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Money FM 89.3. Best of breakfast The US Market Update with Money FM 89.3. Good morning, folks. All markets are looking right now. It’s green on the screen mostly. So you’ve got a Dow up around 520 points or 1.5% to 35,951, surpassing its previous high for a year. In August, the S&P 500 added 0.4% to 4568. And on the flipside, the Nasdaq slightly underwater by 0.2% to 14,226.
Investors taking some profits off the table from the big tech stocks that have been leading the comeback in November. So let’s get into it with Chris Chavez. He is the market strategist at Blue Line Futures. Good morning, Chris. How you doing today? Hey, good morning. I’m doing well, Thank you. Great having you on. And it’s a great time to talk about markets because we are heading into the last stretch, the last month of the year.
So let’s get your take on what’s been playing out so far this year. It’s been a bit of a good run. Where do you see Marcus going from here? Yeah, absolutely. I mean, I think when when you’re looking at the environment, we’ve seen a huge shift in interest rate expectations. You know, specifically this last month we had CPI, you know, come in at no increase.
We saw no increase in inflation by the CPI metric. When looking at producer prices, we actually saw deflation. You know, consensus estimates were for 1/10 increase and we actually got a half a half a percent decrease. So we saw, you know, deflation and PPE, obviously a major headwind to producer prices or energy prices. And we’ve seen crude oil come off of its high significantly.
So I think as you’re starting to see, you know, inflation come in and where the Fed wants it to, you know, not not that they were at the 2% target yet, but we’re certainly on our way there. We’ve seen a large repricing in Treasury market as far as interest rate expectations are concerned. And that’s really what’s been feeling this this rally that we’ve seen here as of late.
You know, I think when you look at the markets today, you know, you did a great job highlighting the outperformance of the Dow Jones here today. You know, we got some earnings yesterday after the bell. Salesforce, you know, they beat earnings, you know, on the top. And the bottom line is a significant component. Constituent And the Dow Jones industrial average, you know, really lifting that you know, indices today.
And I think, you know, heading into the end of the year, really the important thing to keep an eye on is going to be the labor market. We start to see slowing in the labor market and a slowing consumer. The prospects of interest rate cuts potentially being priced in sooner than expected, you know, potentially from May to march, even is really what’s going to send stocks higher.
Definitely. You know, I think that that narrative is currently playing out and I think there’s a great case for us to continue to slowly grind our way higher, you know, consolidate here in the near term. But we will face some significant overhead technical resistance. And, you know, keeping an eye on that’s definitely going to be important, too, from the technical perspective.
Yeah, Chris, just talk about the rate expectations. So we’ve got another meeting in two weeks time and a lot of expectations or speculation on what might happen. We didn’t hear about some possibility of a rate hike again this year. But of course, if signs of moderation in the inflation picture starting to come in a bit more, has that started to move the narrative to a pause or maybe keeping rates way off a bit longer?
How much is there in terms of the expectations of a rate cuts now? Is that enough for a rate cut? Yeah, I think so. You know, I think that, you know, we got, you know, FOMC committee member Christopher Waller speaking this week, you know, which really was a big catalyst for the markets. And, you know, he said something significant that was that, you know, inflation, if it’s coming down meaningfully, that there’s no need for the Fed to maintain a sufficiently elevated levels of interest rates.
And I think that’s a great point to make, especially if the Fed can can achieve this Goldilocks scenario of still maintaining economic growth, you know, getting inflation under control. There’s no need for them to to continue to hold higher for longer. You know, at that point, they could, you know, take a victory lap. And I think that that’s what the Fed has been wanting to do, you know, for some time now, especially after they were slow to raise interest rates with the high inflation that we got after the COVID pandemic.
So I think that that certainly that we’re not going to see, you know, a hike here. I mean, the the Fed watch tool, you know, pricing and interest rate hikes for the end of the year, it’s not about a certainty of 98 to 99% that we won’t see another hike at the end of this year. And at this point, the market is pricing in a pause all the way until May, at which we get our first cut.
And I think that with the current landscape right now, that would be accurate. Now, Chris, how much do energy prices and oil prices in particular play into this? Because overnight we’ve got some news from OPEC, a bit of disappointment with what transpired. We are seeing oil prices drift lower. What do you take away from this meeting? Yeah, it’s a great question.
I think that, you know, really the supply the supply side narrative hasn’t changed much. OPEC has been playing price defense, as we all know, throughout the course of this year. Many member countries, Saudi Arabia has, as you know, extended their cut as well. And I think this market is really demand driven at this point. You know, pricing in potential consumer weakness or, you know, slowing economic growth is why we’re seeing, you know, these lower crude prices.
So, you know, that’s the catalyst that we would be looking for is essentially, you know, if we do start to see a slowing in economic growth, a slowing consumer, and then the Fed cut sooner than anticipated that providing easier financial conditions for consumers, you know, retail spending, things like that, and you’re going to see the demand ramp up again for travel, at which time, you know, we would we would expect to see, you know, the crude market rally a bit more.
So I think that a lot of the supply side production cut, even with OPEC coming out overnight and, you know, laying out another cut, I think that this market cares more about the demand equation at this point as it’s been baked in throughout the course of this year. All right, Chris, you’ve been a pretty good picture of what’s happening in the markets.
So for an investor, what should they be looking at right now? I think that an important thing to keep an eye on is definitely the to be here to the end of the year. You know, if we’re talking commodities, do you know, we could also look at copper, especially if China starts to get their economy back on track as well and you’ve seen the industrial side of things start to pick up.
Also, you know, easier finance conditions here in America that could lead to, you know, more more construction spending and things like that. And I would like copper as well. So, you know, paying attention to the broad indices, you know, some of the other commodities that can benefit, especially at the turn of a the business cycle here, I think would be the important thing to keep an eye on.
All right. Commodities potentially to enjoy a bounce if the economy gets back into an upswing. Chris Chavez, he is the market strategist at Blue Line Futures Chris. Thanks, Jess. On the show today. Thanks. Appreciate it. All right. Say Money FM 89.3 before acting on the information on Money FM, please consider if it’s suitable for your own investment objectives, financial situation and risk tolerance.
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