Power Lunch - Fed cuts rates by 25 basis points 12/10/25

Episode Date: December 10, 2025

The Fed decides to cut rates by 25 basis points. What it means for bonds, stocks and your money here.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Well, happy Fed Day and welcome to Power Lunch. We are less now than five minutes away until the Federal Reserve makes a call to likely lower interest rates or does not. The odds of a rate cut just under 90%. So the market is expecting a cut. So if we do not get one, stocks, they could fall. Or if Jerome Powell's comments about the future of rate cuts are not as optimistic or as bullish as some expect, stocks could also fall. It is arguably one of the most impactful potential meetings in a long time. And ahead of it all, here's how the markets and your money are setting up.

And as you could see, no big positions being taken either way, Dow's up a touch, S&B and NASDAQ are down to touch, stocks mixed, investors, traders really all in a holding pattern ahead of that Fed. Bond yields, they've actually moved a little bit up into this decision, 10-year rates a little bit down now, but we were just at 4.2% yesterday. And by the way, the average mortgage rate in America, 6.19% according to Fannie Mae because you may not care about what interest rates are, but you might care what borrowing costs are for either a house or a car, Kelly Evans. You absolutely do. Real quickly, there is a standout in the markets today. Don't lose this one.

GE Vernova is up 15% pretty much to a record intraday high. The best stock in the S&P shares have more than doubled this year. The company issued strong guidance at its investor meeting. That'll do it. Key to that guidance, Brian, multi-year demand for electricity from some of the world's biggest tech companies. This is one of my favorite stories. We don't have time right now. But the GE spinouts and how well they've done Vernova, which was supposed to be a wind company, now is doing as well as it is. It's fascinating. Well, turbines.

All the money is in turbines. You want to power that through a pipeline, through a natural gas power. I love that everybody is something now interested in energy. All right. Let's get right now our All-Star Fed panel set you up not just for today's decision, but also the markets and meetings ahead. January, March, and April. Very pleased as always to be joined here in studio. David Kelly of J.P. Morgan Chase. Francis Donald of RBC Capital Markets. Jim Karen and Morgan Stanley joining us remote. Jim, welcome as well. Francis, I'll start with you. Your expectations for today.

They're going to cut, but I got to tell you, today is not about this Fed decision for me. It's about what it continues to reflect about an incredibly complicated economy. We have very limited data visibility. We know that employment is softer. Inflation is rising. The economy is fragmented into that case shape we all know about now. And let's not forget, we have a once and 100-year trade shock. How is the Fed going to explain all of this to us? And how are they going to set us up for 2026 in an economy that is decreasingly interest rate sensitive and yet still has its firm eyes on what Powell or Powell's predecessor does next? Would you consider David Kelly today to be what they would say is a hawkish cut, a cut, but with cautious language? It's kind of like when

parents give a kid, okay, you could have one more cookie, but this is the last cookie. It never worked until the next one. Well, exactly, but I think there's going to be, it's going to be a cut, but we could get multiple descents here. And I think they're going to really, really push it out and say, you know, don't wait for, don't expect another near-term cut. Jim, I don't want to look too far ahead of today because it does matter. 90% chance of a Fed rate cut today. Look at the CME Fedwatch tool. You got about a 25% chance in the market of a rate cut at the January 28 meeting.

First one of next year. Where do you land on the next possible cut? So on the next possible cut, it's going to be all dependent on what happens in the labor market. The labor market is really the key messaging for the Fed. The Fed has to be careful, though, right? It doesn't want to walk into a policy mistake by being either too hawkish or too dovish. Because the path of leach resistance right now is towards higher bond yields, which is not necessarily effective or a good thing for markets.

So if the labor data continues to weaken, if it softens further, then I think January is very much on the table. If it doesn't, then we're going to kick the can down the road. Yeah, we're going to find out here in about 15 seconds. Like we said, it is a mixed trade. You got the NASDAQ slightly down, the Dow slightly higher, the 10-year yield, right around 4.16%. Let's go now to Steve Leasman on the Fed's decision on interest rate. Steve.

The Federal Reserve reducing interest rates by an expected quarter point to a new range of 3.5, 3.75. There were three dissents. The first time that's happened to September 2019. Two were against the cut, including Chicago Fed President Austin Gulesby, along with Kansas City Fed President Jeff Smith, his second dissent in a row. Also, another dissent for a 50 basis point cut from new Fed Governor on loan from the administration, Stephen Myron. To recap, the vote was nine for cutting a quarter, two against cutting, one for cutting 50 basis points. The Fed signaled a higher bar for the next cut. using language that it's used in the past to do so, saying that it will assess incoming data to determine the extent and timing of future rate moves. That language that used it last December to signal a pause. The rate Alex suggests consensus for just one more cut next year and one more in 2027, but as I'll get to when I talk about the dot plot, a lot of disagreement. Before the dot plot, though, I want to talk about some pretty big news when it comes to the balance sheet.

The committee making a determination, it is now at what it calls an ample level of reserves. So it plans to initiate purchases of shorter-term treasuries on an ongoing basis. And then a separate document was specific, saying the Fed will begin buying $40 billion in bills starting December 12th. That's just a couple days from now. And I believe that's sooner than the market expected. And those purchases will go on for a little while at an elevated level because of seasonal demands for reserves that are out there before coming down again in April. That's what the document says. Outlook on the economy in the statement. GDP outlook was stronger next year in the Fed's own forecast, up a half a point to 2.4%. So pretty big move there

in the outlook for GDP next year. The inflation outlook lower for next year by just a tick down to 2.5% just about hitting the target of 2.1 in 2027. The statement says the economy is expanding at a moderate pace, job gains have slowed, and unemployment has edged up. Just to note, statement no longer says that the unemployment rate is low at the current rate. Inflation is seen as somewhat elevated, economic uncertainty also elevated. Back to the Fed outlook in the dot pot real quickly here. Only two dissents, but six officials in total wanted no change in the funds rate according to the dot plot.

So kind of a soft dissent in that regard, you can call it. Seven want no change at all for next year. 11 only want one cut next year. one person, and we can imagine who that is, Stephen Myron, just guessing here, wants rates down to 2.12% next year, or 150 basis points lower. And that is the statement and the outlook for rate cuts and the balance sheet. Mr. Sullivan. Quickly, sir, you said buying bills may be sooner than the market expected.

This is not QE. I do not dare call it that, but is this like the son of QE, quantitative easing light? you know brian people are going to take off on this and i don't want to stop the craziness that will happen in social media and on the interweb um the fed will say this is maintenance of its balance sheet at a level of GDP of where it was some people however will call it q e light some people will call it son of q e um i believe the fed will say this is not neither that this is simply maintaining the balance sheet at what they call the ample level of it. of reserves, and that will cause them or prompt them to begin buying $40 billion of bills.

It looks like three years. They also may go out a little bit into the bond market as well, but they want to stick to the short end of $40 billion a month until about April when they say there'll be a sharp decline in there. And Brian, call it what you will. Let's see what Rick Santelli calls it. Steve, stay right there as you continue to dig through this. Initially showed a very doveish tilt. We have stocks moving to session highs. We have bond yields falling. Rick, your interpretation. Well, my interpretation, Steve nailed it. I don't disagree with social media going hog wild.

They could put any spin on it. They want ample reserves to deal with the reverse repo market issues, but it is QE, call it QE light. And once again, I have an issue with this, and my issue is simple. Every crisis, they expand the balance sheet by buying securities to manage rates or manipulate rates, pick any M word you want. But in the end, this is something to really pay attention to. And finally, the markets themselves, we saw a couple of basis point dropped pretty much across the whole curve, 358 down to 356 in a two-year. Tens were hovering right around that 416 level. They dropped about two basis points to 13 and changed the right

back to 415. What's notable is where we were this morning, as Brian pointed out, the fact that we're toying with 420. Remember, we closed at 457 last year. We're getting ever close to unchanged on the year. On a year that many analysts and experts thought we'd be spending a boatload of time under 4%. We've had a total of eight sessions closed under 4%. So far in 2025, the dollar index, no surprise there. It's down about a third of a cent. It was down about a quarter of a cent before the statement was read. It's definitely toying with this 98, three quarters to 99. level. It seems to have lost its hunt for 100 recently, but that makes sense, considering the Fed's easing. And finally, the next meeting, January, many are talking about the January 28th meeting.

For a while today, we had about a 30% probability of a quarter point ease. That's now moved to around 24%. It's been bouncing around a bit. If you look at the March 18th meeting, that's also hovering around a 25% probability of a quarter point cut. But basically, the real issue for 2026 is how much the market's going to pull out on the easy mentality as we continue to get data that certainly doesn't look like the labor market is dying, quick death. And with in terms of inflation, not a lot's changed in the last 16 months. It's sticky and it doesn't seem to be coming down closer to the Fed's target.

Rick, appreciate it. And we'll circle back in a moment. But let's get more from Mike Santoli. Mike on what jumps out to you about the market's reaction here and what the Fed just told us? Yeah, sort of net positive. I wouldn't say it's a real vociferous reaction. Obviously, it's during the press conference that we sometimes get more of the swings or the rethink or the unwind of the unwind. We know the drill on Fed days.

But there has been a value overgrowth, cyclical stocks over defensive stocks, financials leading, especially banks. That has meant that the market has been kind of revving in this direction of anticipating a firmer economic performance in the early part of next year. We could be proven wrong on that, but the market seems pretty resolute in trying that hand. And I don't think that today's cut and going on hold because we weren't priced for further cuts in the coming months is necessarily enough of a surprise to disturb that in any respect. I mean, you know, if it was on hold from, you know, December of last year until September of this year, and we had other things moving the markets around, but it was not really a rates issue. So the longer term coming in a little bit in yield, you know, maybe that does loosen things up a little bit, although I wasn't particularly alarmed at the level that long-term yields had gotten to in this run. All right, Michael Centioli, Michael, thank you very much. All right, let's go back now to our panel.

We've got Jim, Francis, and David. Francis, I want to go to you because let's talk about the job market, and I'm going to compare the last meeting minutes, and you'll forgive me, I've got to look down and read it. Here's what they said at the last meeting minutes about the job market. They said the unemployment rate is edged up, but remained low through August. So they said, oh, okay, it's edged up, but it's low. This year, first paragraph, the unemployment rate has edged up through September, hard stop.

So they seem to be acknowledging that the job. job market has weakened a little bit. I guess that changes the odds of a potential rate cut. I like your word a little bit, because if you look at a chart of the unemployment rate going back to the 1970s, it's only been this low two times over that period, Brian. So I'm wondering why this is suddenly not low, particularly that we've only seen what I would consider a normalization in the labor market. In particular, this hasn't been broad-based across all age groups. It's been really focused on young individuals in the United States. So is this really a labor market that's quickly deteriorating. It doesn't look much like that much-feared hockey-shaped movement to me.

Meanwhile, inflation has been above target for 55 months. So if I was looking at the bulk of the data and I looked at that dot plot and I looked at the Fed's forecast today, I would be saying, oh, they must have decided to hold or hike in that type of environment. What I want to hear from Powell during this press conferences, how the heck did you convince this committee to end with a cut-tay? David, did they convince it? We had three dissents. Well, no, and it sounded like we could have had six-de-six dissent. They dissented on what? what they call the dot lots, which I hate that term. It's like the Fed's light bright, where they put in the, where they expect rates to be.

Six, non-moves on that, three actual dissents. So three people, I'm sorry, I'm going to say this, three people chickened out. Well, they wouldn't go on the paper and say, I disagree. Well, exactly. And you can see that from the language in some of the speeches that we saw after the last Fed meeting, which actually convinced markets they weren't going to cut today, because some of the, particularly the regional bank presidents, are really hesitant to cut, at least in what they say.

but then when it comes to it, you know, they give the kid another cookie. And actually, it's a slightly bigger cookie than expected because they got this extra liquidity for the short end. But I do think this is, you know, more doveish short term, but still pretty hawkish long term, because if Steve's reading of this is right, they've upped their estimate of GDP growth next year by a lot. We've got all these income tax refunds that are going to kick in in the first half of next year. That's going to push growth higher regardless of what the jobs market is doing right now. And it sounds like there are very few. members of the Federal Open Market Committee who want to do more than one rate cut next year.

And if you're only going to do one rate cut in the year, when are you going to do it? Maybe you wait all the way until December. So it's going to be interesting here with the Fed perhaps going on pause in the first half of next year. All of that said, maybe we can put this on the screen. The tech ETF, we were talking about this yesterday on a 12-day win streak. Well, it's now in the green after this move up to possibly have a 13-day stretch. That would be its longest in about eight years. So that's meaningful.

We also have silver and gold on the positive and on the rise. Jim Caron, I was just going to bring you in on this because it seems, and I think John Spelanzani's phrase captures this perfectly, that he calls it, says the repo vigilantes won, because the big headline for a lot of people, even those who are more bearish on bonds, is the Fed's back, they're buying and they're doing so. Maybe it's just bills, but it's significant that this action is now coming a little bit more quickly than people thought. What does it tell you? Hi, Kelly. Listen, I think that's a great way to frame this. On balance, this to me is a more Dovish meeting. Now, yes, it is true. And I would really say that this is ironic, right? And I think

we have to see the irony in this. The Fed has basically raised the bar for the next rate cut, right? So we still think they're going to cut, but it's going to be a higher hurdle for them to do that. However, they did surprise the market on the Dovish side by moving that balance sheet management from what many people thought was going to be early next year to actually what's going to happen starting, you know, right now here in December. The Fed is, basically telling us that they want to have pro-cyclical policy. I mean, they want to support the growth cycle. They're going to stand at the ready to cut interest rates if the labor market deteriorates

further, and at the same time, they're worried about liquidity. They want to add liquidity back to markets. Call that reserves. Call it what you will. The point, though, is that we need to get over the year-end turn, right? So liquidity constraints might come in at the end of the year. And the Fed wants to avoid that type of a stress in the marketplace. So net net, the fact that they're willing to start to inject this liquidity, worry about reserves,

and that's a lot of what's going to maintain, I think, some of the bullish sentiment in the markets, which is what we're seeing reflected, is actually the net-dovish component, even though they raise the bar for the next rate cut. So I think it's a bit ironic. Well, also, Jim, back to you, because a lot of people are listening or watching it home, going, all right, this is great, what do I do? Well, to Kelly's point, the NASDAQ, the NASDAQ, on pace for its 13th straight day of gains. That would I think tie for an all-time record, or at least going back the eight years.

Why did stocks move up if prospects for more rate cuts went down? Yeah. So effectively, one of the big concerns that was in the marketplace was that the Fed would have very inflationary policy, that they would be dovish and that they would push these long-end rates higher because whoever the next Fed chair is, could potentially cut rates a lot. What the Fed is telling us right now is that they're not willing to do that. So what that's doing is it's stabilizing

the back end of the yield curve. It's allowing the equity markets now to say, oh, we don't maybe have to worry so much about this inflation impetus that might come out of a Fed that's too dovish. So again, ironic. And that is actually something that's very supportive for the equity markets

if rates stay relatively stable and well-contained. Yeah. And Steve, you wanted to jump. been here? Yeah, I wanted to back up what Jim was saying about the dovishness of the balance sheet decision. We asked in our Fed survey, which you released yesterday, about the balance sheet expectations, and it was for purchases to begin again in April. So this is quite a bit earlier. And for purchases to average just about $28 or $30 billion. So this is more than that. So on that front for sure, I would also point out that when I'm looking at the immediate reaction of the market, it's a little bit more

Dovish in terms of that next rate cut. We had it more fully priced in for June before the statement came out, and now it's about a 57, 58% probability for April. That's going to bounce around. And all of that said, this entire discussion I would point out may go out the window next week when we get October and November employment numbers, as well as some inflation numbers, and we'll figure out if the Fed made the right call here and whether or not the forecast is worth either the paper that was used to print it or the digital space it's taking up on the web. That's an excellent point.

As always, Steve, Leasman, Francis, the Fed has two mandates. I mean, people forget about that. We always talk about inflation, inflation, inflation, because of what happened during COVID and prices spiked and inflation was 9 percent, blah, blah, blah. But they also have the jobs mandate, maximize employment. How do we read the jobs part of the picture vis-a-vis what the Fed may or may not do? I've been thinking a lot about this because I keep wondering to myself, how can you be cutting interest rates when inflation is this high?

And per our forecast, going to be getting high. higher. In fact, it's really hard to see when that next cut is going to come through. I have to agree with David here, when is the window to do that? Because by February, we see that inflation side moving higher. And yet, Brian, and yet, this is not interest rate-driven inflation. This is tariff-level inflation. This is inflation that is coming from a labor market that is shrinking, immigration, retirements that are coming through. And part of me wonders if this Federal Reserve is saying our interest rate policy is far less relevant to the inflation side of the picture than it is to the job side. So do we? Okay. Let me follow.

up with that. Do we ignore, I hate to say this, do we ignore inflation? If exogenous factors, tariffs, whatever, are contributing, labor costs during COVID, whatever, if they're contributing to inflation and there's nothing the Fed can realistically do about it, should they cut rates anymore at all? Why not raise rates? Here's the rub here. The problem is, if they don't actually contain inflation, it can spiral out of control. So you start with tariff level inflation, you start with some wage pressures that sort of create a floor underneath. If you don't respond to it properly, if you're too easy, then that can start to spiral. But there's another elephant in the room here, which is that we have phenomenal amounts of fiscal spending. And how funny it is to me that we

spend so much time attributing monetary policy to inflation. And we forget that expansionary fiscal policy is also very inflation. So the forces on inflation are wide ranging and shouldn't just go to the Federal Reserve policy. So it's not a surprise to me that they're biases towards the labor side of the mandate. Well, I think the other part that we're not talking about is just how high the equity market has been. This is the end of three booming years for the equity market. And I personally don't think the Fed ought to be cutting aggressively or at all right now, but it's not because of what they're going to do to inflation. So you would have dissented. You would have not have cut rates. I would have dissented and I would have voted the way I did with what I said, because

the problem is that they have caused asset bubbles over the years by keeping rates at an unrealistically low level. And I think the danger is, they're just going to cause another asset bubble. And when these bubbles burst, they cause tremendous damage. So there's nothing wrong with a federal funds rate at three and three quarters to four percent. I think that's okay. The economy should be able to do that. President would disagree because people want mortgage rates to go down to five percent.

Well, the mortgage rates, long-term mortgage rates are determined by the 10-year, not short-term rates. And if you scare people about inflation, or indeed, if you cause a booming stock market, that actually will probably help keep those long rates higher. So I don't think, anyway, you know, why do we have a housing? problem. It's not because mortgage rates are too high now. It's because the mortgage rates were way too low for a decade. And that caused prices to spiral out of a level that people can't afford. Who kept them low?

Who kept them? Well, the Federal Reserve... There you go. No, exactly. Thank you. But that's exactly my point. The Federal Reserve should aim for a relatively neutral level of interest rates. And honestly, that's where we are right now. I'm going to paraphrase Animal House. You screwed up. He trusted us. David Kelly, Francis, Donald, Jim Caron. Steve Leesman,

thank you all very much. All right, let's get another check. Of the bond market, because, Rick, as David just adroitly pointed out, the bond market is going to determine rates, not the Fed. Well, you know, quantitative easing would argue with you. The market can only do so much if the Fed starts pulling out securities from the marketplace affecting supply and demand. It does make a difference. Now, to that end, the yield curve is steep in a couple of basis points.

Now, I understand many out there are saying, well, a couple of base points. but it is significant how it's doing it. So a two-year note right now is almost exactly two basis points lower than before the statement. The 10-year is exactly the same. Arguably, the yields a little bit higher. So we've touched 60 basis points in the 2's 10 spread. And I think that is something to pay attention to. It doesn't surprise me that the shorter maturities are looking at this in a more doveish way than the long end,

because the long end has not only to try to distinguish between what's, going on with the economy and the Fed, but it also has to keep an eye on things like debt issuance and just total debt around the globe. We did cancel, not cancel, postpone today's $22,000, 30-year bond auction because of the Fed meeting. We'll have that tomorrow. But I think it'll be very interesting to see how that demand goes. And then finally, Steve Leesman pointed to some of the percentages and probabilities in Fed Fund futures. And I always put a word of caution that these things are just markets. They change moment to moment. But the next meeting that even is close to the possibility of an ease, anything over 50 percent, that would be the June 17th meeting at the

moment. Back to you. All right, Rick, we really appreciate it. And I think it's a good point to make that as this kind of settles in for the past 20 minutes, markets are looking a little bit more on the bond side like they were pre-decision, although equities are still near session highs. Let's talk more about that now with Jeff Kilberg. He's the founder and CEO of KKM Financial. What do you say, sir. Welcome. Well, Kelly, kind of a surprise. Everyone was looking for a cut in rates, more hawkish. And we actually got more. If you think about that 40 billion that I'm going to start purchasing in just a couple of days, that's annualized half a trillion dollars of new QE. So with a six and a half trillion dollar balance sheet, I think a lot of folks were

surprised. That was the initial reaction equities. But you're seeing a little bit of a shift here and we're waiting for the presser. But I think this was much more dovish. And I think Fed Chairman Paul is keeping his job for another month because that's the one that we haven't talked about yet. And I think the long end of the curve is not pricing the fact that he may not be here in May of 2026 if President Trump has his way. So right when the decision came out, you were standing right there and you heard me say this is the son of QE, or QE light. Because to me, that's the headline. That's why stocks are moving. It's not the interest rate, no offense to any of our headlines or whatever. It's this Q, right, diet QE with T bills. The sense of urgency.

December 12th, they're starting to buy these bills. And that really kind of brings up a question. Why? I thought the economy was booming. Everything was great. Kelly's got a solid gold yacht. Everything's fine. Yes, but they are clearly seeing something. Now, historically speaking, the Fed doesn't have the best track record.

They talked about inflation being transitory, but nonetheless, they are seeing something in this half a trillion dollar annualized. It's $40 billion a month, folks. But this $40 billion month that's starting in a couple of days, that is really surprising. I think that's going to move equities a lot higher because this is, I know we had one dissenter wanted 50 basis points. This is like a 30, 35 basis point cut because it's another tool in their toolbox that is getting the same outcome. And it's going to increase the balance sheet, which is crazy that they just slowed the balance sheet down from draining. And now they're

re-kicking it off. There's a lot to pun. And I'm totally sympathetic to that I think you're right about the market taking it that way, no question. But, you know, they'll argue that this is, it's wonky. It's financial system plumbing. It's that the bank reserves levels getting too low because we're in ample reserves, not a scarce reserves regime. And we saw this in 2019 with repo flare, but they don't want it to happen again. So it's more of like a management tool, right, of the financial system than it is a tool of monetary policy. Now, maybe those are two sides of the same coin, but it seems as though the real question is whether they intend to do anything beyond kind of keeping up with the level of GDP. They're kind of doing now with the balance sheet,

doing something more meaningful, more expansionary, you know? And I think there's going to be a lot more questions about that. What is their intent now with the balance sheet? Is this just a temporary fixed to a repo problem, or is it something more? It feels like they brought the first aid kit out, and we haven't seen the wound yet. So maybe this job situation is going to decrease or get worse. But right now, the economy is strong. We're seeing profits. You know, we just saw Q3 profits, Kelly.

It doubled expectations. And I know there's been an old saying, profits out of the mother milk of the stock market in the economy. Maybe we update that and say, you know, profits are the creatine of the stock market economy. But we are seeing such strength. This is very surprising. Can I see something that's probably a little bit controversial?

Please do. Okay, which is, you mentioned Jerome Powell. He's a human being, okay? His term is up in May. No matter, I would think, and I don't know Jerome Powell at all. Okay, Steve Leesman does, so maybe he can comment on this. He pops back on, but I know he's got to go to the lockup. Jerome Powell's a human being.

He wants to go out looking good, I assume, right? Does that factor into the thinking? You don't want to go out doing something that caused the stock market. go down or wobbles or whatever it might be, I think you want to go out, particularly when you're being attacked by the president every week. You want to go out kind of on top, and I don't think it's unfair. I know it's the Fed, but these are human beings whose heart pump blood. I think there's probably a feeling they want to feel good and go out like a hero, not a villain. Yes or no? Not necessarily. Fed Chairman Powell, I think he's done a great job of deflecting

all that. He's a strong human. He's always been fiduciary. He's doing what he thinks is right. So I don't think he's going to bend one way or the other to make his, you know, riding off into the sunset look better. But he's doing this for a reason. And that's where I really want to unpack and get a better understanding. Why do they do more than the 25 basis point expectation? Because in essence, they did. All right. Maybe they did.

Maybe it's just a tool for, you know, the banks have been having a hard time, Jeff. I don't know if you saw it. All-time highs, you know, for the bank stocks. I note sarcasm. But, Kelly, think about it. Every time they've cut rates with the S&P near a two-party. percent or less high. When we're just close to an all-time high, the times they have cut it, it's been 20 times. Guess how many times a year later the market's been higher? 20 times, 100%.

And that's why we talked to Tom Lee, you know, or a little bit earlier on, who said he views, and he said even if it's a hawkish cut, he would view that as kind of a bullish outcome or a bullish. So you have to imagine that this leaning more in the direction towards accommodation. Seems dovesh. Even more so. Yeah. Do you do anything else now to change your thoughts prior coming into this meeting or no? No, I think you have to really focus on this presser. We're going to see what's about to happen. Yeah. We're going to take a short, speaking of, let's take a very

short break, folks. One small commercial break. Come back. It's the final comments. Then that. The press all these questions we've just asked, maybe they get answered by those three flags. We're back right up. All right, welcome back to Power Lunch.

Again, minutes away. You referenced, Kelly, the XLK Tech ETF, why? There's a couple of reasons. I mean, we also need to look at tick-by-tick what's been happening since the decision at 2, which was initially we saw this big positive reaction. As Brian mentioned, it pushes the Tech ETF, the XLK, now to possibly a third, 13 consecutive day of gains

and a winning streak. However, look at what's happening on the screen now. We're already seeing this pre-Powel positioning where those gains that we had are coming out of the market. So the Tech XLK is down about a quarter of a percent. The small caps will have to check on as well. Those surged to an all-time high. Silver was part of that trade.

The Dow is up as much as a little more than 300 points. A few moments ago, Kilberg gets up 206. So you see the potential for this market to take this and run with it in a dovish direction. But it's going to be really important how Powell emphasizes whether the QE that they're doing is simply bill purchases to help maintain the plumbing of the system or something more meaningful, along with everything else he's about to comment on. I don't think he's going to give us a look underneath the hood to that extent, but you're absolutely right. That's what the market's going to decipher by the end of the week. And that's why I think the longer, bigger picture here is that Treasury yields,

we got more than we actually bargain for today with that 25 base rate cut. So to your point, about 20 times out of 20 times, by my math, and I went to an engineering college, that's 100% that stocks are going higher over the next year on this cut. It's not going to be a straight line. So it never is. But when you see the VIX, in conjunction with that stat, when you see the VIX, the decaying the VIX, just remember two weeks ago when we were a little bit squeak. about the actual Fed interest rate cut happening or not,

we saw the VIX go up to 28, went back down to 15. When you see that vol get crushed like that, that's when you see people really feel good about equities on a 30-day lookout, and then, yes, that's that's silly, 20 out of 20 times higher a year later. What are you listening for us? He kicks this off, Kilver.

What kind of feeds to you the bullish narrative versus bringing some doubt into what they've just done? I think I want him to really kind of give his understanding will he be sitting on his hands in the next quarter because a lot of folks are thinking that we are going to see a rate cut, if not two. Goldman's in the camp, then we could potentially get two rate cuts in Q1 at 2026. So I want to hear something as he kind of positions the ability to kind of hedge, which he always does a great job of, but that's why I'm really looking forward to get a better

understanding.