When it comes to the tilt of jobs versus the Fed's mandate on inflation and price stability, which do you think it should tilt more towards given what we've seen so far. >> Well, look, one of the very rare things would be to cut rates when you have 3% inflation or slightly under 3% wherever the number is. We always want to keep uh 1% real rate.So, this may be as far as you can push it right now. And maybe that's what the Kansas City Fed uh is concerned about. We'll have to see when we get a better briefing ...

For much of the past decade, the “Magnificent 7” (companies like Apple (AAPL), Microsoft (MSFT), and Nvidia (NVDA)) have shaped the rhythm of U.S. market performance. Yet by late 2025, that dominance is beginning to fade. The Federal Reserve’s recent series of rate cuts, including its first 25-basis-point reduction for the year in September, with more expected before year-end. This shift has changed the tone of U.S. equities entirely. Instead of reigniting another tech boom, the cuts have accelerated a br ...

Market Overview - The overnight market showed significant declines, particularly in speculative stocks, leading to concerns about a broader market downturn [1] - The opening of the market was poor, especially for tech stocks, which were heavily impacted during the Dreamforce event hosted by Salesforce [2] - Despite a rough start, the market rebounded, primarily driven by bank stocks, which are crucial for the real economy [3] Economic Indicators - Federal Reserve Chairman Jay Powell indicated that the economy may require further assistance from the Fed, which contributed to market fluctuations [2][6] - The Dow Jones finished up by 203 points, while the S&P 500 saw a slight decline of 0.16% [3] - The NASDAQ, heavily weighted with tech stocks, experienced a significant drop of 76% [4] Sector Performance - The day was characterized by a positive outlook for the real economy, contrasting with a challenging environment for the artificial intelligence sector [5] - Salesforce's stock fell by 3.6%, reflecting broader market trends affecting tech companies [5] - The focus shifted to non-data center segments of the economy, indicating a revival in areas that had been stagnant for some time [6] Federal Reserve Actions - Powell's comments suggested that more interest rate cuts could be on the horizon, along with a halt to the Fed's ongoing bond selling [6] - Continuous selling of the Fed's mortgage bond holdings has contributed to elevated mortgage rates, impacting the housing market [7]

Macroeconomic Outlook - The analysis suggests the economy is in a late phase, evidenced by central banks starting to ease, deteriorating job numbers, and declining short-term yields with topping long-term yields [1] - The real economy is facing challenges, with 156% of the US population struggling to put food on the table, impacted by high rates and inflation [1][5] - Liquidity cannot stem the tide of a rolling-over real economy, distinguishing the current situation from previous stimulus efforts [1] - The analyst anticipates non-farm payrolls will worsen, leading to a stock market top and a potential Bitcoin surge to $160,000, followed by a market correction [1][6] Market Bubbles and Valuations - The stock market is in a blowoff top, with market capitalization at 216% of GDP, exceeding levels seen in 2007 (109%), 2000 (136%), and 1929 (89%) [2] - The current bubble encompasses both tech stocks and the housing market, resembling a combination of the 2000 and 2007 crises [4] - Despite arguments about improved company efficiency and productivity, current valuations are historically high relative to the economy [3] Monetary Policy and Inflation - Central banks' attempts to stimulate the economy through monetary easing are likely to be ineffective due to reintroduced inflation and a struggling consumer [2][7] - The era of easy monetary policy is ending, with the Fed unable to sustain the real economy's downturn [2] - A deflationary phase is expected in the short term, followed by a resurgence of inflation due to continued stimulus efforts [7] Investment Strategy - The analysis suggests studying investment strategies from the 1940s to navigate the coming market shakeout [8] - Gold is recommended as a long-term investment, although it may experience a pullback during the deflationary bust [16][17] - Caution is advised regarding crypto investments, with a potential secular top in Bitcoin and a subsequent crash [6][7][19] - A strong dollar is anticipated during the deflationary phase, followed by a shift towards commodities, gold, and silver during stagflation [22]

Market Outlook & Earnings - The market is primarily driven by earnings, with raised earnings expectations leading to increased S&P targets for the current and subsequent years [3] - Corporates are demonstrating the ability to generate earnings and margins despite concerns about macro data and the labor market [4] - Earnings momentum is a key factor, with strong earnings performance in previous quarters suggesting a bullish market even amidst policy concerns [7] - The market's focus remains on the fundamentals of the corporate sector, particularly earnings growth [5] Future Growth Projections - Earnings growth for 2025 is projected to be 115%, exceeding previous expectations [4] - Earnings growth for 2026 is projected to be 134% [5] - By the end of 2026, the earnings increase is expected to be significant, with a potential 10% gain next year [16] - S&P target by the end of the year is 6400, possibly 6700, and 7400 by the end of next year [16] Risk Factors & Considerations - A primary risk is the potential decline in margin growth and free cash flow due to tariffs, which could impact the market's higher multiple regime [15] - Tariffs could negatively impact retail sector earnings, although recent retail earnings have exceeded expectations [9] - Bond yields globally could potentially trigger a 5-10% sell-off, which is considered a normal market fluctuation [17]