Federal Reserve Policy & Economic Outlook - The wide dispersion in views on the Federal Reserve's dot plot reflects confusion about the current state of the US economy, particularly regarding the labor market and the impact of tariffs [1][2][3] - The Federal Reserve's independence is considered tremendously important, and members are wary of appearing to be overly influenced by the administration [4][5] - The Phillips curve, which relates unemployment to wage inflation, is a key framework the Federal Reserve is using; concerns about a weakening labor market could lead to rate cuts despite inflation above 3% [6][7] - Seven members of the Federal Reserve indicated they foresee no more rate cuts this year, suggesting it may not be a proper easing cycle [32][35] Market Impact & Investment Strategies - Productivity is expected to move higher into 2026, already starting in 2025, which could support higher market multiples and is bullish for equity markets [9] - Small cap stocks, particularly the SML small cap 600 index (up 2%), tend to move at the later end of a rate cut cycle, suggesting potential opportunities in domestic American companies [10][11] - The 10-year yield remained stable at 4%, indicating the bond market has already priced in significant easing and mortgage relief may not be forthcoming [12][13] - Fiscal dominance is in play, meaning the long end of the curve (mortgages) is more sensitive to government actions (shutdown risks, budgets) than Federal Reserve actions [14][15] Uncertainties & Future Considerations - AI's impact on the labor market and the American economy is a significant uncertainty for the Federal Reserve [20][21][27][28] - A capex-driven cycle, fueled by approximately $500 billion investment in AI infrastructure, is underway, reminiscent of the 1990s [22] - Immigration levels and tariffs add to the uncertainty surrounding the economic outlook [28] - The strength and independence of the Federal Reserve as an institution are seen as positive for markets and could help hold down long-term rates [19][20][29]

Market Overview - The U.S. markets opened with the Dow Jones Industrial Average leading, up by 0.40%, while the S&P 500, Russell 2000, and Nasdaq showed little movement [2] - The Dow is making gains despite negative news affecting Nvidia, which is down by 1.2% [2] Economic Data - Recent housing market data indicates a slowdown, with Building Permits at 1,312,000, below the expected 1.37 million, reflecting a year-over-year decrease of 3.7% [6] - Housing Starts also fell short of expectations at 1,307,000, down 8.5% year-over-year [6] Federal Reserve Anticipation - Investors are awaiting the Federal Reserve's interest rate decision, with expectations of a 25 basis point cut [7] - The Fed's announcement is anticipated to provide insights into future monetary policy and interest rate adjustments [7]

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Fed day. We're getting excited, Marc. What are you going to be watching in particular.Because everyone's expecting a cut and there's a lot of focus on the guidance. Of course, what that kind of guidance will look like, Will it reinforce market pricing or push back against it. So I think there's two big things to watch for.It's the dot plot is obviously the big one. How many kind of cuts are priced in not just for the rest of this year, but into next year. There's an awful lot priced into the curve, so it's ...