00:00 Josh
Let’s bring in senior reporter Alec now with some of the trading day takeaways. Alec.
00:04 Alec
Hi, Josh. Well, markets are pretty much waiting for that inflation data due later this week. I mean, it was not a bad day in markets. if we take a look at the major indexes. You’re seeing them close all in the green. We have up around 100 points for the Dow, Nasdaq up around 50 of a percent, S&P up marginally, some individual movers. If we take a look at the trending tickers page, you’ll see 8co up a whopping 3,000% that Dan Ives backed company getting into the crypto space, maybe a little bit of mumification in there.
00:30 Alec
But in terms of of the broader indexes, not too much. So really it’s the inflation story that we’re waiting on and you’ll see that core CPI is expected to come in at 3.1% year over year. The all items increase 2.7%. We are significantly above the Fed’s 2% target. That is leading to questions on what we could see next week when it comes to rate cuts. Right now markets are pretty much pricing in with 100% certainty that we’ll see 25 basis points, but 50 bips is now on the table. If you take a look at the latest CME Fed watch tool, they these are where the odds are. 88% for 25 basis points, 12% for that jumbo 50 basis point cut. I think it would take a massive upswing in CPI to really change the calculus here for the Fed. That being said, some FOMC officials did say they want to see where inflation comes in before really uh subscribing to that September rate cut. Again, to be determined. But if we take a look at the argument against Fed cuts, that was something I was focused on this morning because not all strategist seem to say that automatically we are going to see uh this surge in the rally just because we get cuts.
01:21 Alec
Ed Yardeni, he’s a friend of the show. He talked about how right now the economy doesn’t need rate cuts at this point. And if we do see those rate cuts, that could potentially fuel a market melt up where you have a lot of speculation, a lot of money flowing into markets that maybe are a little bit’s attached from the fundamentals. And if that happens, then you can see a market come down potentially. But at the same time, David Costin, he’s talking about small cap uh getting a bid. And if you take a look at a month to date here, you’ll see up 8% on the heels of those expected rate cuts, obviously outpacing the S&P. So just a lot of back and forth when it comes to what ultimately will happen and how the economy and the markets are going to digest all this.
02:02 Josh
Yeah. I mean I’ve heard a number of folks banging the table on small caps recently. The argument being as you said, Alec, you know, their argument being economy’s hanging in there, the Fed’s going to cut and it’s good news for those pint-sized companies.
02:11 Alec
Right, but if the economy’s falling off a cliff, no rate cuts is going to help anything.
