There's More Markets Pain Coming Soon: 3-Minute MLIV

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00:00Strong gains in stocks globally, U.S. into Asia, Mark, as a result of what the Fed rate cut theme.

00:07Does that live on? U.S. features have rolled over a little.

00:11Yeah, I think that the sell-off that we started in stocks about four weeks ago is still not fully exhausted.

00:18I know that's been a kind of repeated refrain of mine for the last few weeks.

00:22I understand why people are rushing to buy the dip very quickly,

00:25but it just doesn't feel like the pain in the digital asset sector has fully played out.

00:30And sure, there's not a direct transition, but that is weighing at the margin on some of those popular retail names

00:35and some of the most popular momentum stocks, and that is dragging on the sector.

00:38I don't expect a major pain, and as we've talked about a lot, I think the AI bubble will continue to inflate very, very strongly into 2026.

00:48I am just not convinced they're ready to get right back on the bubble bandwagon already.

00:51I think from here until Christmas will continue to be difficult and not the usual Santa rally.

01:00Does it matter, though? AI, yeah, that's obviously a huge market theme, but as long as the Fed's cutting, who cares?

01:06I think that ultimately the AI theme is much bigger.

01:13It's, you know, it is what drives the U.S. economy.

01:16It's driving all the biggest valuation stocks in the world.

01:19So for markets, the AI theme matters much more.

01:22It is true that at the moment, you know, there seems to be a very outsized reaction, surprisingly so,

01:28to small moves on whether the Fed cuts by 25 basis points or not in December, which seems kind of ridiculous.

01:34I actually think that, you know, Powell's got the votes to probably push through a cut at the margin.

01:41I think that's the way we're going, and that will help the stock market.

01:44But that's not coming for, I think it's three weeks from today.

01:48So, you know, they've still got quite a bit of time.

01:49Sorry, two weeks from today.

01:51So you've still got, until then, I think it's going to be tough for stock markets.

01:54And I'm not sure that's going to be the game changer that people are looking for.

01:57Mark, does a cut in December mean a cut in January?

02:04No, I don't think that's necessarily the case.

02:06I mean, clearly, if they cut in December, it's going to be super, super debated.

02:10And as I said, I understand the uncertainty out there.

02:14If you ask me now, I think it's more likely they will just about cut in December.

02:18But there's a lot of data coming in, you know, between today and tomorrow before Thanksgiving that might help kind of clarify that.

02:25But I think that even if they cut, I think it will remain very, very difficult to have kind of consensus behind it,

02:33which means we don't necessarily follow through.

02:35The overall theme, though, going into next year is that we know this.

02:38We've known this for a while, that the Fed is going to provide easier monetary policy than orthodox economics would suggest.

02:44And that is supportive for the stock market.

02:46Growth at the moment seems to be holding up OK, but driven by the AI CapEx boom.

02:51If the AI CapEx boom blows up, then the economy is not robust enough to hold up because it is a K-shaped economy.

02:58And that's why, ultimately, it is the AI theme that dominates absolutely everything else out there.