LIVE NOW: FOMC RATE DECISION & PRESS CONFERENCE
In a Nutshell
FOMC maintained the federal funds rate at 3.75-4% with 94% probability. Chairman Warsh stated the economy is strong with GDP growth revised to 2.4%, but inflation remains elevated and financial conditions have tightened since September. The Fed will reduce to eight meetings annually starting 2027, with two meetings dedicated exclusively to monetary policy strategy rather than rate decisions.
These notes were generated by AI and may contain inaccuracies.
Ricky from Tech But Solutions is live on October 28th at 10:56 a.m. Arizona time, moments before the FOMC rate decision. The press conference follows 30 minutes after the decision. The stream is shared with the group for watching market reactions.
Markets have been consolidating following initial sell-off and recent lows. There is a 94% probability the Federal Reserve will pause rates. The focus shifts to Kevin Warsh's commentary on future policy direction.
"There is true beauty in waiting for an opportunity to present itself instead of hoping for something to happen and then getting stuck."
The rate decision arrives in under two minutes (1 minute 10 seconds), followed by the press conference 30 minutes later. Viewers are encouraged to stay live for Kevin Warsh's remarks.
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The Federal Reserve announced no change to interest rates at 4%, matching both previous levels and market expectations. The decision came at 11:00 a.m. Pacific / 2:00 p.m. Eastern time.
Markets began dropping following the announcement. Key uncertainty centers on how many Fed members are open to future rate hikes, particularly 25 basis point increases. The vote involves 12-14 rotating members who vote on whether to raise, pause, or cut rates.
Fed votes typically hold rates steady, with possibly two members suggesting rate hikes. Kevin Warsh's upcoming press conference will clarify the Fed's openness to raising rates.
Raising rates increases borrowing costs for individuals and businesses, particularly impacting hyperscalers' profit margins. Higher rates create greater risk for AI infrastructure investments and could delay profitability timelines.
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NASDAQ showing slight pullback, testing daily lows with consolidation pattern.
Irene exhibits bearish technicals with lower lows and lower highs. Fundamentals show 8% downside from fair value, negative P/E ratio, and annual losses of $702 million. Stock down 60% from recent highs but momentum remains against it.
Fundamentals matter for most companies, unlike Tesla where Elon Musk receives exception. Many companies have good stories and momentum but eventually face fundamental scrutiny. Amazon comparison is a red flag when used to justify current investments.
Warren AI rates Irene as strong sell at $27.33 with price below daily 20 EMA. Three-month read shows bearish descending channel. Next earnings November 5th after hours with expected EPS loss of 72 cents and $230 million revenue. Bearish continuation probability 82%, bullish reversal 18%.
Meta down 21% from recent highs of $780-$779, entering correction territory. Previous lows around $560-$500. Company generating $241 billion revenue and $75 billion net profit. Recent earnings beat but stock dropped 6.54% due to spending guidance concerns, margin pressure, and negative free cash flow.
Meta raising approximately $95-100 billion through share offerings and dilution without voting rights. Microsoft offering buyouts to 60,000 employees being replaced by AI. Concern that AI investments will increase service costs long-term, potentially creating inflation.
Apple considered "boring" among Magnificent 7 but valuable for not overexerting on AI investments. Company positioned to benefit from hardware ownership while competitors bear AI development costs.
Meta rated strong sell at $610, broken below $619-$624 demand zones. All major moving averages showing fresh breakdown. Daily RSI at 30 (nearly oversold). Bearish continuation at 92% probability. Potential demand zones at $592-$600.
Seagate (STX) oversold on larger timeframes with 35 P/E ratio. Revenue $13.7 billion, net income $4.3-4.4 billion with aggressive growth. Stock rose from $70 to $1,140 (1,400% gain) in one year, followed by 30-40% correction. Toshiba planning to double HDD manufacturing capacity by fiscal 2027, potentially ending supply shortage that underpins Seagate's pricing power.
Calculate position tolerance by determining reaction to 50% rallies followed by 25-40% drops. Adjust position size or investment decisions based on volatility tolerance assessment.
Seagate shows bearish daily regime with descending channel continuation. Demand zone at approximately $500, currently testing $627 demand zone. Strong descending setup with potential retest of moving average followed by sell-off.
Oracle up 5.8% with bullish reversal probability at 55%. Stock described as one of the most leveraged finance companies with huge risk. Short position opened with 100 shares at current levels (not for copying). Demand zone retested at lows of $120.
NASDAQ testing same daily lows with volatility but no significant changes. Oracle continuing upward movement ahead of press conference.
The FOMC decided to maintain the target rate for the federal funds rate at 3.75% to 4% in support of the Federal Reserve's dual mandate. Economic activity is expanding at a strong pace, with uncertainty remaining due to geopolitical developments. Domestic spending has been resilient, productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce and the unemployment rate has changed little, but inflation remains elevated.
GDP increase in the first half of the year was revised up from 1.8% to 2.4%. The third quarter appears to have brought an even more rapid advance, led by healthy consumer spending likely running above 3% growth and business investment likely rising at about a double-digit pace. Capital expenditures are at a historically high share of GDP. High-tech investment is leading the acceleration, but there has also been a broadening in other categories.
The jobless rate is lower than a year ago and payroll growth is noticeably above last year's pace. The four-week moving average of unemployment insurance claims shows conditions are quite positive on the employment side of the Fed's dual mandate.
Americans are still dealing with inflation running above the committee's objective for close to six years. Since the policy action in September, changes in financial and credit conditions have tightened for some businesses and households. Market participants are becoming somewhat more discerning in their capital allocations. While overall financial conditions are tighter, they are not being described as tight.
The committee decided on a change in the FOMC schedule starting next fall, reducing to eight meetings per year. In 2027, one meeting will focus exclusively on broad monetary policy strategy with neither a vote on the federal funds rate nor a policy statement anticipated. The rest will be regular FOMC policy setting meetings. In 2028, there will be two meetings dedicated to discussions of strategy and six for setting policy.
The reasoning is that getting policy right involves assessing near-term developments at timely, regular, and information-rich intervals, while also reserving time and space for strategic deliberations, thinking anew about big questions, and looking out over longer time horizons.
When asked why rates were not raised today given the 84% probability of a rate increase on December 9th, the response emphasized that ensuring price stability is not about some fixed individual date on a calendar or an isolated data point. The new monetary medicine includes doubling down on the 2% inflation target, taking responsibility without blaming others, and laying out a framework for how monetary policy should work.
Inflation compensation as measured by swaps and other measures is going in the right direction. Inflation expectations have also moved in the right direction despite the unsettled world environment. The period ahead is information-rich with a lot happening globally, and the committee is keen to take notice of developments.
There is no firm conclusion about the conduct of monetary policy. The overwhelming consensus is that the monetary medicine implemented is starting to work but conclusions are not firm. The decision was made to call these questions, take stock of where things stand, and evaluate whether the period ahead is likely to provide more clarity on the appropriate protocol.
The chairman has 18 independent colleagues who submit their own dot plots. The chairman does not submit a dot and does not plan on submitting one. The committee consists of serious, sober, responsible people who had a serious, sober discussion about policy.
At the strategy meeting in 2027 and the two strategy meetings in 2028, no policy decisions are anticipated and no policy statements will be issued. Details about what might come out of these meetings are still being determined and will be shared when available.
The mandate given by Congress is to deliver stable prices and full employment in the context of financial stability. The working groups are hard at work with a year-end deadline for reports. Some but not all groups will likely hit their deadline. The task forces are making intellectual investments expected to bear fruit in the next policy conjuncture.
On November 16th, the productivity and jobs task force will be doing a field hearing inviting a broad range of people with strong views on implications for jobs in the economy near term, medium term, and long term. The question being explored is whether this represents a productivity miracle that will happen quickly or slowly. The chairman plans on attending and may have a few words to say at the outset. The conference is expected to last three to four hours.
When asked about comments made by President Trump on October 7th regarding board members appointed by Obama and Biden, the chairman stated he is not going to respond to quotes from public officials. The experience in five months has been that the committee just came out of a serious, sober discussion and reached the right policy decision for this moment.
Surveys show households expect inflation to remain above the Fed's goal. When consumers interrogate reality, they look outside their window and go to the gas station where they see prices are up. Oil prices have gone up and when consumers fill their tanks, they see it. Inflation expectations have gone up in the very near term because consumers are doing what the Fed is doing - interrogating reality.
There has been a stable correlation between oil prices as they've moved up this year and interest rates set in the market. Until very recently, this correlation has been quite strong. Oil prices have continued to move up largely due to geopolitical events, and crack spreads between oil and refined products have stayed elevated. However, interest rates have rolled over to the downside recently.
There was a narrative that raising rates would not affect AI investments because investor returns expectations are different. The chairman was skeptical of that view, noting that interest rates get in the cracks and affect directly or indirectly almost everything. Since early September, interest rates have had an effect inside and outside the technology complex. Market participants are discriminating between kinds of investments, with credit spreads for certain assets widening and some tightening in financial conditions.
The CapEx story is not just robust and strong. The strength of the economy is not only in narrow pockets as it would have been several quarters ago. The investment surge is broadening beyond just the technology wave.
Politics played no role in the decision to stay on hold. The chairman spent two days with colleagues and did not hear an utterance about politics.
Chairman Warsh stated he heard no reference to politics or elections in the FOMC meeting. He confirmed that political considerations played no role in the decision for himself or colleagues. He described the coming period as an information-rich interval unrelated to politics.
Reporter Chris Ruhgeber from Associated Press asked about the statement of economic projections. Last month, colleagues penciled in another rate hike for this year. Warsh noted the blackout period for colleagues ends Friday or over the weekend, so they might discuss this. He stated he does not believe in forward guidance absent exigent circumstances or crisis, citing the 2008 financial crisis where forward guidance proved helpful. In normal times with a strong real economy, he does not favor forward guidance. He also does not believe in prejudging meetings, noting many things can happen before the next meeting six weeks away.
Sangun Lee from Korea Economic Daily News asked about the Fed shrinking its balance sheet further. Warsh noted he pays significant attention to the Korean economy because it provides insights on technology feedstocks coming from Japan and Korea. He mentioned knowing Korea's new central bank governor for 20 years and described him as talented. They met 20 years ago during the global financial crisis. The balance sheet task force is currently working on recommendations to be fed into the FOMC probably early in the first quarter. Any changes to the balance sheet would follow serious consideration of the task force proposals. Warsh stated it is unlikely to have material effect on the current policy conjuncture.
Nick Temerosa from The Wall Street Journal asked whether the AI investment boom becoming more dependent on external financing makes aggregate demand more sensitive to interest rates. Warsh chose to answer the second question about removing accommodation six weeks ago. He stated the effects on financial markets and financial market conditions were broadly consistent with his expectations.
Howard Schneider from Reuters asked about aggregate demand and inflation components. Colleagues have said the AI investment boom adds a strong demand component to inflation, representing a handoff from supply side concerns. Warsh stated the only things known in economics is that supply and demand cross. He heard in the room that the economy is strong, with the first three quarters marked up and pointing in the right direction. The judgment of most colleagues is that the economy is not running too hot. He noted productivity has been moving higher for a couple of years, preceding superintelligence discussions. The goal is not to throw sand in the gears of the economy. Policy is tightening financial conditions, which have tightened since the last meeting, indicating policy is working.
Victoria Guido from Politico asked about the White House hearing next week on Lisa Cook's future and allegations. Warsh stated he has no knowledge of Fed involvement in those proceedings.
Markets showed volatility with NASDAQ relatively flat. The next meeting is in December. Warsh stated no rate hike this meeting and indicated openness to cutting rates due to inflation concerns, taking it meeting by meeting. The new approach involves six meetings with data and rate decisions, with the other two meetings serving different purposes. Markets initially pushed higher on this announcement.
Tomorrow's economic calendar includes PCE report, GDP report, initial claims, and continuing claims. The GDP report will indicate whether the economy is growing or shrinking, potentially signaling technical recession entry. Reports release one hour before markets open.
Warsh gives lengthier answers compared to Jerome Powell's concise style. Warsh is described as articulate and smart, worth $100-200 million.
NASDAQ showed slight pullback with consolidation. Oracle pushed higher due to guidance projecting nearly $54 billion turnaround in annual free cash flow over three years. Oracle is described as volatile, with an overbought reversal and significant catalyst. The 720 support level is critical for NASDAQ - breaking below creates gap down risk.
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