Hot CPI report; stocks take it in stride (0:45). Impact on sectors and stocks and how tariffs play into it (2:10). Keep an eye on Fed commentary (5:15).Show Notes:Gold edges lower for second straight session, backing off all-time highTrump announces reciprocal tariffsPowell Leaves Fed's Rate Options OpenEpisode transcripts: seekingalpha.com/wsb Sign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.
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Brian Stewart, our director of news at Seeking Alpha. Our usual discussions will still happen on Friday at Wall Street Lunchtime. But today, in Kim Kahn's absence, although he is irreplaceable, we are doing a quasi-Wall Street Lunch today following some macro news. So, Brian, first of all, welcome to a Thursday edition of Wall Street Lunch. Great to have you.
Thanks. Big shoes to fill, but I'm ready.
Absolutely. Absolutely. Clown size big. Talk to us about the macro picture. How would you articulate it for investors listening?
So the obvious big news in terms of Fed prediction that happened this week was the CPI report, which came in very hot. Pretty much took a rate cut off the table for the March meeting and pushed it back quite a ways. There's now an 86% chance of no change in May. So we're looking in the kind of June, July, September timeframe for a cut.
Another thing to look at is the chance of no cut at all this year. has gone up dramatically. It's now sitting at about 23%. This is based on market trading. It was 11% a week ago, so more than doubled in the course of the week. And the major catalyst for that is a CPI report. So the market's getting used to the idea of higher for longer.
that we might have these interest rates even through the rest of 2025. Though by and large, stocks took it in stride. There was a sizable dip as the news came out at the opening of trading and then the recovery. And as we said on Thursday, we're now higher than we were before the news came out. So by and large, it's been kind of shrugged off.
But I think if you're an investor, you're kind of looking longer term. impact on consumer impact, on businesses' ability to borrow, things like that. It is definitely something to keep an eye on.
And anything else to mention in terms of how this may impact stocks or which stocks it may impact or which part of the market it may impact more? And how are tariffs playing into this picture? I know we're anticipating some announcements, other things we don't know. How does that figure into this conversation?
The impact on individual sectors, I would look to the traditionally interest rate sensitive sectors. So REITs is a good example of a sector that moves in accordance to how interest rates are looking. The home builders and other housing stocks are another indication. If it's becomes more difficult for those companies to book revenue and therefore can affect their bottom line.
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