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Morgan Stanley Anticipates Fed’s Surprising Symphony of Rate Cuts Beyond Expectations

Get ready for a monetary maestro performance, as Morgan Stanley predicts the Federal Reserve will kick off a series of rate cuts surpassing market expectations, starting in June next year. The financial giant foresees a soft landing for the economy as the Fed navigates the final stretch to rein in inflation.

Rate Cut Extravaganza on the Horizon

According to Morgan Stanley’s crystal ball, the Fed is set to deliver four 25 basis point cuts in 2024, gracefully lowering rates from 5.375% to 4.375%. The crescendo continues in 2025, with an encore of eight cuts, bringing the benchmark rate to a harmonious 2.375% by year-end.

Defying Expectations

Contrary to the market’s melody, which hums around a year-end Fed funds rate ranging from 4.50% to 4.75%, or 4.625% at the midpoint with a mere three expected cuts, Morgan Stanley’s symphony soars to new heights. This sonata also outshines the Fed’s own modest projections of two rate cuts in 2024.

Divergent Tunes from the Orchestra

While Morgan Stanley orchestrates a grand symphony, other financial virtuosos present divergent forecasts. UBS, embracing a bold composition, envisions 275 basis points of cuts in the upcoming year. Meanwhile, Goldman Sachs takes a more cautious stance, proposing a solo rate cut debut in Q4 2024.

Soft Landing Serenade with ‘Labor Hoarding’

The melody of deeper rate cuts is expected to harmonize with the economic slowdown triggered by the Fed’s prolonged higher-for-longer interest rate strategy. Morgan Stanley, however, conducts a reassuring movement, suggesting that the deceleration will be counterbalanced by a resilient labor market. As companies hoard workers and more individuals join the workforce, the symphony aims for a soft landing, sustaining consumer spending.

Dow futures steady ahead of crucial inflation report

US stock futures hovered near the flatline on Monday night in anticipation of a significant inflation report scheduled for release on Tuesday.

By 6:30 am ET (11:30 pm GMT) Dow Jones Futures, S&P 500 Futures and Nasdaq 100 Futures were trading within a range of 0.1%.

In extended deals, Xp Inc (NASDAQ:XP) added 0.3% after the company reported EPS of $1.96 versus $2.01 expected on revenues of $4.13 billion versus $3.84 billion expected

Azenta Inc (NASDAQ:AZTA) added 4.6% after the company reported EPS of $0.13 versus $0.02 expected on revenues of $172.36 million versus $163.91 million expected.

Fisker Inc (NYSE:FSR) shed 14.1%, reporting losses of $0.27 per share versus expected losses of $0.22 per share, while revenues were reported at $71.8 million versus $143.1 million expected.

Ahead in Tuesday’s trade, market participants are expecting the annualized US CPI data to come in at 3.3% versus 3.7% in the previous month. Traders will also be monitoring small business optimism data released in the morning and comments from several Federal Reserve officials throughout the day. Additionally, the earnings report from Home Depot Inc (NYSE:HD) will be a notable focus for traders.

Monday saw a varied start to the week, with the S&P 500 and Nasdaq Composite both closing with slight decreases of about 0.1% and 0.2%, respectively. In contrast, the Dow Jones Industrial Average posted a moderate gain of nearly 0.2%.

On the bond markets, United States 10-Year rates were at 4.645%.


Nvidia Unleashes H200: The Chip Upgrade That’s More Turbocharged Than Your Morning Coffee

In a move that’s making other chips quake in their silicon, Nvidia (NASDAQ:NVDA) declared on Monday a turbocharged upgrade to its AI royalty—the H200. This high-tech marvel, set to hit the scenes next year, comes loaded with features so fancy, it’s getting a VIP pass into the circuits of industry titans (NASDAQ:AMZN), Alphabet’s Google (NASDAQ:GOOGL), and Oracle (NYSE:ORCL).

Surpassing its predecessor, the H100, the H200’s pièce de résistance is the boost in high-bandwidth memory—a glamorous upgrade that plays the starring role in the chip’s data processing speed. Considered the diva of chip expenses, this expanded high-bandwidth memory is here to speed up AI services powered by Nvidia. Get ready for OpenAI’s ChatGPT and other AI applications to respond so fast, you’ll think they’ve mastered the art of instant wit.

With 141 gigabytes of high-bandwidth memory, the H200 is flexing its memory muscles, leaving the H100’s 80-gigabyte memory in the tech dust. As for the suppliers behind this tech wizardry, Nvidia is keeping the mystery alive, but whispers in the tech corridors suggest Micron Technology (NASDAQ:MU) might be part of the secret sauce, having hinted at a supplier role back in September.

But that’s not all—Nvidia’s memory rendezvous also involves a dance with Korea’s SK Hynix, who spilled the beans last month about AI chips boosting their sales revival.

To make sure the H200 doesn’t just sit pretty, Nvidia spilled the beans on its A-list partners. Amazon Web Services, Google Cloud, Microsoft Azure (NASDAQ:MSFT), and Oracle Cloud Infrastructure are the chosen ones to get their hands on the H200 magic. And it’s not just the big shots; specialty AI cloud providers CoreWeave, Lambda, and Vultr are also in on the action, proving that this chip upgrade is causing a stir that extends far beyond the tech giants’ boardrooms. Get ready for the AI revolution—Nvidia just turned up the volume.

Investing is like choosing a dance partner at a masked ball – you want someone reliable, with good moves, and preferably not wearing a financial disguise. It’s not a sprint; it’s a financial tango that requires finesse and a bit of rhythm. Sure, the market might throw in a surprise dip or a sudden twirl, but with the right strategy, you’ll be leading the way to a portfolio waltz that leaves everyone else applauding. Remember, in the grand ballroom of investments, diversification is your elegant waltz, and risk management is the secret salsa move that keeps you from stepping on toes. So, put on your investment shoes, hit the dance floor, and make your money do the cha-cha-cha of compound returns!