%, aligning with the Fed's previous projections [5] - The market is already pricing in six cuts, which may affect the bond and equity markets differently [6][7] Market Reactions - The bond market is expected to trade sideways following the anticipated cut, as yields have already been priced in [8][9] - The equity market is responding to different themes, particularly related to AI investments, which are projected to continue growing [10][11] Historical Context - Historically, non-recessionary cutting cycles have led to an average market increase of 15% over the following 12 months [11][12] - The company believes that the current economic environment is adapting rather than unraveling, which supports a positive outlook [14] Importance of AI and Rate Cuts - Both AI spending and Federal Reserve rate cuts are deemed equally important for the market, impacting various sectors and consumer behavior [15][16]