Kevin Warsh hit pause on interest rates without taking his foot off the brake.
The Fed held its benchmark rate at 3.75% to 4%, six weeks after its first hike in more than three years. It was a “wait and see” signal rather than a “this hiking cycle is over” move.
Two Fed officials — Lisa Cook and Beth Hammack — dissented in favor of a quarter-point hike.
Still, policymakers said activity is now “expanding at a strong pace,” a subtle change from calling the economy “solid” in September.
The Fed again wrote that “capital investment is robust.”
At his press conference, Warsh said capex hovers “at a historically high share of GDP” and that “high-tech investment is leading the acceleration.”
That’s the AI spending boom showing up in the Fed’s own language.
As expected, the harder piece of the calculus is inflation.
The statement said “the accumulation of more information” will guide the next move, replacing September’s line that the hike would support “a timelier return” to the 2% goal.
“If the crux of your question is you haven’t delivered yet, you haven’t achieved price stability, you’re right about that,” Warsh told reporters.
As of Wednesday night, traders see more than 80% odds of a December hike.
Still, stocks have liked the day-after through Warsh’s short tenure so far.
The S&P 500 has rallied at least 1% the post-Fed trading session after each of the three prior meetings.
Elsewhere
📉 Alphabet stock fell 10% after reporting another quarter of negative free cash flow. Revenue and earnings both missed Wall Street expectations, even as the company’s Gemini AI app reached 1 billion users. (CNBC)
📈 Oracle stock jumped 10.7% after it targeted at least $30 billion of free cash flow in fiscal 2029. The company set a goal of at least $225 billion in revenue for fiscal 2030 and capped new capital raises at $20 billion through that year, excluding refinancing. (Yahoo Finance)
🏦 The Bank of Canada raised interest rates for the first time since July 2023. The quarter-point hike to 2.5% aims to keep high energy prices from spreading to other goods and services, and the bank said it could need to raise rates further. (Bank of Canada)
Full Signal
Eddie Ghabour is the co-founder and CEO of Key Advisors Wealth Management. We sat down to discuss the stress building in AI debt markets, comparisons to the dot-com bubble, and his favorite stock picks and sectors for 2027.
Tune in on Spotify, Apple Podcasts, or YouTube.
Rapid-fire
Microsoft stock jumped 4% after reporting strong cloud growth and earnings beat (CNBC)
The US goods trade deficit widened to $134.9 billion in September (Census Bureau)
SpaceX’s $85.7 billion IPO topped half of what 1999’s 476 IPOs raised after inflation (Opening Bell Daily)
Bond investor Jeff Gundlach questioned why the Fed was pausing rates (CNBC)
Enphase fell 16% after forecasting fourth-quarter revenue of $225 million to $255 million (StockTwits)
Anthropic’s pre-IPO finances explained in 6 charts (Opening Bell Daily)
On this day
🗓 October 29, 2012: Hurricane Sandy shut the New York Stock Exchange for the first of two straight days, the first weather-related two-day market closure since the Great Blizzard of 1888.
Last thing
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