As the calendar has now turned squarely into Q4, the sweepstakes for who will be nominated as next Chair of the Federal Reserve will no doubt increase. Current Chair Powell’s term does not end until May 2026, but according to published reports, it looks like the Trump Administration could make an announcement as soon as January.
Outlook
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AI investment fuels a $1.1 trillion capex surge in the S&P 500, with IT returns soaring post-tariff. Meanwhile, AI transforms marketing by making high-quality ad creation affordable and narrowing the gap between big brands and small businesses.
While trade tensions with China dominated the attention during the week, some bank news also captured investor interest. Stocks pushed higher last week, buoyed by strong third-quarter results posted by several money center banks.
Pavlov’s dogs became conditioned to associate a bell with a reward. Does that sound all that different from equity traders right now?
With the federal government shutdown delaying major economic data releases, investors are left navigating markets without key signals. While this shutdown does not include debt ceiling standoffs, it still clouds short-term visibility for the economy.
The S&P 500 fell by more than 2.7% on Friday, which came as a big surprise to many. While the size of the decline was certainly unexpected, the change in trend was not. So what can one expect to see next?
As the midnight deadline approached for Congress to pass a continuing resolution that would temporarily fund the federal government, the prospect of a shutdown dominated market sentiment.
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?
Investors are turning to the euro and yen as safe havens amid rising global uncertainty and currency market volatility. Slowing US labor markets, tariffs, and an impending Fed easing cycle weigh on the dollar, adding to a bearish outlook.
Dispersion remained the theme, with the Dispersion Index still elevated. While it could rise further, it’s something to watch—high dispersion typically coincides with low correlations.
While widely anticipated, the real news about the cut was in the finer points made by Fed Chair in the post-meeting press conference. He said the move was essentially a “risk management” cut which confused investors a bit.
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.