Dear Trader,
Kevin Warsh has a tough sell this afternoon.
He needs to explain why the Fed’s holding rates with September CPI (the government’s main inflation reading) at 3.7%, a month after his committee hiked on softer numbers, and he has to do it less than a week before the midterms.
Traders give a hold nearly 90% odds at the 2 p.m. ET decision, but at least one big-name strategist thinks Warsh could hike anyway just to prove a point.
So Mark’s bringing Olivia Voz into the State of the Market room today. They’ll dig into the three stories below, and Voz will preview what she’s watching heading into this afternoon’s Fed live event at 2 p.m. ET.
If you trade anything that moves on the Fed (spoiler: that’s everything), you’ll want her take before the headline hits. Join Mark and Voz in the live room above, then come back at 2 p.m. ET for the main event.
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The Daily News Breakdown
SIREN: Fed Chair Kevin Warsh has to walk into a press conference this afternoon and explain why he’s sitting on his hands while inflation heats back up. September CPI hit 3.7%, wholesale prices jumped more than 6%, and core PCE (the Fed’s favorite inflation gauge) should top 3%. Traders still give a hold nearly 90% odds at the 2 p.m. ET decision.
The Fed hiked in September after a 0.2% core PCE print. September’s number should come in at 0.3%, so good luck squaring that one with the midterms less than a week away. JPMorgan’s Michael Feroli warns an unexplained pause invites questions about what’s really driving policy, and Ed Yardeni thinks Warsh might surprise everyone with a hike anyway.
SIGN: SK Hynix (SKHY) just posted a quarter that makes most tech companies look like lemonade stands. Revenue jumped 328% to about $78.7 billion, and operating profit soared 632% to roughly $62.7 billion. That works out to an 80% operating margin on memory chips.
Historically, memory booms lasted eight or nine quarters before the bottom fell out. This one just hit quarter 14, and Hynix says the AI memory shortage runs through 2030, with more than half its 2027 and 2028 capacity already locked into long-term contracts. It’s also handing shareholders another $45 billion, and the US-listed shares jumped 8% premarket after drifting near their IPO price.
SNEAKER: Vertiv (VRT) makes the power and cooling gear that keeps AI data centers from cooking themselves, and its orders just doubled from a year ago. Third-quarter sales hit $4.31 billion against Wall Street’s $3.76 billion guess. Adjusted earnings of $2.21 a share grew 78% and cleared the $1.82 estimate by a mile.
Management raised its 2026 sales outlook to $14.45 billion to $14.85 billion and now expects earnings of $7.10 to $7.20 a share, comfortably above the $6.73 analysts had penciled in. The customer list reads like a Mag 7 group chat: Alphabet, Microsoft, Nvidia and Amazon. The stock jumped 15% in premarket trading.