Transcript
Ambery (0:01)
The Uniswap wallet makes crypto easier and safer to own and use. Discover new tokens, research confidently, swap instantly, and manage it all securely in one place. The Uniswap trading protocol has powered over $3 trillion in volume, and it's trusted by millions worldwide. Buy your first crypto assets in a few taps and experience the freedom of decentralized finance with Uniswap Tap the banner to get started. Foreign.
Ambery (0:30)
Delivers on subscription shipping and Cracker Barrel feels nostalgic for the days of happy customers. Our take on earnings, Walmart's 3D printing entire buildings and GE Venova is riding the power demand wave. We roll through those headlines and it is Fed Rate Day. We break down today's quarter point cut. The cause, the controversy and why we think it's just the wrong call for Wednesday, December 10, it's Blue Markets Daily and I' Manberry.
Ambery (1:06)
More market details to come. But first, the Fed's final decision of the year. Chair Jay Powell's last comments of 2025 there's just been so much anticipation and at last the announcement has landed. And that was a quarter point cut today. Though the market generally expected it, a rate cut was actually never a slam a dunk. So just why did the Fed do it? Yes, there's been pressure from the White House to cut, as well as prominent analysts arguing that labor market softness would justify a third rate drop this year if the Fed went in that direction. But the arguments against doing so have been compelling. Inflation has remained stubbornly high, clocking in above the 2% target rate at 2.8 for the core PCE measure for September. That's the last month for which government data is available. And that's just part of the problem. The doggedly quote data driven Fed is running data blind if it wants to be consistent. Thanks to the record long government shutdown. Its usual full labor market and pricing metrics for October just weren't available. And if there's any catch up in getting that information, and it's not clear that there will be completely, it won't come out until next week when November data is due, inconveniently popping up after today's critical decision deadline. Now the Fed already got a pass on a data light decision on October 29 when it made a quarter point cut in the thick of the shutdown data fog. So just where was the data driven part of the Fed today? Especially when non monetary reasons for inflation remain very much in play. Tariffs are still working their way through corporate margins. We saw that in earnings this quarter and while the Trump administration has clearly gotten the memo on affordability concerns, racing reversing tariffs on 200 foods just last month, pricing pressure just hasn't abated yet. Reversals take time. So really, again, why this cut? In his press conference this afternoon, Powell called out the relative weakness of the housing market and softened demand for labour, with risk to employment, quote, rising in recent months. I sat there glued to my TV screen watching this unfold. But there aren't glaringly obvious signs of a recession looming, which you'd expect with rate cuts of this magnitude and speed. Despite, despite what we are hearing in terms of the overall picture, consumers have been trading down. That's true. We've seen that in the strength of Walmart and dollar store stocks through the earnings season. But they haven't stopped spending. In fact, digging into the summary of economic projections released by the Federal Open Market Committee today, median expectations for growth increased for next year, upping to 2.3% real GDP growth in 2026, which is a serious boost from the 1.8% expected rejected just a couple of months ago. And the question is not just why this cut, that's just the headline. Another question is why is the Fed now injecting more liquidity into the financial system? Because the Fed also announced today plans to accelerate to this week purchases of short term Treasuries. So just to de jargonize this, this is a way of getting cash into the banking system and this wasn't supposed to start until April. Now this kind of activity is usually done to prop up bank reserves to make sure there isn't a spike in short term borrowing rates between financial institutions that can work against the Fed when it's actually trying to get rate cuts and getting those rates down. Bank reserves peaked at over $4 trillion in 2021, but they have recently fallen as low as 2.8. So what is it exactly that Powell is seeing in the banking system? We got a little bit of verbiage about that in today's data, but we didn't get enough. So we're going to have to watch the number crunching and, and hear Fed members speak in their own media appearances in coming days to really get to the bottom of this. While today saw the most division in the Fed committee's vote since 2019, two members voted against a cut, one voted for an even deeper 50 basis points. So my own view, if it hasn't come across already, I just think the Fed should have waited to get next week's data dump. Why not continue to be data driven. Why change now? Moving to cut if that seems to still be the right decision in January? Only one cut now is expected for the whole of 2026, so a month's pause to just see what unfolded frankly would have made no difference. Now, I've been a staunch supporter of Jay Powell on television. I've talked about it, I've written about it. Because I do think, despite the criticism he's faced, I do think he's done a solid job over the past six years in hugely uncertain circumstances. It's easy to criticize from the outside, but making decisions in times as challenging and as uncertain as we've seen is hard. But today I see a Fed chair gifting the market an undeserved cut in the first sign that he's either more focused on his legacy or he's losing the courage of his data driven convictions. Coming up, has Cracker Barrel reached the bottom of the keg, leaving it nowhere to go but up? And we look at which retail giant aims to 3D print at least part of its stores.