00:01 Josh
The S&P 500 and the Nasdaq hitting another record closing high. The S&P 500 topping 6,600 as the Fed's rate decision nears. Yahoo Finance's Jared Blikre joins us now with the trading day takeaways. Jared.
00:10 Jared Blikre
Thank you, Josh.
00:11 Jared Blikre
We got to talk about mega cap domination. and I'm seeing this expressed in a few different ways in the market. We've talked about this concentrated market, highly concentrated going back a few years, and we haven't necessarily seen that as of late, but it seems to be on the way back. Now, this is a sector action and what you're going to notice these three sectors that are outperforming the S&P 500, XLC is communication services. That's where you find Alphabet, and Alphabet has been on fire recently. It's up over 20% over the last month, hitting record high day after day. Tech, that's Nvidia. We know what uh tech includes. And then XLY, that includes Amazon and Tesla. And guess what? Tesla has really come alive recently, and let's just show a 10-day chart on that. And by the way, it's uh it's up 22%, 23% in 10 days. And it's also positive on the year, which I was just kind of showing along the close here up 1.54%. So it has come alive after taking out this high and we're just seeing more and more this market kind of re-gearing towards these larger names. and it doesn't mean that it's uh things have to roll over or that it's even a big warning sign, but it's helpful to know what's working and what's not. So here's my leaders uh board and I like to use these ETFs to show what's in favor, what's not. Look at the upper left, MAGS, that is a Mag 7 ETF, followed by New York Fang, followed by FDN. That's basically an internet ETF that tracks mega caps and the Nasdaq 100. Um, ARKK, that's a lot of smaller issues, but Tesla's in there and so is Shopify. and today it's skewing uh towards those larger names because that's what's positive today. And then you go down and see what's not working today. Bitcoin, that's kind of a smaller one, maybe we'll have some time for a Bitcoin check at the end. And then regional banks. I found this interesting because on a day when JP Morgan was hitting record highs, here's our big bank ET or a big bank uh leaderboard here and you can see a lot of green on the screen. Take a look at what's happening with the smaller banks, the regionals. just not seeing it there.
01:46 Jared Blikre
Final exhibit. This is like Exhibit Z, Josh. Stick with me here. Uh, S&P 500 Equal Weight index. This is down 22 basis points today, not a lot, but meanwhile, the S&P 500, which is market cap weighted, which means the bigger stocks get a bigger vote, that was up half a percent. So it seems like big is back in favor again.
02:22 Josh
Meanwhile, the event of the week, Fed decision on deck. What are you listening for?
02:30 Jared Blikre
So, I'm looking for a descent, and I just had the opportunity to sit down with Greg Daco today. He's EY Chief economist and we were talking about the Fed and how there could be more than one type of descent. And if you're following at home here, there's going to be potentially a hawkish one and a dovish one. He lays it out for us.
03:00 Greg Daco
There's likely to be a few dissents uh when it comes to the actual vote for the rate cuts. Um there's likely a small majority that's led by Jerome Powell uh that is in favor of a 25 basis point easing of the Fed funds rate because there has been some evidence that the labor market is softening, notwithstanding the re-acceleration in inflation. But at the same time, on both ends of the spectrum, you're going to see a more hawkish dissent in favor of a hold, likely from a couple of regional Fed presidents, and then you're likely to see a dissent in favor of more easing, 50 basis points or perhaps more with Governor Bowman and Governor Waller likely dissenting in favor of a larger rate cut and potentially Steven Miran also dissenting.
03:48 Jared Blikre
This episode drops Tuesday morning, 8:30 a.m. And by the way, if Stephen Myron is confirmed, you can just expect a lot of, I think, this is this is my personal opinion, a lot of upheaval at the Fed. Uh, Jennifer Seanberger noted that last week when he was in front of Congress, he mentioned the the Fed's third mandate, moderate long-term interest rates. Did you know the Fed has three mandates? Well, according to Congress, an exagetical reading of the Federal Reserve Act section 2A says, in fact, moderate long-term interest rates are a thing, but they haven't been part of the Fed discussion for a few decades now. And uh there's all kinds of things that could happen, but a lot of dissent at the Fed. If there are three dissents, that would be the first time since 1988. So this is a Fed meeting to watch.
04:35 Josh
Let me ask you, let the market thinks that cut's a lock. Let's say we get the cut. It's 25. I'm curious, how do you think the stock market responds and reacts?
04:43 Jared Blikre
Well, so this would not be the first cut, it would be a resumption of the rate cutting cycle. Is this good or bad? Well, I found this JP Morgan chart. I thought this was pretty interesting. The X-axis, this horizontal axis, this goes 12 months in the past, 12 months in the future. This line right here is what happens when the Fed resumes cuts after a pause and you can see there's a little bit of a dip here, but then it kind of stair steps up and after 12 months, you're at at higher highs and for the most part before that, you're going to see historically, um, this is just kind of a flat line. And that's really not what we're seeing right now. If you look back to where we were one year ago, well, we are significantly up since then. So, we'll have to see if this plays out. I think it could kind of be slice this it's easy to slice and dice something like this a different a few different ways. But the bottom line is if we enter recession, if the job market is truly kind of falling out right now, uh this isn't going to matter that much because the economy is just not going to like that. The stock market is not going to like that. and we're going to we're not going to know if we're in recession for a long time anyway, so.
06:14 Josh
All right, Jared, thank you, buddy. Appreciate it.
