An uncertain environment has Wall Street questioning when rate cuts will come in 2025
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Hello there! Value meals are practically extinct these days, but one place is holding the line: Chili's. The chain's CMO told BI why deals like the Triple Dipper and the 3 for Me combo aren't going anywhere.
In today's big story, the Fed is likely to cut rates again today, but don't bank on more coming after that.
What's on deck
Markets: This $19 billion hedge fund's old-school approach still relies on its founder's big bets.
Tech: AppLovin is a Wall Street darling, with shares up more than 780% this year. Can its incredible run last?
Business: How Sean "Diddy" Combs' professional and personal life crumbled amid a flurry of allegations.
But first, it might be the last one for a while.
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The big story
Here today, gone tomorrow
Getty Images; Jenny Chang-Rodriguez/BI
Enjoy today's rate cut because it might be the last one for a while.
The Fed is expected to make its third-straight rate cut this afternoon, but the certainties end there, write Business Insider's Ayelet Sheffey and Madison Hoff.
Plenty of people on Wall Street believe today marks the end of the Fed's three-month rate-cutting spree, writes BI's Matthew Fox. Yardeni Research and Goldman Sachs both warned the Fed might take a breather when it meets again at the end of January.
Apollo's top economist, Torsten Sløk took things a step further, suggesting a potential rate hike in 2025.
So what's giving the Fed … pause? (Sorry. I had to do it.)
First, inflation is still very much a thing. While prices have improved since 2022, we're not at the 2% target Fed chair Jerome Powell set as a long-term goal. It's also ticked up a bit, with the consumer price index hitting a 2.7% year-over-year growth rate in November.
Meanwhile, the recent jobs report also shows the labor market is in a decent spot.
Those figures aren't exactly where the Fed would like them to be, but they're also not so bad that the central bank would adjust rates after today's announcement to enact change.
Jeff Bottari/Zuffa LLC via Getty Images
One other factor has market watchers unsure about the Fed's next move: the incoming president.
President-elect Donald Trump has made clear he intends to make big changes once he's in office. Talk of widespread tariffs, in particular, has some investors on edge.
Many economists believe Trump's trade plans will lead to higher inflation, as companies raise prices to pass on the taxes they face to customers.
(It's not a bulletproof prediction. Trump implemented tariffs during his first term and inflation decreased, and some believe that could happen again.)
There's another twist: Trump might not do anything with tariffs. The president-elect's tough talk could be a negotiation tactic to get better terms from China, Canada, and Mexico on various topics.
All that uncertainty puts the Fed in a tricky spot. Powell recently said the Fed couldn't make policy changes based on something that "lies well into the future." Instead, it needs to focus on the here and now.
So that means a rate cut today, and who knows tomorrow.
News brief
Top headlines
- Luigi Mangione indicted on first-degree murder charge 'in furtherance of terrorism.'
- Nima Momeni, the man accused of stabbing Cash App founder Bob Lee in April 2023, found guilty of second degree murder.
- Biden backs congressional stock-trading ban with just weeks left in office.
- Amazon commits another $10 billion to Ohio data centers amid questions about energy costs and supply.
- Verily's plan for 2025: Raise money, pivot to AI, and break up with Google.
- Walmart is testing body cameras for some front-line employees in Texas.
- Nvidia stock's correction has accelerated since Microsoft's CEO hinted the frenzied demand for AI chips may be waning.
3 things in markets
Citi; Chelsea Jia feng/BI
- Some Citi employees review of the bank's annual review process: Not great! Citi uses a forced curve to evaluate employees, meaning managers rank employees from best to worst and there are a finite number of top ratings. Current and former MDs told BI the bank's promotion process can pit employees against each other. Here's how it works and why some people aren't a fan.
- In a sea of multistrats, Rokos stands apart. Unlike its peers, $19 billion Rokos largely relies on its billionaire founder making big bets. Its strategy starkly contrasts the rest of the industry, where diversified multistrategy funds rule the roost. Going against the grain has served them well.
- The best bet for investing in 2025, according to Morgan Stanley's top stock strategist. It's time to hit the gym (sort of), as Mike Wilson recommends a barbell investment strategy. That means a mix of high and low-risk assets, which could be a good bet with potential market uncertainty in 2025.
3 things in tech
iStock; Rebecca Zisser/BI
- SantaGPT. Artificial intelligence has been changing the e-commerce game. AI should make the process easier since it's more integrated into online shopping. But BI's Amanda Hoover found you still might have to lend the AI elves a helping hand.
- Wall Street is lovin' AppLovin. Mobile ads and gaming company AppLovin recently had its market value surpass the $100 billion milestone, and shares are up more than 780% this year. However, some ad industry insiders are skeptical about how long its run can last.
- A $3 billion AI startup added Stripe's CFO to its board. Vercel, which offers AI tools to developers, said on Tuesday that Stripe CFO Steffan Tomlinson was joining as a director on Vercel's board. Tomlinson has experience taking tech companies public, even though Vercel is early in its life cycle.
3 things in business
Getty Images; Jenny Chang-Rodriguez/BI
- Rapper unraveled. Since his rise to fame in the late 1990s, Sean "Diddy" Combs had built a business empire and become one of the richest and most well-connected entertainers of all time. But it all began to unravel when he was hit with a criminal indictment — which he pleaded not guilty to — and dozens of civil lawsuits. How his world fell apart in a year.
- Rich musicians got millions in pandemic relief — and American taxpayers footed the bill. Stadium performers like Lil Wayne and Chris Brown billed US taxpayers for luxury hotels, private jet flights, and shopping sprees. They did it by taking advantage of a pandemic relief program intended for smaller arts organizations, a BI investigation found.
- Don't trust that Zestimate. Zillow's popular automated home valuation is wrong. A lot. But Americans still love it — and that obsession is a big win for Zillow.
In other news
- The cancellation of 'Freaks and Geeks' broke Linda Cardellini's heart. It also taught her a valuable lesson.
- 56 million Americans don't have access to a retirement plan at work — and Social Security may not be enough to keep them afloat as they age.
- How Alex Karp built the 'cult' of Palantir — 'with no sex and very little drugs.'
- Wealth strategies that used to be reserved for billionaires are becoming more accessible.
Juror 'misconduct' battle brewing in Trump hush-money case.
What's happening today
- Federal Reserve interest rate decision.
The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Grace Lett, editor, in Chicago. Ella Hopkins, associate editor, in London. Amanda Yen, associate editor, in New York. Milan Sehmbi, fellow, in London.