00:00 Speaker A
Ali, um, Josh was just talking about what this does to fed fed rate cut odds, which I know is something that you've been watching closely.
00:17 Ali
Yeah, if we take a look at the CME's Fed Watch tool, this is what markets are pricing in when it comes to that next fed rate cut, and consistently we had seen markets looking at that September uh Fed meeting as the next time the Fed will slash interest rates. That had been hovering around a 70% chance. Now, I'm looking at 50%. So we're at a 50/50 odds now that the Fed cuts in September. And we've seen a variety of Wall Street firms really adjust their targets here. Morgan Stanley is not projecting any rate cuts this year. They're looking ahead to 2026. Capital Economics believes we're going to see our first cut in December. So you just have a variety of opinions on Wall Street. Uh we do have that Fed meeting coming up at the end of this month. Pretty much a 100% odds that the Fed remains on hold and I think this data certainly supports that narrative here. So that's going to be another thing for markets to keep an eye on as we continue to wade through earnings. And so far, we seem to have a pretty strong start there. What happens on the Fed side? And we know President Trump has been very outspoken in his want to have those fed uh funds rates lower. But he might have to wait a bit longer there. And I'm curious how markets are going to react if we see those rate cut odds get pushed out a little bit. And and also how that feeds through to the 10-year Treasury yield as well. We're seeing that hover around 4.5%. We know when we hit that 4.6% level that starts to weigh on US equities.
02:58 Speaker A
Let's talk about earnings too guys, because obviously we're in the thick of earnings season now. Ali, um, as you point out, um, it as you have pointed out to us, it's a mixed bag, right? Um, but let's talk a little bit about what which are the sort of highlights that you're watching. I know TSMC is on the list.
03:41 Ali
Yeah, TSMC a big standout here. When we talk about the mixed bag, you take a look at something like Pepsi, which really had a better than feared report. We're seeing shares up this morning, but even heading into this earnings season, the stock was down around 11%. So some of these consumer names have been a little bit more beaten down. But when you look at a name like TSMC, just delivering these solid results, 61% profit surge, soaring AI demand, there's a clear read through here. When it comes to what's working best and most consistently in this market and that's AI. That's really the nucleus of this rally and it extends beyond the tech sector as well. Of course, for TSMC there are still headwinds when it comes to Taiwan, those reciprocal tariffs, a lot of uncertainty. That was something that the CEO talked about in the release. But we've also got some clarity on that port too. Invidia, for example, which is one of TSMC's biggest customers, they will be able to sell those A20 chips to China. They had that sign off from President Trump. This was something that TSMC talked about in the earnings call saying that this is good news for their customer and therefore it is good news for them. So just a lot of catalysts here heading into the thick of earnings season and this sets us up well for some of those hyperscalars and of course the biggie invidia, which is set to report next month.
05:42 Speaker A
Yes, and we've got Netflix after the close today. You're going to be busy doing that. We'll talk about that a little bit later um in the morning. Thank you so much, Jennifer. Ali, Josh, appreciate it.
