Fed cut baked in this week; what about '25?
Wall Street Breakfast
Seeking Alpha
4.1 • 1K Ratings
🗓️ 15 December 2024
⏱️ 7 minutes
🧾️ Download transcript
Summary
Show Notes
Palantir in the Nasdaq 100, Super Micro Computer out
Apple developing a foldable iPad - report
Episode transcripts: seekingalpha.com/wsb
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Transcript
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| 0:00.0 | Welcome to Seeking Alpha's Wall Street brunch, our Sunday look ahead to this week's |
| 0:09.9 | market-moving events, along with the weekend's top news and analysis. |
| 0:14.7 | Hello, today is Sunday December 15th, and I'm your host, Kim Kahn. |
| 0:18.4 | It's the most wonderful time of the year, if you're a macro fan. |
| 0:21.7 | The Federal Reserve meets for the last time this year, and all of Wall Street expects a quarter-point rate cut to wrap up 2024. |
| 0:28.3 | After the November jobs report and CPI failed to set off any alarm bells for the Hawks, |
| 0:33.2 | traders are pricing in a 96% chance that rates move to the range of 4.5% to 4.5%. |
| 0:39.3 | The November PCE price index figures are also due this week, but not until after the FOMC has made its decision. |
| 0:45.8 | The Fed's favorite inflation gauge arrives along with personal income and spending reports on Friday. |
| 0:51.0 | Pantheon macroeconomist Samuel Toom says, |
| 0:53.6 | Core PCE inflation will remain well above the 2% target next year |
| 0:57.2 | if Mr. Trump falls through on his tariff and deportation threats. |
| 1:01.1 | For now, we are factoring half a percentage point uplift |
| 1:03.7 | to the headline and core PCE deflators in 2025 from tariffs, |
| 1:08.1 | which is the boost we estimate could result for Mr. Trump's current plan to increase tariffs on Mexican and Canadian imports by 25% and on Chinese goods by 10%. |
| 1:16.9 | But tariffs likely will be threatened, imposed, and removed on a wide range of countries sporadically and opportunistically. |
| 1:23.9 | The Fed will continue to ease policy in 2025, but less quickly than required to stabilize the unemployment rate, |
| 1:29.6 | given stickiness in core PCE inflation and the long lags between policy changes and the response in the real economy, he added. |
| 1:37.0 | Tariffs ought to be a one-time shock to inflation, but households' medium-term inflation expectations remain elevated in the wake of the 2021-22 inflation surge, |
| 1:46.3 | and the Fed cannot risk a big de-anchoring. So, after easing by 25 basis points this month, |
| 1:52.0 | we expect the FOMC to skip January and then ease by 25 basis points at alternate meetings thereafter. |
| 1:58.7 | Also in the economic calendar, November retail sales are released Tuesday, |
... |
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