Fed Decision Preview, Cohere CEO Interview, Clarity Act Vote 9/15/26

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Keith Lansford (0:36)

I'm your host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com/marketupdatepodcast, or find Schwab Market Update wherever you get your podcasts.

Brian Sullivan (1:05)

The 10-year yield just touching its highest level in nearly 20 years. A good reminder, the bond market, not just the Fed, is driving your investment conversation. Welcome to Power Lunch, everybody. The big question for your money right now, is a Fed hike all but a done deal? This is Oil Pops again on some new reports around Saudi Arabia you have to hear.

Kelly Evans (1:24)

While MegaCap Tech still dominates the headlines, we'll look beyond the AI trade. Healthcare and energy have their own powerful catalysts, from earnings and innovation to commodity prices and global supply. Evan Seagerman of BMO Capital and Tyler Rosenlicht of Cohen and Steers are here with their best ideas.

Brian Sullivan (1:41)

All right, big hour ahead. Let's start with the markets and your money. That Fed decision is now less than 24 hours away, and the market is all but betting and beating the Fed over the head with we demand an interest rate hike. Don't believe us? The CME FedWatch tool now put in the odds of a quarter point interest rate increase at 92.5 percent. But as big of a deal as that is, your next guests say the Federal Reserve decision tomorrow may not be the market's real problem. They're watching a 5 percent 10-year yield, oil over 100 bucks a barrel, and a lot more. Let's bring them in. Onset, Julian Emanuel, he is Senior Managing Director of Equity, Derivatives and Quant Strategy at Evercore ISI.

Also joining us, Robin Brooks, Senior Fellow in Economic Studies at the Brookings Institution. He has been all hot on the debt story lately. But Julian, I'm going to start with you. September is historically the worst month of the year for the stock market. The market is down this month, but given oil at 105, given a 5 percent 10-year, given an interest rate hike, given increased problems in the Middle East, I'm actually a little bit surprised the market isn't down more.

Julian Emanuel (2:50)

It really is trading very well. And look, if you look at it, the bull market turns 4 next month.

It has been a constant push-pull between stress macro moments and earnings brilliance. And I mean, we just came off of a quarter, which you may end up clocking close to 50 percent earnings growth. And even if that's the peak, which it likely is and who cares, that's 50 percent, is that next year's earnings trajectory still looks good. The market's in that push-pull and earnings have kept stocks in afloat.

Brian Sullivan (3:24)

So it's like a tug of war. You got one giant guy, that's earnings on one side of the rope, and then you got a couple of smaller people on the other side. Right now, that earnings guy has been winning, has been pulling that rope to the winning side. Is there a point here close, Julian, where it flips, where earnings don't matter as much as the other stuff?

Julian Emanuel (3:44)

So in our view, you are at the point in terms of both the 10-year yield and the oil price where we are on high alert. What breaks the tie and which way the rope goes is the signals that we're going to get from the credit market. Credit has been remarkably buoyant given the fact that you've had competition from the US running the $40 trillion deficit, the rest of the world, of course, and then the hyperscaler issuance, which is slated to be large in the fall.

So far, so good, but that is where the critical links lie.

Kelly Evans (4:21)

You know, just going back to the kind of fallout that we could see from rate hikes or not rate hikes, it's been, I think, three years since the last rate hike. We've had six rate cuts since then. So is that the end of that cycle and the beginning of a different one?

Julian Emanuel (4:34)

It's the beginning of a different one. And this won't necessarily be those large scale 200 and 300 basis point hikes. And in fact, if anything, the almost four hikes to the end of next year might be slightly lower. But it is a new paradigm. And the fact that the market actually wants a hike and we think they're right in wanting hike tomorrow tells you you're in a new.