Well, post Thanksgiving, markets are back in riskoff mode this morning. Equities seemingly stuck between possible Federal Reserve doubbishness and the risk aversion signals being sent by the crypto markets. Joining me now, Steve Sausnik, Interactive Brokers chief strategist.Steve, it's great to see you. Thanks for being with us. Hope you had a great holiday.Um, let's talk about the sort of push and pull in the markets here because, you know, we're getting these signals that maybe Kevin Hasset's going to be ...

Core Viewpoint - The 10-year Treasury yield has increased, indicating a shift in market expectations regarding interest rates [1] Group 1 - Societe Generale anticipates that the Federal Reserve will implement two interest rate cuts in the upcoming year [1]

Core Viewpoint - Investors are increasingly confident that the Federal Reserve will cut interest rates next month due to weaker-than-expected retail sales data [1][3]. Group 1: Market Reactions - Stock futures for the Dow Jones Industrial Average rose by 99 points, or 0.2%, while S&P 500 futures and Nasdaq 100 contracts both gained 0.3% [2]. - The three major indexes experienced a rally on Tuesday, with the Dow increasing by more than 660 points following economic data that supported the case for a rate cut at the Fed's upcoming policy meeting [3]. Group 2: Economic Indicators - Retail sales figures were reported weaker than expected, contributing to the market's anticipation of a rate cut [3]. - The producer price index increased in line with economists' forecasts, further influencing market sentiment [3].

Market Overview - Market indices began flat but rose due to expectations of easing Fed funds rates, with Kevin Hassett being a frontrunner for Fed Chair [1] - The Dow increased by 664 points (+1.43%), while the Russell 2000 saw a gain of +2.14%, S&P 500 rose +0.91%, and Nasdaq increased +0.67% [2] Housing Market Data - Case-Shiller Home Prices for September rose by +1.3%, following a revised +1.4% the previous month, marking the fourth consecutive month where home prices lagged behind inflation [3][4] - Pending Home Sales increased by +1.9% month over month in October, up from a revised +0.10% the prior month, although still down -0.40% year over year [5] Economic Indicators - Consumer Confidence index dropped significantly to 88.7 from 95.5, the lowest since April [6] - Business Inventories for August remained unchanged at 0.0%, marking the third consecutive month without change [7] Earnings Reports - Urban Outfitters (URBN) reported earnings of $1.28 per share, exceeding expectations of $1.19, with revenues of $1.53 billion [9] - Dell Technologies (DELL) reported Q3 earnings of $2.59 per share, beating estimates, but revenues of $27.01 billion fell short of expectations [10] - Hewlett Packard (HPQ) shares fell -5% due to a revenue miss, reporting earnings of 93 cents per share against expectations, with sales of $14.64 billion below projections [11]

Core Viewpoint - The market is optimistic about potential Federal Reserve interest rate cuts, leading to a rise in stock futures, particularly in the S&P 500 and Nasdaq 100 indexes [1][2]. Group 1: Market Performance - Stock futures for the S&P 500 increased by 0.7%, while Nasdaq 100 futures rose by 1% [1]. - The Dow Jones Industrial Average futures remained mostly flat [1]. - Last week, the three major indexes experienced volatility due to concerns over inflated valuations in the artificial intelligence sector, but the Dow gained nearly 500 points on Friday [2]. Group 2: Federal Reserve Insights - New York Fed President John Williams expressed support for lowering interest rates at the upcoming policy meeting scheduled for December 9-10 [2].

Core Insights - The current investment environment is favorable for adding equity income through covered call ETFs, particularly those utilizing a daily options strategy [1][4] - Declining short-term interest rates from Federal Reserve rate cuts are impacting fixed income plans, necessitating alternative income sources for investors [2] - Tax loss harvesting at year-end presents an opportunity for investors to switch from underperforming monthly covered call ETFs to more effective daily options strategies [3] Group 1: Covered Call ETFs - Covered call ETFs are gaining popularity for their potential to deliver high income while allowing for equity market participation [4] - Many covered call ETFs using monthly options have struggled in recent market rallies, often sacrificing market upside for high income [4] - Daily options strategies in covered call ETFs can enhance income generation while capturing more market upside compared to monthly strategies [4] Group 2: Investment Strategies - The ProShares S&P 500 High Income ETF (ISPY) is highlighted as a potential investment, charging a fee of 55 basis points and returning 11.3% year-to-date [4] - Investors are encouraged to consider daily covered call ETFs as a means to enhance portfolio income without compromising on potential market gains [4]

Market Overview - Major indices are attempting to rebound after experiencing back-to-back weekly losses, raising the question of whether this presents a buying opportunity [1] - The market has seen a strong six-month run, particularly in high momentum and higher beta stocks, but some of the best performers are now dragging the market down [3] Federal Reserve and Interest Rates - Stability in the market may require reassurance regarding potential Federal Reserve rate cuts, with expectations for a cut in December and three additional cuts in 2026 to reach a neutral rate of approximately 3% by mid-year [3][4] - The impact of rate cuts on job stability and layoffs, particularly in the context of technological advancements like AI, is a concern [6][8] Employment and Economic Conditions - There is a noted two-speed economy, with small businesses experiencing job cuts in five out of the last six months, indicating a need for stabilization in the job market [5] - Current job weakness may be influenced by AI and technological innovation, but attributing all job losses to AI is considered premature [7] - The focus is on stabilizing jobs at a low level rather than expecting a resurgence, which could lead to higher volatility in the market [9]

Economic Outlook - The potential end of the government shutdown is expected to boost economic activity, leading to a slight increase in yields [2][3] - The 10-year benchmark yield is currently at 4.10%, reflecting market reactions to the shutdown developments [3] Market Dynamics - The market is experiencing a push-pull scenario with fluctuations in yields between 4.08% and 4.16% due to mixed economic data and varying comments from the Federal Reserve [4] - There is caution regarding early data points post-shutdown, as they may be incomplete and require careful interpretation [4] Federal Reserve Policy - The expectation is that the Federal Reserve will not initiate rate cuts in December, with decisions likely pushed to the first quarter of the following year [5][6] - Inflation remains around 3%, leading the Fed to seek more confidence in a downward trend before considering further rate cuts [5] Credit Market Opportunities - Credit markets are characterized by tight spreads, with low yields compared to treasuries, but the fundamentals for investment-grade bonds remain strong [7][8] - Intermediate-term bonds and Treasury Inflation-Protected Securities (TIPS) are recommended for their potential positive real returns [8][9] Investment Recommendations - Mortgage-backed securities are highlighted for their government backing and higher yields compared to treasuries [9] - Municipal bonds are favored for investors in high tax brackets due to attractive tax-equivalent yields and generally high credit quality [10]

Core Insights - The ongoing question for investors in fixed income is when to go long duration, especially with the Federal Reserve resuming rate cuts [2][3] - The macroeconomic environment suggests limited upside for long duration fixed income strategies, with Treasury yields remaining volatile and near 4% [8][9] Macroeconomic Outlook - The U.S. economy is expected to continue on a modest growth path, with inflation remaining sticky but not significantly impacted by tariffs [3] - The Federal Reserve is cautious about further rate cuts, with some members expressing caution regarding another cut this year [3] Treasury Yield Dynamics - The UST 10-Year yield is currently in a fair-trading range of 4%-4.5%, with recent trading as low as 3.93% [9] - Historical yield curve dynamics indicate a potential rise in the 10-Year Treasury yield, making it an unfavorable environment for reallocating to long duration [8] Trading Activity - Trading activity has been volatile, with approximately 100-basis point swings in yields over the past two years [9] - A long duration position implies a belief that the economy is heading toward a recession, with expectations for the UST 10-Year yield to decline to at least 3.6% [9] Fed Funds and UST 10-Year Yield Spread - Following the recent 25-basis point rate cut, the spread between the Fed Funds mid-point and the UST 10-Year yield is around +20 basis points, significantly below the long-term average of +129 basis points [10] - A potential widening of this spread could place the 10-Year yield in the 4.5%-4.75% range [11] Conclusion - Given the historical performance of long duration strategies and the current macroeconomic outlook, it is recommended to hold off on going long duration [12]

Core Viewpoint - Despite recent challenges, big tech companies remain the best investment option in the market [1] Group 1 - Big tech has experienced significant declines this week, but analysts believe these companies are still positioned for long-term growth [1] - The overall market sentiment has been affected by various economic factors, yet big tech continues to show resilience [1] - Investors are advised to consider the long-term potential of big tech stocks, as they are likely to recover and outperform other sectors [1]