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Curse and Coffee friends,
Today, we explore the possibility of a Fed rate cut in December.
Hit reply and let us know what you think (we read all of your kind words).
Coffee at the ready…
The Big Sip
The take: The Fed will make its December rate decision without October's inflation data. Markets rallied anyway.
What happened: US stocks rose for a third straight day on Tuesday after one Fed official hinted at a rate cut.
Why it matters: Rate cut odds jumped from 30% to 83% in five days. No new jobs report. No inflation data. Just one speech.
What to watch: December 9-10. The Fed decides rates. The October CPI report is still missing. Nobody knows what inflation did last month.
Last week, the S&P fell 2% on "bubble fears." This week it's up 2.5% on "rate cut hopes."
Sponsor Break
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Here’s Your Brew
The wild part: the government shutdown killed the October CPI report. It was never released.
The Fed meets in two weeks to decide rates, and they're missing the one number that tells them if inflation is cooling.
Markets don't care. They heard "near term" and bought everything.
Meanwhile, the real power shift got buried.
Nvidia fell 7% intraday on Tuesday. The reason: Meta is in talks to buy billions in AI chips from Google. Not Nvidia. Google.
Google has made its own chips for years. Now it wants to sell them. If Meta bites, others will follow.
Amazon already has Trainium. Microsoft just backed Anthropic. The hyperscalers are tired of paying monopoly prices. They're building their own supply chain.
Nvidia still controls 80-90% of the AI chip market. But its biggest customers are now its competitors. That's a business model under siege.
The rate cut story will dominate headlines.
The chip story will dominate the decade.
Two Sides, One Mug
Image: Morningstar
Pro: A cooling job market justifies cutting rates now, and waiting too long risks a recession nobody wants.
Con: Inflation is still above target. Cutting on vibes alone could reignite the fire that the Fed spent three years putting out.
Our read: When the data is missing, hope fills the gap. Hope is not a strategy. It is, however, very tradable.
Receipt of the Day
Morningstar: A December Rate Cut Looks Likely—Again
The complete timeline of how odds swung 53 points in five days. Key fact: October CPI was never released. The Fed is making a trillion-dollar call with incomplete data. That's not confidence. That's improvisation.
Spit Take
Rate cut odds: 30% → 83%. New data released: zero. CME FedWatch
Your Coffee Break Links (and water cooler chatter)
☕ Fortune: Suddenly, a December cut looks back on — One speech. 72 hours. Complete sentiment reversal. That's how fast "January at the earliest" became "December is locked."
☕ CNBC: Nvidia falls on Google-Meta chip report — Meta may buy Google's TPUs instead of Nvidia's GPUs. If this deal happens, it cracks the monopoly everyone assumed was permanent.
☕ Yahoo Finance: Alphabet races toward $4 trillion — Up 70% this year. Now bigger than Microsoft. Last week: AI model underdog. This week: chip supplier to Facebook. That's a plot twist..
Join your team of caffeinated skeptics. ☕
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You can read yesterday’s newsletter on Claude Opus 4.5 here.
For the love of coffee, see you tomorrow!
Enjoy your Wednesday, keep it caffeinated.
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