Week Ahead on Wall Street: Hawks Vs. Doves

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With the next Federal Reserve meeting front and center, investors should buckle up for what promises to be the most dramatic week left in the year. 

While another interest rate cut is nearly fully priced into markets, it’s not likely to be a unanimous choice. Fed officials have been openly divided since the last Fed meeting, and we could see four or five of the 12 voting members dissent.

On one side, the hawks (mostly regional Fed presidents) have argued that the Fed should stop cutting rates because inflation remains too sticky and tariffs pose a new risk. On the other, doves (mostly Fed governors) have said we need another cut because downside risks to the cooling labor market outweigh those concerns. 

Complicating all of this – as if monetary policy wasn’t already complicated enough – is that the Fed will release its quarterly Summary of Economic Projections, which include their expectations for economic growth, unemployment, inflation, and rates over the next few years.
How this tug-of-war shakes out will set the tone for the rest of this year, and the next as well. The path forward is anything but settled.

Economic and Earnings Calendar

Monday

• November New York Fed Survey of Consumer Expectations: This is a measure of peoples’ expectations for inflation, jobs prospects, earnings growth, and more.

Tuesday

• November NFIB Small Business Optimism: This measures how small business owners feel about current and future economic conditions. 
• October Job Openings: A key measure of business demand for labor is the number of job openings, since reducing openings is easier and preferable to layoffs.
• Earnings: AutoZone (AZO), Campbell Soup (CPB)

Wednesday

• 3Q Employment Cost Index: This is the most comprehensive measure of worker compensation, including wages, bonuses, benefits and more. 
• FOMC Interest Rate Decision: The Federal Reserve will announce any changes to monetary policy after the conclusion of its two-day FOMC meeting, in addition to providing commentary on the economy. It’s one of eight regularly scheduled meetings per year. 
• November Treasury Statement: This summarizes the U.S. federal government budget by tracking government revenues and expenditures.
• Weekly Mortgage Applications: Mortgage activity gives insight on demand conditions in the housing market.
• Earnings: Adobe (ADBE), Nordson (NDSN), Oracle (ORCL), Synopsys (SNPS)

Thursday

• September Trade Balance: Trade, made up of exports and imports, is an important driver of economic activity.
• September Wholesale Inventories and Sales: Wholesalers often operate as an intermediary between manufacturers and retailers, serving as a key part of the goods supply chain.
• Earnings: Broadcom (AVGO), Costco (COST), Lululemon Athletica (LULU)

Friday

• Fedspeak: Philadelphia Fed President Anna Paulson will discuss the economic outlook at the Delaware State Chamber of Commerce. Cleveland Fed President Beth Hammack will speak at a Real Estate Roundtable Series.

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