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Well, as we do every month, we are joined by Jeremy Seagull, . Jeremy, good to talk to you again, sir. It's very good to talk to you too, Dan. Well, obviously the big story of the week is the Federal Reserve and the rate cut that was made. Uh, but maybe even more so, the comments by Chair Pal afterwards that he said that, you know, a December rate cut is not a guarantee.
um give us your thoughts on that. Yeah, I mean and and also the you know the the trade negotiations, you know, just uh uh concluded between she and and Trump are are are certainly worthy. So you you you got me on a very good day. A lot of news is is coming out. Uh let's talk about the Fed. Yeah. I mean uh there's no question that Pal's comments about uh uh you know we're not sure at all about the December meeting and then uh emphasize far from it.
He said, I mean like uh you know uh one has to remember that chair Powell more than any other chair that I can recall and pro you know um is very sensitive about preparing markets for whatever the Fed is doing and particularly if he believes the markets are heading in one direction uh that uh is not a sure thing or or not what he intends he's going to correct that.
Um now this was very early uh the the the odds looked like you know that that you know was 70 80 90% that that he would cut and I guess because of the discussion uh he thinks it's more towards 50 now and he wanted to correct it right away and that's what he did. He pushed those odds uh closer to 50/50.
Um, and you know, the truth of it is they don't know what they're going to do until they see what's going to happen the next six weeks. And these are very very important six weeks because uh, you know, uh, uh, the December 10th meeting does end two weeks before Christmas. But we will have a lot of data about how people are spending.
Are they reacting to the tariffs? Are there is there going to be some sticker shock um, among some of them and say, "Oh my god, you know, I bought this last year for $10. Now it's $12 and I can't buy as much and uh you know uh we're going to have to see whether that's going to occur. In addition, we're we're beginning to see some layoffs.
Um are they AI related or not? Some from the big tech companies. Uh is that going to shake confidence? So um in a way what he's saying is we just don't know. Um the the good thing is if if if it does affect confidence negative and consumer spending is poor during the next uh 6 weeks uh until that December 10th meeting then uh there's no question they'll lower it.
In fact, if it's very poor they they'll probably go could go down 50 basis points. Now I don't expect that to happen. It's always possible. So in a way I think stockholders know that they have the Fed at their back if things slip. But he's saying if things don't slip and things say stay as strong as they are looking now um we may well pause uh the December meeting and then collect you know more data until uh next year.
Let me ask you about the markets in general because it seems like the last several months we have seen quite a run up in terms of what we've seen on the Dow and the NASDAQ and the S&P. uh seeing the dynamics that we have right now, are you leaning towards the potential of that run continuing or is there a dynamic out there where you say, "Okay, maybe we do have not a full-on correction, but at least we we pull back a little bit."
Well, I think you know, you know, uh Pal's speech is a a little is going to be a little bit of a of a slowdown. I mean, the lid on uh overenthusiasm. Um uh and and maybe maybe that's good not to get too bubbly. We do we do we do have some speculative trading uh not excessive. I mean I the earnings are coming out.
Blockbusters very very good on the whole firm's guidance is is very very good on the whole and and and that con combined with the expectation of the Fed continuing to lower rates I think was producing a strong bull market. Now with the expectation of further rate cuts muted, I think you know uh that that uh puts a dent but not a a fatal blow to the bull market.
I I think I I think we can still see gains over the next uh two months. Um and I wouldn't be surprised if we take out 7,000 on the S&P. Um uh but I I think those gains because the bond rate I think is now going to move up to the 4 and a/4 to 4 1/2 level do a little bit more challenge to uh the returns on the stock market.
Let me circle back with you about your comments uh that you teased a moment ago about the labor markets and some of the softness that's there right now. And I guess we don't fully know whether or not AI is the driver of this. I think a lot of people suspect that it's part of the driver. And I think what's also interesting to note is that and I talked ran into a friend of mine in the grocery store who just lost his job.
He's finding it harder and maybe this is the company's not yet well willing to pull the trigger on as much hiring to backfill some of those spots right now. And and that the labor market is going to be a little bit challenging for a while. And if it if it's I mean we see uh you know although you know there is the federal shutdown right now um uh we we can those uh jobless claims we can put together from the state uh numbers and um so far and that's an early warning signal pal mentioned it frequently um uh I we would see that uh type of slowdown in in addition by the way I I don't know if you saw the news that ADP uh which is the payroll processor coming out with weekly data.
I think it's Tuesday morning. Uh this is something new and and welcome. Uh obviously uh uh especially in the shutdown period. We're we're getting the Chicago Fed also has an indicator of unemployment. So you know we're not it it's we're not flying blind by any means. Uh and I don't think the comment you know some people said, "Oh, it's he's going to slow down because of the fog and we don't really know." No, I don't think that's it.
I don't I think we've got enough data uh to to make the judgments there. It's just and the data that we do have shows continued strength and basically what he's saying is if that strength continues through the Christmas holiday buying season which we know you know is hugely important. I mean retail sales in the next uh you know uh 6 8 weeks are you know uh you know what what onethird of the year uh on on gift items.
So um that's going to be very important. We're going to wait and see how well are are consumers spooked or they're not spooked. Um and uh I think that they're going to say we're going to just have to see how that data comes and we'll make a judgment uh from there. If they're not spooked, consumer spending remains strong.
I think you will have a pause. If we do see a slowdown, you will definitely have a drop. Let me finish up uh with trade and you mentioned it a bit ago uh that it seems like US and China are coming together. Uh I think it's been mentioned by you and by others how important getting a deal done with China is when you think about the overall potential growth of the economy.
And you think about that those two countries being the most too influential out there uh in terms of uh of trade and and business. Yeah. I mean I I I mean it's don't forget this is not a deal, you know. I mean it's an outline. Uh deal the deal will be done later. Uh a lot of them are one-year extensions.
Although Trump said I should, you know, I have no problem with extending it. like if everything goes okay. I mean, I'm not going to, you know, it's uh uh he he he wanted it to be, but I think both of them, you know, want to see how how how things go. But, you know, that's extremely welcome. And I mean basically the market had figured out that you know tr you know Trump likes to come in with a big stick and uh you know scare everyone 100% doesn't go through u and uh so market had basically figured that out but it was a lot of cordial uh interaction uh and uh you know that uh you know Trump is uh going to go to see she again and or or and she's going to visit him And uh this is this a very important ongoing uh ongoing.
So that's that that is definitely a positive. He was in South Korea. He was in Tokyo where made more deals. Uh he wants to wrap up the deals. Um and it's it's it's resulting in a far lower effective tariff than you know all of us feared from April and uh that's one reason why you know the inflation bump has been really minor so far.
Jeremy, always get to great to get your thoughts and your insights. We will catch up with you again next month. All the best. Okay. Thank you very much, hun. Bye. &.
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