Economic Outlook - The Federal Reserve is facing challenges in making decisions for the upcoming December meeting due to a lack of key economic data caused by the government shutdown [1][3] - The Atlanta Fed's GDP now forecast for Q3 2023 is projected at 4.1%, indicating a strong economic performance [2][3] Federal Reserve Policy - The Fed is described as data-dependent but currently lacks sufficient data, relying instead on private data sources [3][4] - There are mixed signals regarding the labor market, with ADP data showing weakness and consumer sentiment at a three-year low, which could suggest a need for a rate cut [4][5] - The probability of a rate cut in December has decreased to about 50%, reflecting uncertainty in policy direction [5][6] Market Dynamics - Institutional investors are pulling back from the market, while retail investors continue to invest, influenced by tax considerations and year-end rebalancing [12] - Mega-cap companies are expected to lead the market, particularly in a tighter credit environment, as they have better access to borrowing [9][10][11]

🇺🇸 UPDATE: Markets see a 45.8% chance of a Fed rate cut in December. https://t.co/JL4ZzWry9y ...

Core Viewpoint - The likelihood of a rate cut by the Federal Reserve in December is diminishing as more officials express caution about further cuts, with current inflation levels being a significant concern [1][2]. Group 1: Fed Officials' Perspectives - Kansas City Fed President Jeff Schmid believes inflation is too high and suggests that a rate cut may not help the job market due to structural long-term issues [2][3]. - Schmid's dissent at the last policy meeting reflects a growing divide within the Fed, with more officials leaning towards holding rates steady rather than cutting [3][4]. - The current sentiment among Fed officials indicates a potential for dissent on either side, depending on the decision made regarding rates [5]. Group 2: Market Expectations - Traders' expectations for a December rate cut have decreased significantly, with the odds now at approximately 45%, down from 94% a month ago [5][6]. - Fed Chair Powell has indicated that a rate cut in December is not guaranteed, further influencing market perceptions [6]. Group 3: Future Fed Composition - Atlanta Fed President Rafael Bostik's upcoming retirement in February presents an opportunity for the president to reshape the Fed, although the Atlanta Fed does not have a vote on the FOMC until 2027 [7][9]. - The potential nomination of a new Fed chair by the president in May could lead to a more dovish stance within the committee, impacting future monetary policy [10]. - The Supreme Court ruling in January regarding the president's authority to fire a Fed member could also influence the Fed's direction [11].

Group 1 - The dollar index (DXY) increased by +0.13% on Friday, recovering from a two-week low, driven by hawkish comments from Kansas City Fed President Jeff Schmid and Dallas Fed President Lorie Logan against further Fed rate cuts [1][2][3] - The probability of a Fed rate cut at the next FOMC meeting decreased from 70% to 42% following statements from several Fed presidents favoring steady interest rates [2][3] - The euro (EUR/USD) fell by -0.12% on Friday, influenced by the dollar's strength, although losses were mitigated by an upward revision of Eurozone Q3 GDP to +1.4% y/y from +1.3% y/y [4][5] Group 2 - The Japanese yen (USD/JPY) experienced a slight decline of -0.01% on Friday, despite modest gains supported by Japan's September tertiary industry index showing its largest increase in four months and rising government bond yields [6]

Core Viewpoint - The current financial conditions are favorable, and the Federal Reserve's rate cuts may not have been necessary, leading to market volatility and presenting investment opportunities outside speculative assets [4][6]. Financial Sector Analysis - The financial sector is not experiencing a hiccup that would inhibit lending or slow GDP growth, as financial conditions remain easy with tight credit spreads [3]. - Prior to the pandemic, GDP was tracking around 3.5% to 4%, indicating a strong economic backdrop [4]. Investment Opportunities - There is a significant speculative nature in the market, with record participation in options and leveraged ETFs, suggesting a potential for volatility that could highlight alternative investment opportunities [5][6]. - The focus should be on boring investments such as dividends and quality stocks, particularly outside the tech sector, where non-US quality stocks are growing faster than major US tech companies [5][6]. Geographic Focus - Increasing non-US exposure is recommended, particularly in quality large-cap stocks in Europe and Asia (excluding Japan), which offer higher dividend yields, faster growth, and attractive valuations [8]. - The current market conditions present a growth story for non-US investments that was previously lacking [8]. Crypto and AI Investment Stance - The company has historically been critical of crypto and has not engaged in it, suggesting a cautious approach to speculative assets [9]. - For AI investments, diversification is advised, with a recommendation to take profits from significant gains and reallocate into a more balanced portfolio [10].

Core Insights - Wall Street experienced a significant decline, with large-cap technology companies losing $1.5 trillion in market value over two days due to reduced expectations for a Federal Reserve interest rate cut in December [1][2][12] Market Performance - Major US indices faced volatility, with the Nasdaq Composite falling 1.5%, the S&P 500 dropping 1.1%, and the Dow Jones Industrial Average losing 479 points, marking the lowest intraday levels of the week [3][4][7] - The selloff on Thursday was noted as the worst one-day performance for major US indices since October 10, with the Dow reversing gains from the previous day [7][9] Technology Sector Impact - Top technology companies such as Nvidia, Microsoft, Palantir, Tesla, Amazon, Intel, and AMD saw sharp declines despite reporting strong earnings [2][15] - AI-focused stocks were particularly affected, as investors expressed concerns over overvaluation in companies heavily investing in artificial intelligence [2][8][15] Individual Stock Movements - Nvidia dropped 2.8%, AMD slid 4.7%, and both Tesla and Palantir fell 3% following larger declines on the previous day [6][15] - Significant losses were reported for Palantir (-11.0%), Tesla (-10.5%), Intel (-9.0%), and AMD (-8.0%) among others [14][15] Investor Sentiment - Investor concerns centered around the sustainability of the AI trade, with Oracle's pullback raising alarms about stretched valuations and rising debt [8][9] - Expectations for a Fed rate cut in December decreased, with traders now assigning a 52% chance of a quarter-point cut, down from 62.9% earlier in the week [9][15] Notable Gains Amidst Turbulence - A few companies saw notable gains, including Cidara Therapeutics which surged 105% after a $9.2 billion acquisition announcement by Merck, and Avadel Pharmaceuticals which rose 20% following a purchase offer [10][11]

Group 1 - The market is experiencing volatility, particularly in tech stocks, with a notable selloff in the NASDAQ and major tech names due to concerns over AI valuations and Fed interest rate policies [3][7][29] - Seammen's Energy reported a nearly 600% surge in adjusted profit, driven by increased energy demand from AI data centers, and the CEO expects this momentum to continue [4] - The US Treasury yields are rising, with the 10-year yield around 4.121% and the 30-year yield at 4.7%, indicating market reactions to potential Fed rate cuts [8][9] Group 2 - The Fed's hawkish commentary and uncertainty regarding interest rate cuts have contributed to market selloffs, with December's rate cut odds now below 50% [9][10][12] - ADP reported a slight recovery in hiring with 42,000 jobs added in October, but the shutdown of key statistical agencies has created uncertainty in economic data [11][12] - Retail investors have been pivotal in the market, successfully buying the dip in previous downturns, but current market conditions pose challenges to this strategy [15][21] Group 3 - The UK Chancellor is reportedly reversing plans for income tax hikes due to fears of backlash, creating uncertainty about how to address a potential £30 billion fiscal hole [49][56][67] - Analysts suggest that freezing income tax thresholds could raise around £8 billion, while adjusting the thresholds for higher tax rates could generate additional revenue [68][69] - The political turmoil within the UK government is affecting market confidence, with concerns about the government's ability to implement significant fiscal measures [66][70]

a negative reaction to earnings. This is a chip equipment maker, by the way. >> Yeah.And investors aren't exactly feeling optimistic today. So we'll see how it shakes out through the call. Thanks Christina.Now let's get back to today's big sell off. Speaking of what should investors do if a fed rate cut is no longer a guarantee in the markets seem to be on a bit less stable ground. Joining me now is Innovator Capital Management chief investment strategist Tim Urbanowicz and Citi U.S. equity strategist Drew ...

Economic Policy and Market Reactions - President Trump signed legislation to end the longest US government shutdown, providing full-year funding for some departments and resuming federal payments to states and localities [1] - Boston Fed President Susan Collins indicated that it may be appropriate to maintain current policy rates to balance inflation and employment risks, while Cleveland Fed President Beth Hammack expressed opposition to further rate cuts due to persistent high inflation [2][6] - The market is currently pricing in a 51% chance of a -25 basis point rate cut at the next FOMC meeting, down from 70% the previous week [6] Stock Market Performance - US stock indexes experienced significant declines, with the S&P 500 Index down -1.66%, the Dow Jones down -1.65%, and the Nasdaq 100 down -2.05% [4] - Concerns over upcoming economic reports, delayed by the government shutdown, contributed to the market sell-off, particularly affecting chipmakers and major technology stocks [3][12][13] Corporate Earnings and Forecasts - Q3 earnings season showed strong results, with 82% of S&P 500 companies exceeding forecasts, leading to a +14.6% increase in earnings compared to expectations of +7.2% [7] - Ardent Health cut its full-year adjusted EBITDA forecast, leading to a more than -34% drop in its stock price [14] - Walt Disney reported Q4 revenue below consensus, resulting in a more than -7% decline in its stock price [15] International Market Trends - Overseas stock markets showed mixed results, with the Euro Stoxx 50 down -0.77% and China's Shanghai Composite up +0.73% [8] - European government bond yields increased, with the 10-year German bund yield rising to 2.688% [10]

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