Thankful for Data: AI Momentum, Rate Expectations, and What’s Driving Markets Now

Hello and welcome back to another episode of blue Chip. Now you have Daniel Dossena, chief investment officer, my new senior financial advisor and then senior managing partner. We are recording this on the morning of November 24th, 2025. It’s a Monday, so a happy early Thanksgiving to everyone or a happy belated Thanksgiving if you’re listening to this after, I think the only reason I’m calling out the date is because some of the items we’re going to talk about might be important to understand the framing.

So without further ado, I’ll tell you the topics and maybe that’ll allude to why timing might be important here, but a few different topics today. As usual, we want to start with the equity market. Talk a little bit about artificial intelligence. Some of the things that are driving the equity market right now, including fed cut, optimism and then some company specific items.

Next topic we want to talk about the Federal Reserve, alluded to rate cuts, but also want to talk about potential risk of investment professionals over anticipating rate cuts and what that might mean for different assets. Third topic, we want to talk a little bit about cryptocurrency, specifically Bitcoin. We’ve seen a fair amount of volatility in the space.

And we’ve also seen a fair amount of outflows related to vehicles that participate in that space. So just want to unpack that a little bit. And then finally we’ll end with some some talking points on international markets. We’ve seen international markets perform very well year to date. And more recently we saw international markets tick up on, some of the progress related to reopening of the U.S government.

So let’s jump into it. We’re going to start off with the US equity market. So specifically as we look at, the back end of last week. Friday, November 21st and leading into this week, Monday, November 24th, U.S equities have kind of charged higher with alphabet actually leading the rally. Boosted by its excitement around its new Gemini artificial intelligence model.

The surge has kind of been underpinned by growing investor expectations that the Federal Reserve will cut interest rates in December. So that was a very noticeable shift, last week. So think the back end of November here, that we’ve started to see play into into market performance. And I would say that optimism, however, does come amid some semblance of a tug of war.

You’ve got some officials from the fed warning that too many cuts could destabilize the financial system. So why this all matters right now is you have a portion of the market in artificial intelligence that is driving a massive portion of the equity upside, but at the same time, the macro backdrop, you know, think interest rate policy and other items is deeply influencing investor sentiment.

So we’re in this this tug of war type market environment right now. You know, I think it’s kind of interesting that, you’re out there, on most of the financial media is about an AI bubble. And we’re talking about, you know, everybody in there, the brothers, you know, predicting AI bubble, talking about their AI shorts, shorting this company, shorting that company.

And at the end of the day, what we’re seeing is when these companies announce earnings, they’re executing, so they continue to, you know, push the proverbial bubble out, I guess, because, you know, majority these companies from Nvidia and Apple, you know, alphabet, not Apple. Alphabet, these companies continue to crush in on what they’re doing and they’re spending it is all seemingly at this point, justified.

And they’re making money. So these aren’t you know, I really think people need to I think a lot of what you hear right now, you associate tech, you associate bubble with 2001 could not be more different. Yeah. So so I think people really have to separate those two. They’re not the same. These companies have diversified, relatively diversified revenue streams.

And they’re making money irrespective of if they’re investing in AI or not. What’s a very helpful point to call out, Matt? I mean, you can’t really compare what’s happening right now to 2001 because the companies that were driving upside during the tech bubble were not profitable. By and large, it’s dramatically different than what we have today in 2000.

A lot of those companies probably had no business going public. They just weren’t businesses. They were ideas. Right? Whereas today the companies that are leading the market higher are incredibly profitable. They are experiencing a surge in in CapEx dollars that have fund funded their businesses. And that’s just a trend that I don’t envision going away anytime soon. You can see the production show up in other items like, industrial production that are deploying a wealth of resources towards data center build out and power generation, build out that all feed these artificial intelligence players.

So to call it a bubble, I think is a little bit disingenuous, because it’s not like the movement in these stocks is unfounded in data. Right. So all right. We’ll talk about the fed. And I know we kind of just, alluded to it a little bit, but, second topic, you know, you’ve got the fed right now in this precarious position where the government was shut down and there wasn’t a wealth of data that was coming out with regards to the labor market and inflation.

And you’ve got now the talking heads, that have come out and are very much split in terms of the short term trajectory of interest rates. So, for example, Beth Hammack, president of the Cleveland Fed, cautioned that further rate cuts pose significant financial stability risks. Her concern centers on risky lending leverage and distorted pricing. If borrowing remains very cheap, her views signal a split within the fed, suggesting that not all policymakers are on board with aggressive easing.

So why this matters is, is really that if financial stability concerns constrain future rate cuts, markets that are banking heavily on dovish fed policy, meaning further interest rate cuts in the short term might be disappointed. And I would say, you know, maybe just to to blend this in as well, you’ve had Vanguard kind of come out in support of this argument.

Saying that Wall Street just as bluntly too optimistic. Vanguard’s fixed income team argues that markets are overestimating how many rate cuts the fed will do, whereas some traders, as it stands today, expect 3 to 4 rate cuts by the end of 2026. Vanguard is predicting only 1 or 2 more, citing strong economic growth, especially driven by that theme.

We just talked about AI investment, and they’re also pointing to rising corporate debt issuance, particularly from tech, as a potential pressure point in credit markets. So just to tie a bow on this, if Vanguard is right, markets may be mispricing future monetary conditions, which could lead to volatility when reality sets in. I tend to agree saying I feel like the the futures market always overestimates the number of cuts or it happens often.

So my, I would take the, Yeah. You know, it’s funny though, I can see, you know, from a layman’s perspective, you, you’ll sell this like, wait a second. So if growth’s good and we might get more volatility. So growth so good that we might not get as many rate cuts. And that’s somehow really bad for the markets.

And you know I think that’s interesting. You know we’ll see. Right. Like you know these things are you know believe it or not really far out. And it’s going to matter, you know, what kind of, path it takes if the economy strengthens and, and inflation, you know, remains, you know, remains low. I mean, we might kind of be where we’re at, which isn’t a bad thing.

Now, I know, I know the the political environment is heated and there’s a strong divide between the left and the right. And so often we’re talking to investors who do bring their political view into their investment thesis. The reality is the fed is way more influential in the direction of monetary policy, is way more influence on the markets than any political matter.

Now, while political matters do influence, particular sectors or they can influence the markets. This is really important stuff that we’re talking about. This is market moving stuff that we’re talking about. So, the the direction of monetary policy and whether the fed cuts more or less is meaningful. I don’t I it’s, it sure feels like the, the wheels would have to be falling off the economy for the fed to cut four times.

Yeah. I agree with that. Yeah. I think are things that bad. No they’re really not. And that’s the whole point. I mean, I think a lot of folks got worried because of some of the weakness we saw in the labor market through late summer. And then we get this pause in data where we have no semblance of readings on the labor market.

And, you know, we have a claw back data point that just came out. So we just got jobs data, for the U.S. for the month of September. And it was actually surprisingly good. So though too, there were some articles I read this weekend, that I found fascinating. They talked about the labor market and how the Fed’s faced or potentially going to be faced with higher unemployment but high productivity.

Right. So so you’re going to still have, very, you know, you know, reasonable, let’s say, real GDP growth. And you might have a little bit higher than what you would anticipate unemployment with that. Yeah. Yeah. And so like I think to your point, Dan, the wheels are not falling off. GDP growth as we understand it right now is still very healthy.

You have wage growth that still remains in a good spot and we’re still adding jobs. It’s not at the 250,000 a month clip that we are used to, but to be adding 100 and that 100,000 plus jobs. You know, to me that does not warrant anything close to pricing. And for rate cuts, I view it as an insurance policy.

So let’s just say Vanguard’s right. And there are less cuts than that and more of that cuts. Well, and if economic data comes out and it’s really bad while the fed has dry powder correct. Room to do more should they need to do more. But I think the base scenario or the if I’m a betting man I would take them.

And let’s also you know I’m not I am by no means a conspiracy theorist, but this is great chatter from the fed amidst a market that setting all time highs and is being led by technology to be kind of to be the wet blanket, so to speak, and really kind of help regulate maybe some of the greed or, momentum in the market isn’t necessarily a bad thing.

Well, as as we were going through this, I’m thinking to myself, how does the fed coordinate who goes out and says, why is there any, rhyme or reason to who? Because I would, I would think there should be some type of policy, you know, because what you don’t what you don’t want is members going out and and talking opposing views.

But I feel like that happens a lot. And then the market gets this, getting this tug of war. What who do we believe in, you know, are things more hawkish or or dovish than we expected. But but it’s great because it allows the markets have a real, release valve. It can let some steam out, you know, as pressure builds in the system.

So these things end up being I wouldn’t be surprised if they’re coordinated, but they end up being, you know, I would say likely healthy for the market. Yeah. Okay. Last two topics. We’re going to do bitcoin and then talk a little bit about international markets. So where we’re at right now we have Bitcoin ETFs that have bled about $1.2 billion amid rising macro risks.

If you look at U.S spot Bitcoin ETFs, they saw about $1.2 billion worth of outflows in one week. So that would have been the week starting November 17th. And that’s one of the largest on record. November’s cumulative outflows as of this recording are nearing 3.8 billion, which signals a bit of a shift in crypto risk appetite.

The pullback right now is being attributed to that weaker rate cut expectation environment from the fed and just generally broader macro concerns. You have some analysts that are warning that the drop could spark deeper structural stress in crypto markets. And I think the reason that this matters is because big ETF outflows generally suggest even institutional investors are starting to cool on crypto, which adds another layer of risk to macro sensitive digital assets.

One interesting spin on this I was actually talking about this, with our analyst Vince Parekh last week that, Bitcoin and cryptocurrency in general is an asset class where you’re you’re probably likely to see a little bit more leverage implied applied. So people bought buying these items on margin as these assets decline and individuals need to deposit cash or come up with cash to cover some of those positions, that could have explained some of the equity market volatility that you saw through the month of November.

That’s not founded in any, you know, certain data. But that is just an interesting, I think, assertion that we were talking about last week or that. And one other thing I want to say about Bitcoin or cryptocurrency. What does big call or what doesn’t bitcoin have? The public equity markets have earnings, right. So Bitcoin doesn’t have as you have really nothing on a relative basis to compare price against.

So who trades bitcoin or who invests in bitcoin. A lot of times it’s the technicians. It’s the market technicians that are looking at the charts. And I would say a critical technical level like the 200 day moving average was broke mid November. Right. So so there’s a lot of momentum at play where when asset class like Bitcoin starts to sell off, everybody jumps on board and no one wants to be the last one out the door.

And so, you get this massive selling and then eventually something like Bitcoin will be oversold and you’ll, you’ll find a bid at some point of polarity down the road. But but I think there’s also some momentum at play. Yeah without a doubt okay. Let’s wrap up with some chatter on international markets. So over the last couple of weeks you’ve had European equities soaring on U.S shutdown progress.

Meaning as the the chatter around the government shutdown started to turn more favorable in terms of reopening the government, you’ve had European stocks perform relatively well. Specifically, European stocks rallied very strongly after you got signs that the US government shutdown was nearing resolution and that I think, just in general, started to boost some risk on sentiment. So the Footsie 100 hit a record high, while the pan-European STOXX 600 was led higher, specifically by the financial sector, which is a much larger percentage of of international markets than I would say in the US.

According to one market report, tech valuations are starting to be reexamined as well. And defensive flows are emerging in some pockets as investors digest both macro and geopolitical signals. So that’s just a long winded way of saying investors are kind of reassessing positioning in portfolios, maybe taking some profits from some of the big winners that are more growth oriented, like U.S tech, and shifting it over to some call it more defensive, undervalued areas like European financials, for example.

So I think why this matters is just improved political stability in the U.S, right now is giving global markets a little bit more breathing room. And for Europe in particular, the rally that we’ve seen recently underscores how interconnected fiscal politics and equity markets really are. And how a relief in Washington can actually ripple across the Atlantic. Yeah.

I mean, it’s interesting that international markets have outperformed us their day in the sun right now. You know. Yeah. When our most advisors, you know, investors comfortable holding international when it’s outperforming. Right. It’s been a super easy market to underweight the past you know really since the financial crisis. Right. But what of what do international markets lack exposure to attack.

What do you domestic reported the domestic U.S. markets have. They have a market cap space environment. Where now what’s the number that we talked about this morning that ties to the mag? 738% of the year, correct? Yeah, it’s a huge portion. So what’s the technology exposure in international indices? It’s it’s nowhere near what it is here in the United States.

So the ability for the international markets to adapt over the years I think has hurt international markets. So if you see, I think there’s a correlation, if you see a period of tech, a period where tech stocks lack, lag and you’re going to see international markets do well, I mean, I think that’s really what it is.

This is this comes down to the tech exposure. Yeah. No, it for sure does I mean that’s where a lot of the innovation is coming from. Obviously. It’s also where a lot of our at least as a country earnings power is coming from. But at the same time there’s, you know, as you get sentiment shifts and more value oriented investors come into play, you know, it’s not surprising to see international markets have a strong year, especially as the dollar has weakened.

All right. Just as a recap, we talked about artificial intelligence optimism, how that relates to some tech stocks and plays into, some of the movement we’ve seen lately talked about, some of the risks that are present today with regards to the Federal Reserve easing too fast, or at least expectations that are pointing to the fed easing much quicker than I think is realistic.

Then finally talk a little bit about Bitcoin. Talked about the environment that we’ve seen there with regards to some outflows and then finally ended with international markets. It’s been a strong year. Is there anything else to add before we wrap guys. No I don’t but that’s awesome okay well thanks again as always. Yeah happy Thanksgiving. We appreciate as always you guys joining us for another episode of blue Chip. Now we look forward to speaking with you all again soon