So the Fed just had their little meeting yesterday, and guess what? They basically told the stock market, “Go ahead, have your fun.” It wasn’t the cleanest breakup with hawkish policy, but it was good enough to get this party started.
Here’s what went down: Jerome Powell and his crew cut rates by a quarter point (check), updated their economic outlook to be slightly less doom-and-gloom (double check), and kept the door open for more cuts down the road (triple check). The only buzzkill? Powell himself, who spent the press conference basically saying, “But don’t get too excited, kids.”
Classic Fed move, right? Give with one hand, take with the other. But here’s the thing – the market didn’t freak out. No dramatic selloffs, no bond market meltdowns, no currency chaos. Just a collective shrug that said, “We’ll take it.”
The Dot Plot Doesn’t Lie
While Powell was playing hard to get, the Fed’s famous “dot plot” was telling a different story. Think of it as the Fed’s internal group chat – and half the members are basically saying, “Come on, let’s cut rates more!” The other half agrees with Powell’s “let’s wait and see” approach.
But here’s the kicker: Powell’s not going to be running this show much longer. The incoming administration is way more cut-friendly, which means this “pause” probably has an expiration date. And markets? They don’t wait around for official announcements. They’re already pricing in what’s coming next.
Meanwhile, AI is Having Its Own Party
While everyone was obsessing over Fed speak, the AI boom just kept doing its thing. Enterprise AI spending is still going bonkers, Big Tech keeps throwing money at custom chips, and every earnings call sounds like a sci-fi convention.
The beautiful part? AI doesn’t need rate cuts to thrive – it just gets a nice little boost from them. Lower rates mean higher valuations, and higher valuations mean investors get even more excited about growth stories. It’s like adding rocket fuel to a fire that was already burning pretty hot.
Santa Rally, Anyone?
So here we are: the Fed stepped aside (mostly), AI keeps accelerating, and we’re heading into the final stretch of the year. This is exactly how those legendary December rallies get started – a little uncertainty early on, some skepticism in the middle, then everyone suddenly realizes they’re underexposed and starts buying everything.
The hiking cycle is done. The next Fed leadership will be more dovish. And underneath it all, artificial intelligence keeps growing like some unstoppable economic force.
Translation? The runway is clear for takeoff. Santa might be trading his reindeer for a rocket ship this year, because when you combine easier monetary policy with the biggest tech revolution since the internet, things tend to get interesting fast.
Just don’t tell Jerome Powell we said that. He’s still trying to play it cool.