Latest / Markets with Megan: A Quick Financial Markets Update / AI Spending Is Booming. Will the Fed Raise Rates?

Transcript

AI Spending Is Booming. Will the Fed Raise Rates? · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: The CapEx spending continues to support GDP.
• 0:03
  Megan Horneman: It's Friday, September the 25th, and this is Markets with Megan.
• 0:06
  Megan Horneman: If you like this podcast, you can subscribe, hit the alarm bell, share with your friends, family, colleagues, anybody who's interested about that economic data, what it means when we hear it.
• 0:16
  Megan Horneman: What does it mean for the markets?
• 0:17
  Megan Horneman: What does it mean for the economy?
• 0:18
  Megan Horneman: Well, this morning we received the durable goods orders for the month of August.
• 0:23
  Megan Horneman: And keep in mind that these are subject to revisions, but this was a really good report underneath the surface.
• 0:29
  Megan Horneman: Headline orders were basically flat, and that's because it included aircraft orders, and they saw a pretty big steep decline in the month of August.
• 0:37
  Megan Horneman: That was because Boeing on Boeing orders.
• 0:39
  Megan Horneman: But when you strip out those the volatile items like aircraft and defense, we saw a really nice um uptick in those orders.
• 0:47
  Megan Horneman: They were up over 1% for the month of August.
• 0:49
  Megan Horneman: And when you look at this on a year-over-year basis, they're up 14.8%.
• 0:54
  Megan Horneman: You have to go all the way back to levels that we saw after in the aftermath of the COVID disruptions to see these types of annual growth numbers.
• 1:03
  Megan Horneman: And most of this is in things that are related to CapEx spending in the AI.
• 1:08
  Megan Horneman: So you're looking at things like metals, machinery, computers, electrical equipment, continues to see a lot of spending there.
• 1:15
  Megan Horneman: This is very good for third quarter GDP.
• 1:18
  Megan Horneman: The Atlanta Fed gives a third quarter GDP number.
• 1:21
  Megan Horneman: It's called the Atlanta Fed Now, and it does change on a regular basis as we get incoming data.
• 1:27
  Megan Horneman: Well, today we're looking at GDP for the third quarter, tracking it over 5% on an annualized basis.
• 1:32
  Megan Horneman: Again, that's subject to change as we get more economic data, but right now we're looking for pretty solid economic growth in the third quarter.
• 1:39
  Megan Horneman: So, what does that mean for the markets?
• 1:41
  Megan Horneman: The equity markets are up today.
• 1:43
  Megan Horneman: There's some a little bit of relief in the energy market because there is some talk, there is some rumors that there's talks between Iran and the U.S.
• 1:50
  Megan Horneman: going on right now.
• 1:51
  Megan Horneman: We've gotten a little bit of reprieve in the sell-off in bond yields.
• 1:54
  Megan Horneman: So equity markets are taking that with stride.
• 1:57
  Megan Horneman: And again, this is really good economic data.
• 2:00
  Megan Horneman: It keeps the Fed on the table to raise interest rates in October.
• 2:03
  Megan Horneman: We still think that they will.
• 2:04
  Megan Horneman: This is really solid economic data where the Fed's got to be careful of what this can mean for inflation.
• 2:10
  Megan Horneman: That's all we have today.
• 2:11
  Megan Horneman: If you want a history of our podcast, you go to marketswithmegan.fm.
• 2:14
  Megan Horneman: Thank you.