But now here to help us set up the trading day, I'd like to welcome in Kevin Hanks for our pre-bell playbook. And so Kevin, we've gotten some important economic data this morning. I mean GDP rose just 1.4% pretty wide miss.Well, we also saw at the same time inflation actually holding pretty firm. So I mean right now how do you make of what do you make of this conflicting data and what does this mean for overall just the Fed. >> Good morning Jen.You know I think two things. We got two very big numbers today. ...

Market Overview - The U.S. market closed with mixed results, as the Russell 2000 gained 1% driven by hopes of a rate cut, while large-cap indexes like the Dow and S&P 500 showed minimal changes, and the Nasdaq declined by 0.22% [2] - The Russell 2000 was noted to be leading the market with a 1.84% increase, while the S&P 500, Nasdaq, and Dow followed with gains of 0.62%, 0.55%, and 0.42% respectively [3][8] Winners - Evolution Metals & Technologies Corp saw a significant increase of 28%, leading the U.S. stocks, followed by Rivian Automotive at 27.1%, Tri Pointe Homes at 26.6%, and Magna International at 18.8% [4][5] - The market capitalization of Evolution Metals & Technologies Corp is reported at $5.79 billion, while Rivian Automotive has a market cap of $21.82 billion, and Tri Pointe Homes stands at $3.98 billion [5] Losers - Bright Horizons Family Solutions experienced the largest decline at 21.3%, with other notable decliners including Pinterest at 17.6%, Fortune Brands at 15.1%, and Callaway Golf also at 15.1% [6] - Prediction markets such as DraftKings and Flutter Entertainment saw declines of 13% and 11.6% respectively [6]

Inflation Overview - Inflation slowed in January to 2.4%, the lowest pace since May 2025, following a positive jobs report, indicating the economy is currently avoiding the full impact of President Trump's tariffs [1][5] - The core inflation figure, excluding food and energy prices, decreased to 2.5%, marking the lowest level since 2021 [2] Employment Impact - Consumer inflation has been gradually decreasing from a peak of 3% in September, reaching 2.7% in December, while wholesale inflation remains elevated at 3% [3] - The strong payroll report indicated that US employers added 130,000 jobs in January, which may influence the Federal Reserve's decision-making regarding interest rates [3] Federal Reserve Response - The likelihood of a rate cut in the near term is diminished due to the robust employment numbers, as the Federal Reserve is balancing inflation concerns with employment growth [4]

Group 1 - The new trading range is expected to be between $5002.31 and $5143.89, with traders facing a decision to either short or anticipate a breakout if this zone is tested [1][2] - A significant sell-off occurred due to a combination of speculative trading and external factors, including the nomination of Kevin Warsh for the U.S. Federal Reserve Chair and a lack of clarity on rate cuts from the Fed [4] - The market's long-term outlook remains bullish, but the rapid rise driven by speculators has led to a correction, indicating a need for a support base to form above the 50-day moving average to attract real buyers [3][4] Group 2 - The first leg down from a major top is typically characterized by long liquidation, followed by a retracement of 50% to 61.8% of the previous move, with aggressive shorts likely to enter at the retracement zone [2] - If the retracement zone is breached, it may signal the return of buyers, while holding at this level indicates the presence of sellers [2]

Core Viewpoint - The Federal Reserve's current situation is heavily influenced by political pressures, which limits its ability to make independent monetary policy decisions [3][4][10]. Group 1: Federal Reserve's Independence - The Federal Reserve is facing a significant political assault that undermines its independence, making it difficult for officials to acknowledge economic data [3][4]. - There is uncertainty regarding the statements that Fed Chair Jay Powell will make during the press conference, especially in light of recent political scrutiny [2][3]. Group 2: Potential Leadership Changes - Discussions are ongoing about the next head of the Federal Reserve, with various candidates being considered, including Rick Reer and Christopher Waller [4][5][7]. - Christopher Waller is noted for not having made political donations, which aligns with the Fed's tradition of maintaining political neutrality [7][8]. Group 3: Economic Indicators - Consumer confidence has significantly declined, with a notable labor market differential reported, which historically indicates a recession [10]. - Inflation metrics, such as Trueflation TRU at 1.15%, suggest that inflation is not currently a pressing issue for corporations, despite ongoing cost-cutting measures [11][12]. Group 4: Employment and Cost Pressures - The labor market is experiencing challenges, with high-paying corporate jobs being lost, impacting middle-income workers [15]. - Rising costs in essentials, particularly grocery prices and gasoline, are straining consumers, although rents are beginning to fall [13][14]. Group 5: Future Rate Cuts - Expectations are that meaningful rate cuts may not occur until June, and there is speculation that Powell may not act decisively on monetary policy before his term ends [15][16]. - Powell's acknowledgment of labor market weaknesses could influence future policy decisions, as failing to address these issues may tarnish his legacy [17].

Core Viewpoint - The Federal Reserve is expected to maintain its current interest rates, with significant attention on Chairman Jerome Powell's comments regarding future monetary policy and economic conditions, which could impact both traditional and cryptocurrency markets [1][3][5]. Interest Rate Status - The Federal Reserve is anticipated to hold rates steady at 3.5%-3.75%, with a 96% probability priced in by CME's FedWatch futures [3]. - This decision aligns with Powell's previous statements indicating no further cuts until at least 2026, supported by Minneapolis Fed President Neel Kashkari's assertion that it is "way too soon" for additional cuts [4]. Market Reactions - The Fed's decision is likely to be a non-event unless an unexpected rate cut occurs, which could negatively affect the dollar while positively impacting bitcoin and stocks [5]. - Traders are focused on whether the Fed's pause in rate cuts indicates a hawkish or dovish stance, with a hawkish pause suggesting ongoing inflation risks and a dovish pause indicating potential future rate cuts [6]. Dovish Signals - Morgan Stanley predicts the Fed will convey a dovish signal by maintaining language in its policy statement that suggests future adjustments are possible, while recognizing the economy's strength [7]. - The presence of dissenters, particularly Stephen Miran, who may advocate for a significant rate cut, could enhance the dovish outlook and support for future easing, potentially benefiting stocks and bitcoin [8].

Market Overview - The S&P 500 and Dow Jones Industrial Average closed at all-time highs in the previous session, with the Dow edging up 28 points or 0.1% in early trading [4][6] - US equity futures showed mixed signals before the opening bell, with S&P 500 futures slipping less than 0.1%, Dow futures rising 0.1%, and Nasdaq futures down 0.2% [4][6] - Global uncertainty is increasing, particularly due to geopolitical tensions following the capture of Venezuelan President Nicolás Maduro by US forces [4][6] Corporate Developments - Warner Bros rejected Paramount's latest takeover bid and urged shareholders to support a rival $72 billion offer from Netflix, with shares of Warner Bros, Paramount, and Netflix remaining largely unchanged [5][6] - The US labor market data is a focus for investors, with job openings data due Wednesday and the monthly jobs report scheduled for Friday, which will be closely monitored by the US Federal Reserve [5][6] Economic Indicators - The Federal Reserve is expected to keep interest rates unchanged at its upcoming meeting after cutting rates three times in late 2025, despite inflation remaining above the 2% target [5][6] - US Treasury yields moved lower, while in commodities, US benchmark crude oil slipped 9 cents to $57.04 per barrel, and Brent crude rose 8 cents to $60.78 per barrel [5][6] Regional Market Performance - European markets were mixed, with France's CAC 40 down 0.2%, Germany's DAX up 0.5%, and the UK's FTSE 100 lower by 0.6% [5][6] - Asian markets also showed mixed cues, with Japan's Nikkei 225 falling 1.1%, South Korea's Kospi rising 0.6%, Hong Kong's Hang Seng declining 0.9%, and the Shanghai Composite edging up marginally [5][6] Sector Analysis - Analysts noted signs of fatigue in the technology-led rally that has driven markets higher, with tech appetite reportedly weaker in Asia [4][6] - There is a growing sentiment that good news is no longer generating the same euphoria as seen in the past three years, indicating a potential shift in market dynamics [6]

Federal Reserve Interest Rate Cuts - The Federal Reserve cut interest rates three times in 2025, each by a quarter of a percentage point, with the most recent cut on December 10, leaving benchmark rates at 3.5% to 3.75% [1] - The decision was controversial, marked by a six-year high of three dissents among Federal Reserve members [1] - Chair Jerome Powell indicated that further cuts would be difficult to justify, but future decisions may be influenced by post-shutdown data [1] Investment Recommendations Post-Cut - ChatGPT recommends investing in cyclical and growth sector stocks, particularly in technology-related industries, as these stocks tend to benefit most from rate cuts according to BlackRock Capital [3] - Growth stocks are characterized by companies expected to grow revenue faster than the market average, often possessing competitive advantages and loyal customer bases [4] - Cyclical sectors are suggested for investment as they typically outperform stable sectors in the early days following a rate cut [4] Broader Market Exposure and Bonds - ChatGPT advises considering broad market exposure, such as S&P 500 or total-market ETFs, with a focus on sectors that historically benefit from rate easing [5] - Long-term bonds and bond funds are recommended as bond values typically rise when interest rates fall, making existing bonds with higher fixed rates more attractive [5] - The present value of long-term bonds (20- to 30-year) increases with falling rates, providing capital gains in addition to interest [6]

Group 1 - Tether, the issuer of USDT, purchased 8,889 BTC valued at $778.7 million as Bitcoin's price fell below $88,000, increasing its total BTC holdings to 96,370 BTC worth $8.46 billion [1] - Bitcoin is currently experiencing bearish consolidation, trading just under $87,500, with a 1.1% decline in the past 24 hours [2] - The US-based spot BTC exchange-traded funds recorded a net outflow of $348.1 million on December 31, indicating weak institutional demand [2] Group 2 - December 2025 saw a monthly net outflow of $1.09 billion from investment products, reflecting ongoing macroeconomic uncertainty [3] - Bitcoin recorded its weakest Q4 performance since 2018, with a decline of 23%, attributed to multiple negative catalysts including macro conditions and institutional outflows [4] - A CryptoQuant analyst outlined three potential scenarios for Bitcoin's price movement, ranging from a volatile range of $80,000 to $140,000 under weak economic recovery, to a potential drop towards $50,000 amid recession risks [5][6]

Market Overview - The U.S. stock market opened with mixed results, with the Russell 2000 (+0.06%), Nasdaq (+0.04%), and S&P 500 (+0.03%) starting in positive territory, while the Dow (-0.09%) remained flat [2] - All four major indexes were reported to be slightly down, indicating a potential fourth consecutive day of declines for the S&P 500 [3] Company-Specific Developments - Nvidia's stock rose by 0.84% after placing a significant order with TSMC (+1.5%) due to strong demand in China for its new H200 chip, with over 2 million orders from Chinese firms and only 700,000 units in stock [3] Labor Market Insights - Initial jobless claims for the week of Dec. 27 were reported at 199,000, lower than the expected 220,000, marking the lowest level since late November [5] - There has been a sustained decline in jobless claims over the past four weeks, with Continuing Claims for the week of Dec. 20 at 1.866 million, down from 1.923 million the previous week [6] - The labor market is showing signs of slowing rather than collapsing, which may impact expectations for future rate cuts by the Federal Reserve [7]