| Dear Reader,
It’s a whole new year, with a whole new calendar including eight schedule meetings for the Federal Open Market Committee (FOMC) — each of which could come with a potential cut for the Fed’s benchmark interest.
But that doesn’t mean I’m expecting any rate cuts over these next few months.
Because the latest economic data seems to indicate the economy is actually roaring. And that means interest rates could be holding steady into the foreseeable future.
Click the video below for the full story in today’s episode of Moneyball Economics:  | 
The world's wealthiest individuals are making huge moves with their money.
Warren Buffett just liquidated billions of shares. Bill Gates sold 500,000 shares of Microsoft. Jeff Bezos filed to sell Amazon shares worth $4.8 billion.
What is going on? One multi-millionaire believes they are preparing for a catastrophic event. But not a crash, bank run, or recession. It’s something we haven’t seen in America for more than a century. For the full story, click here. | Video Transcript: I’m Andrew Zatlin, this is Moneyball Economics … and the topic today, interest rate cuts.
And no, I don't mean interest rate cuts this week. I mean the next round of interest rate cuts.
Because quite frankly, the markets are already gearing up for another round of rate cuts. It's kind of like giving a kid a piece of candy, they gobble it down and the hand's right back out for the next piece of candy.
Well, unfortunately, if you don't give the kid a piece of candy and they're disappointed, they tend to throw a temper tantrum. And that in fact is what I expect the markets to do. As we get into January and February, I believe they're going to be disappointed. I believe the economy's going to continue to firm up, turn a little bit more and more bullish, and that's going to point to delays in the next interest rate cut.
And when the market throws a tantrum, well, it's a great buying opportunity, a “buy the dip” opportunity. So what I'd like to do today is give you a little background on why I think the markets are going to be disappointed, why I think the economic data is going to be positive and maybe even what some things we should look for specific data points and when, so we can maybe time some of this temper tantrum right off the bat.
As you know, all year long I've been saying that this would be a solid year of growth in the stock markets.
And I've been saying that the fourth quarter is a quarter of transitioning where we're going from companies and businesses leaning back in their spending and hiring to leaning in.
Again, I'm not expecting much this quarter for various reasons that I'll talk about in a minute, but let's look at next quarter, the first quarter of next year. That's when I think the signs are going to become stronger, that the economy's taking off.
And joining me in this assessment is the IMF.
For example, if we were standing here in April of this year, the IMF was just full of doom and gloom in April. They thought the US economy, well, they said it was 2.8% growth last year. This year, 1.8%. Well, guess what? They revised that view. They're not saying, well, it could be closer to 2.1% and if that shutdown hadn't happened, it would be even stronger. That's pretty good.
In fact, they've got the same assessment for Japan and Europe. For example, standing in April, they thought Europe's GDP would grow 0.8%. Hey, it's now 1.2%. That's a big delta. What's driving all of this growth? Because today 2025 growth tells us what's going to happen with 2026. Well, 2025 in my assessment was pretty much a reaction to Trump.
Remember, Trump comes in and he's instantly cutting hundreds of thousands of federal workers. He's got DOGE in place, hacking all these billions of dollars of spending at the federal budget, and then we've got tariffs.
All these things. Companies did what they should do. There's a lot of uncertainty out there. So they froze hiring and they pulled back on spending. However, when we get to the second half, well it's a totally different picture. We're not seeing the inflation that export projected.
In fact, inflation's kind of trickling down and economy seems to be continuing to tick away regardless of what we're hearing consumers are spending. And on top of that, we bled off a lot of that extra inventory that was stockpiled. So the economy got very lean. There's no hiring. There was a lot of firing. So staffing is very lean. There's no excess inventory sitting on shelves.
In fact, companies are now at a point where they are concerned that they got too lean. You start throwing in economic growth, you start throwing in more demand. They don't have supply. And that's where we are in the fourth quarter. We are transitioning from companies leaning back to companies, leaning in. They're not going to hire, they're not going to do a lot of spending in the fourth quarter because they're winding down the year, which means all this demand that's out there will start kicking in next quarter.
Now added to that is what's going on in manufacturing. Manufacturing is really like a spring that's ready to release. The only reason it hasn't released has to do with the tariffs. There's still no agreement with China.
There's still a lot of uncertainty. However, they don't have a choice. Machines break down. They have to be replaced, equipment needs to be purchased. Inventories are winding down. And that's why I think next quarter we're going to start to see manufacturing come back to life.
And this is kind of a positive feedback loop. Manufacturing comes back. You start seeing growth there. You start seeing growth everywhere. Companies suddenly start to hire more. They start to spend more. You start to see, again, pressure to hire more now that we're seeing more spending and so on and so on and so on. Now you throw interest rates into the mix. We come into housing season.
All these things have a way of creating a lot of synchronicity and complimentary impact that shows more and more growth. So the factors that we want to watch are the ones that the market's fixated on. Obviously payrolls are going to be a big one out there this month. I'm projecting a pretty decent number north of a hundred thousand.
That's very different from what the expectations are. But nevertheless, if we see this month, we see next month and especially in February, if we see a firming up of the labor market, if we see payrolls holding at or around a hundred thousand per month, we could still see a rate cut, but it gets pushed out because again, the fed might say, look, the rate cuts we've done have been sufficient.
Now anything south of a hundred thousand, the markets are going to love anything north. They're going to start, well, they're going to throw that tantrum. So every month when the first week of the month, first Friday, when payrolls come out, be ready for a tantrum, play the volatility. Now having said that, I think the real effect is going to be February. And here's why We just got a rate cut. The next opportunity is late January.
Nobody is expecting a rate cut in January.
So when they get to February, data is going to start flowing in. All this spending and hiring behavior is going to start to kick in. But I believe February and more likely March is when the market's going to have a tantrum.
If payrolls are soft, if inflation starts picking up whatever we start seeing, that might delay a rate cut. Well, it's probably as we head into March when the market's going to throw that tantrum, when we're going to see that by the dip opportunity. And speaking of inflation, I continue to believe that it's going to be mild. I look at oil at gas prices as the major reason for that. And with that in mind, pay attention to both oil prices and inflation. And if you can't pay attention to CPI look at personal consumption expenditures. It's a great proxy for what's happening with inflation, but it also points to consumer spending, which I think is the third factor we want to start tracking. I don't mean retail necessarily.
PCE’s considered a little bit more of what the Fed's looking at with rate cuts, but payrolls, inflation, personal consumption, expenditures, those are the three things you want to look at. And they all tend to come out at the same time, and they're all looking back a month.
So the data coming out now immaterial, the rate cuts happen. Whatever data comes out between now and say January, it's just catching up. It's just bringing us to the end of the year. It's what happens in the new year that matters the most.
What happens to companies in January? Are they hiring a lot more now that we're in a new year? What happens in February? Well, now we've got trend. So with that in mind, look forward to catching up with you. Send me your questions. Anything you want me to talk about, we're in it to win it. Let's get out there.
Zatlin out. 
Andrew Zatlin
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