FedWatch's Ben Emons forecasts gradual Fed rate cuts in 2026

Brian Sullivan (Anchor) 00:00.040

Bring in Ben Emmons. He is founder and chief investment officer at FedWatch Advisors. Ben, I saw you on the other screen sort of listening intently to our industrial metals discussion. It kind of all rolls into the Fed, which I think, correct me if I'm wrong, will be a big part

Brian Sullivan (Anchor) 00:18.400

of the discussion in the first half of 2026. What is your expectation for? Well, everything.

Ben Emons (Founder and Chief Investment Officer) 00:27.680

That is right, Ryan. I think that it's really the Fed drive a lot of it initially because you know we're going to get a new fat chair announced. And we're going to get the Lisa Cook case, you know, some sort of resolution on that. And then we have the FOMC meeting. And we have

Ben Emons (Founder and Chief Investment Officer) 00:40.360

the market price not immediately for rate cut. So there's a lot pending up there. And I think to the discussion about gold, you know, one other reason why gold is up so much is is the fact that the moment that that came out with this is meeting in December, gold just took off.

Ben Emons (Founder and Chief Investment Officer) 00:55.800

And that was actually also related, I think, to the real interest rate, the funds rate the account inflation, that continues to slowly to decline. That's not a big power by gold. So this it is the fact that's driving here a lot with also its liquidity that's restarted too. Like

Ben Emons (Founder and Chief Investment Officer) 01:10.240

we're we're going to get a report today that shows the Fed's balance sheet is continues to expand. So I think this is not a big story next year, Brian, that as that balance he starts to expand, it will affect broader markets.

Brian Sullivan (Anchor) 01:21.680

Will the We're going to get the announcement at some point on who the next Fed chair nominee because they've got to be confirmed will be. We've narrowed it down Steve Leespence done a great job. There's four or five really sort of final candidates. Do you care? Does the market

Brian Sullivan (Anchor) 01:36.480

care? Is there one candidate, one of the two Kevins, a Rick Reader maybe, somebody else that would be better or worse for the equity markets?

Ben Emons (Founder and Chief Investment Officer) 01:47.840

Well, I think there's an interesting take to to to give there, right? Because the big Rick Reader, right? I mean he he's like us. He's a portfolio manager. He's a trader. You know, someone with that type of background when he was talking to Scott Warner on one of his interviews.

Ben Emons (Founder and Chief Investment Officer) 02:02.720

He's really talk about like how to use the balance sheet in a more creative way to stimulate the economy and affect that for the markets. So he could be a really good friend of the markets. But when in the case of Kevin Warner, Kevin has it, that's a very different story. Think

Ben Emons (Founder and Chief Investment Officer) 02:18.040

back of April when Kevin Warner was out there on the wire saying that the administration is looking to remove Powell, you know, the market really generated on that against Kevin Warner, who's very much against QE. He's not very very strong about this balance sheet expansion. So,

Ben Emons (Founder and Chief Investment Officer) 02:32.520

I think the word still out on how the market will respond to who will be announced next. I think Rick Reed is truly a friend of the markets. Kevin and Kevin, that could be a different story.

Tim Seymour (Founder and Chief Investment Officer) 02:44.400

Hey Ben, so let's talk about this dynamic of also the political cycle and just where you think that the need to be politically in vogue, which means actually stimulative is something that will also push pressure on gold. down in the dollar, but ultimately be limited back to the

Tim Seymour (Founder and Chief Investment Officer) 03:02.800

Fed who may be at least more influenced at this point going into midterms. I saw your notes, I think it's fascinating and I think it's part of a cycle that says some of these trades that we're just talking about are going to continue. And also a steeper yield curve. Curious what

Tim Seymour (Founder and Chief Investment Officer) 03:17.520

you think also why the curve is steepening and the way it is. I understand a bull steepening from the short end because of lower rates, but we're also not seeing the long end come down in any way.