Bloomberg Daybreak: Asia Edition Fed Rate Cut Spurs Record Day on Wall Street
Sep 19, 2025
Shams Afzal, Managing Director at Carnegie Investment Counsel, shares insights on how Federal Reserve rate cuts have propelled U.S. stocks to historic highs. He discusses bond-market signals and the implications of escalating AI spending on corporate investments. Afzal also highlights the Russell 2000's impressive rally and suggests tactical investment opportunities in banking and tech. Additionally, Shuli Ren touches on the potential weakening of the dollar and how tariffs may affect global currency dynamics.
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Risk-On Rally Hits Records
- The Fed's quarter-point cut sparked record highs as money flowed into riskier assets like small caps and tech.
- Bond yields rising too suggest markets expect the economy to be allowed to run hotter, creating mixed signals.
Bond Market Tempering The Euphoria
- Bonds signal caution even as stocks rally, with yields up across the curve after the cut.
- The dot plot shows modest additional cuts this year but little change for 2026, tempering inflation/recession fears.
AI Buildout Could Avert Stagflation
- Massive AI-related data-center buildouts could meaningfully support GDP through 2026.
- That investment reduces the immediate risk of stagflation despite inflationary concerns from tariffs.