So the Fed just cut rates again – quarter point, nothing fancy – and the market basically shrugged and went back to scrolling TikTok. Which is wild, because not too long ago, Jerome Powell clearing his throat could send the Dow into a tailspin.
But here’s the thing: the Fed is having a bit of an identity crisis right now. They’re still doing their Fed thing – cutting rates, making serious faces, using words like “data-dependent” – but the market has basically moved on to a new obsession. And that obsession has a name: artificial intelligence.
When Your Ex Tries to Get Your Attention
Picture this: Powell steps up to the mic after Wednesday’s rate cut, ready to move markets with his every word. Instead, he accidentally admits that the hottest investment trend in America – AI data center buildouts – doesn’t really care about interest rates.
“I don’t think that the spending that happens to build data centers all over the country is especially interest sensitive,” he said. On camera. The Fed Chair basically told everyone that his main tool for controlling the economy doesn’t work on the thing everyone’s actually investing in.
That’s like a DJ admitting the crowd stopped listening to their music halfway through the set.
The New Sheriff in Town
Here’s what’s actually driving markets these days: Microsoft, Amazon, and Google are spending money like they’re trying to build the Death Star. Except instead of destroying planets, they’re building the infrastructure for our AI-powered future.
We’re talking about companies with $30-50 billion in quarterly cash flow writing checks for data centers, chips, and power infrastructure. When you’re sitting on that much cash, you don’t really care if borrowing costs go from 4.0% to 4.25%. It’s like arguing over the price of gas when you’re already driving a Tesla.
The old playbook was simple: Fed cuts rates → companies borrow more → economy grows → stocks go up. The new playbook? AI demand → tech giants spend billions → their suppliers get rich → stocks go up. Notice who’s missing from that equation?
But Wait, There’s More (Fed Still Matters… Sort Of)
Before you start thinking Powell should just pack up his briefcase and become a TikTok influencer, the Fed still has two tricks up its sleeve:
The Valuation Police: Higher interest rates still make growth stocks look expensive on paper. So while AI companies keep printing money, their stock prices can still get dinged when Treasury yields jump. It’s like getting a speeding ticket – annoying, but not enough to make you sell your car.
The Nuclear Option: If the Fed gets too aggressive and breaks something important in the broader economy, even AI companies feel it. Think of it as the “if I can’t have nice things, nobody can” approach. But we’re nowhere near that scenario right now.
The Bottom Line: Follow the Money (It’s Going to AI)
Look, I’m not saying the Fed is completely irrelevant. They’re more like that friend who used to be the life of the party but now mostly just complains about the music being too loud.
The real action is in AI infrastructure. Companies are building the backbone of the next industrial revolution, and they’re doing it with cash, conviction, and a complete disregard for what Jerome Powell had for breakfast.
So while everyone’s parsing Fed minutes for clues about December rate cuts, the smart money is betting on the companies building data centers, making AI chips, and upgrading the power grid. Because whether the Fed cuts rates or not, those billion-dollar AI checks are still getting written.
The Fed used to be the main character in the market story. Now they’re more like a supporting actor who keeps trying to steal scenes. Meanwhile, AI is over there actually running the show, making it rain for anyone smart enough to invest in the infrastructure powering our robot overlords.
And honestly? The robots probably don’t care about interest rates either.