Interactive Brokers Traders Insight

With the delay of government statistics clouding the outlook for growth and consumer spending, Black Friday numbers will be a topic of conservation as we begin a new month.

Volatile trading on Wall Street has risk assets and fixed income swinging from gains to losses indecisively as investors await clarity on AI and the status of employment prior to making bold wagers.

Stocks achieved records for the fourth consecutive session this morning as AI enthusiasm, robust corporate earnings, trade deal optimism and dovish monetary policy expectations encouraged risk-taking on Wall Street.

Pavlov’s dogs became conditioned to associate a bell with a reward. Does that sound all that different from equity traders right now?

No matter how enthusiastic one might be about the prospects for artificial intelligence, it is fair for investors to ask inconvenient questions. Wouldn’t it make sense to maximize your impact now if you thought we were in the midst of a bubble that could explode later?

The enthusiasm for all things related to artificial intelligence is akin to that of the dawn of the internet, though many of the circumstances are quite different.

Markets are rebounding following last Friday’s turbulence as Wall Street looks to Fed rate cuts for enthusiasm ahead of critical economic data later this week.

When data pushes and pulls in opposite directions, like Dr. Doolittle’s fictional animal, traders should be prepared for anything. And prior Jackson Hole conferences have shown that Powell can be anywhere from even-handed to strident.

Like a pilot advising his passengers to keep their seat belts buckled in case of potential air pockets, over the past two days, it seemed advisable to buckle up for a potential pop in volatility. Consider VIX to be the price of parachutes when a plane hits turbulence.

Governor Christopher Waller’s reminder this morning that he’d prefer a rate cut this month coincides with the White House looking for Fed Chair Powell’s replacement. And investors are taking it well.

Investors are far less freaked out about tariffs than they were just three months ago, but they remain a sore subject. At the same time, most of us either know or have participated in, the roller-coaster ride of Tesla (TSLA) shares over the past several months.

Chair Powell has managed to stay on message about remaining cautious ahead of the potential effects of tariffs and resisted getting sucked into partisan politics. Since nothing he wrote or later said was particularly market-moving, equity traders could resume buying.