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100% odds the Fed cuts but inflation seems entrenched. Will the cut really help pull the labor market up? Tourism is down, AI is up, etc.

by bix6 1y ago

buellerbueller 1y ago
>Will the cut really help pull the labor market up? The capitalists don't care about the labor market as much as they do the stock market. In Trump's crazy Tilt-a-Whirl Policy and Tariff Generator (TM), what business would invest in expansion beyond what is necessary to grease the palms that need greasing? Way too much uncertainty. Time for stock buybacks.
- gruez 1y ago
  >what business would invest in expansion beyond what is necessary to grease the palms that need greasing? Way too much uncertainty. Time for stock buybacks. AI and AI related companies are the opposite of this.
  - buellerbueller 1y ago
    You're right, as far as I can tell, which will help further wreck the labor market and juice the stocks for the capitalists. AI companies are an existential threat to those who don't control the AIs. All of the "good AI" scenarios that the AIcolytes espouse assume we have bent AI to our whims permanently.
  - brendoelfrendo 1y ago
    AI is not going to be able to grow geometrically forever. OpenAI and Oracle just signed a $300 billion contract. OpenAI doesn't have $300 billion. Oracle doesn't have enough chips on hand nor enough cash to buy them in order to fulfill these obligations. Based on RPO, Oracle is estimating that their cloud revenues will grow from roughly $10 billion now to $144 billion by 2030. That's insane, and yet it was enough to send their stock price up 25%.
    - rsync 1y ago
      ORCX exists … I was very tempted by long dated puts on this when the intro-day high of +40% was reached…
ddddang 1y ago
[dead]
goalieca 1y ago
The tech sector labor bubble started popping last year. I don’t think we’ve hit bottom yet. Stocks are at an all time high riding the AI bubble but I think that too will pop despite the soft landing certain tech leaders will hope for.
- Dumblydorr 1y ago
  We already had a soft landing last year right? That referred to coming out of the pandemic inflation without recession. This year is tariffs, trade wars, uncertainty, AI, labor markets, mass firings, mass deportations. Seems like we’re into a new phase of potential stagflation.
baby-yoda 1y ago
90% expected probability of a cut at the moment, down from 96% a week ago. A surprise no-cut would send a shock to the market IMO. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html https://www.cmegroup.com/markets/interest-rates/cme-fedwatch...
- bix6 1y ago
  That’s 100% is it not? There’s 0% for current and then a split between the two potential cut amounts.
  - baby-yoda 1y ago
    You're right - I'm so used to looking at the probabilities waterfall diagram where there's always some percent for status quo I glanced right over it not being there. In the time since I originally posted that the 400-425 basis point level has dipped another 2%, with that amount going towards a 50 basis point cut. Very muddy waters indeed. Powell has been adamant about fighting inflation so I struggle to understand how the market gives a zero percent chance of status quo.
    - bix6 1y ago
      It got me initially as well! I’m with you on Powell but I feel like he’s tired of fighting Trump so he’ll throw a cut just to get everyone off his back a bit.
- m101 1y ago
  How these things are calculated is dumb: The market implied rate (from swaps/forwards curves) for the following period is something like 27bps cut, so they say: - 27 Is bigger than 25, so 0 cuts is 0% - attribute 2/25bps likelihood to 50bps cut - the remainder is left to 25bps cut The reality is that there's a non-zero probability to unchanged, and a non-zero probability of 75bps+ cut etc etc. However this information would probably be in swaption prices and too complicated for anyone like the CME or media to make sense of. But at least with the way people talk about it they get to feel like they're making sense of the world.
seneca 1y ago
Polymarket puts a cut at 98% likely currently: https://polymarket.com/event/fed-decision-in-september?tid=1757599215479 https://polymarket.com/event/fed-decision-in-september?tid=1...
- ksec 1y ago
  Wow. Let me buy no Change.
  - Workaccount2 1y ago
    Unemployment pretty much guarantees the cut. Inflation is in the backseat.
cosmicgadget 1y ago
Would be funny if the FOMC postponed voting until after the courts make a decision on the Cook "dismissal".

100% odds the Fed cuts but inflation seems entrenched. Will the cut really help pull the labor market up? Tourism is down, AI is up, etc.

by bix6 1y ago

100% odds the Fed cuts but inflation seems entrenched. Will the cut really help pull the labor market up? Tourism is down, AI is up, etc.

buellerbueller 1y ago

>Will the cut really help pull the labor market up? The capitalists don't care about the labor market as much as they do the stock market. In Trump's crazy Tilt-a-Whirl Policy and Tariff Generator (TM), what business would invest in expansion beyond what is necessary to grease the palms that need greasing? Way too much uncertainty. Time for stock buybacks.

gruez 1y ago
>what business would invest in expansion beyond what is necessary to grease the palms that need greasing? Way too much uncertainty. Time for stock buybacks. AI and AI related companies are the opposite of this.
- buellerbueller 1y ago
  You're right, as far as I can tell, which will help further wreck the labor market and juice the stocks for the capitalists. AI companies are an existential threat to those who don't control the AIs. All of the "good AI" scenarios that the AIcolytes espouse assume we have bent AI to our whims permanently.
- brendoelfrendo 1y ago
  AI is not going to be able to grow geometrically forever. OpenAI and Oracle just signed a $300 billion contract. OpenAI doesn't have $300 billion. Oracle doesn't have enough chips on hand nor enough cash to buy them in order to fulfill these obligations. Based on RPO, Oracle is estimating that their cloud revenues will grow from roughly $10 billion now to $144 billion by 2030. That's insane, and yet it was enough to send their stock price up 25%.
  - rsync 1y ago
    ORCX exists … I was very tempted by long dated puts on this when the intro-day high of +40% was reached…

ddddang 1y ago

[dead]

goalieca 1y ago

The tech sector labor bubble started popping last year. I don’t think we’ve hit bottom yet. Stocks are at an all time high riding the AI bubble but I think that too will pop despite the soft landing certain tech leaders will hope for.

Dumblydorr 1y ago
We already had a soft landing last year right? That referred to coming out of the pandemic inflation without recession. This year is tariffs, trade wars, uncertainty, AI, labor markets, mass firings, mass deportations. Seems like we’re into a new phase of potential stagflation.

baby-yoda 1y ago

90% expected probability of a cut at the moment, down from 96% a week ago. A surprise no-cut would send a shock to the market IMO. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html https://www.cmegroup.com/markets/interest-rates/cme-fedwatch...

bix6 1y ago
That’s 100% is it not? There’s 0% for current and then a split between the two potential cut amounts.
- baby-yoda 1y ago
  You're right - I'm so used to looking at the probabilities waterfall diagram where there's always some percent for status quo I glanced right over it not being there. In the time since I originally posted that the 400-425 basis point level has dipped another 2%, with that amount going towards a 50 basis point cut. Very muddy waters indeed. Powell has been adamant about fighting inflation so I struggle to understand how the market gives a zero percent chance of status quo.
  - bix6 1y ago
    It got me initially as well! I’m with you on Powell but I feel like he’s tired of fighting Trump so he’ll throw a cut just to get everyone off his back a bit.
m101 1y ago
How these things are calculated is dumb: The market implied rate (from swaps/forwards curves) for the following period is something like 27bps cut, so they say: - 27 Is bigger than 25, so 0 cuts is 0% - attribute 2/25bps likelihood to 50bps cut - the remainder is left to 25bps cut The reality is that there's a non-zero probability to unchanged, and a non-zero probability of 75bps+ cut etc etc. However this information would probably be in swaption prices and too complicated for anyone like the CME or media to make sense of. But at least with the way people talk about it they get to feel like they're making sense of the world.

seneca 1y ago

Polymarket puts a cut at 98% likely currently: https://polymarket.com/event/fed-decision-in-september?tid=1757599215479 https://polymarket.com/event/fed-decision-in-september?tid=1...

ksec 1y ago
Wow. Let me buy no Change.
- Workaccount2 1y ago
  Unemployment pretty much guarantees the cut. Inflation is in the backseat.

cosmicgadget 1y ago

Would be funny if the FOMC postponed voting until after the courts make a decision on the Cook "dismissal".