This time of year, in December as it gets colder outside, the stock markets begin to warm-up.
‘I hear turkey stock performs well this time of year’.
‘Prime Minister, you may wish to read my resignation letter before sacking me.’ ‘Was it something I said?’
Does the stock market think the Fed is going to start cutting rates aggressively any time soon?
Probably not, any time soon…
Observing the data available at CME FedWatch the stock market does not seem to expect the Fed to start cutting rates aggressively anytime soon, this opinion is based on the current pricing data of the fed-funds futures market.
According to the CME FedWatch Tool, the probability of a rate cut in the next FOMC meeting on 13th December 2023 is very low. It is likely interest rates will be left unchanged.
The market seems to expect the Fed will hold the current rate of 5.25% until at least March 2024, but will then gradually lower it to 4.75% by December 2024.
The market seems to be more optimistic about the U.S. economic outlook and the Fed’s ability to control inflation. The mood on rates has been buoyed recently with inflation data coming in better than expected.
It is highly likely that the Fed will have to cut rates more aggressively in 2024 and 2025 to stimulate the economy and avoid a potential prolonged recession.
Microsoft announces custom AI chip November 2023
Microsoft is working on its own artificial intelligence chip, code-named Athena, that could compete with Nvidia’s products.
The company introduced two new microchips.
The first, its Maia 100 artificial intelligence chip, could compete with Nvidia’s highly sought-after AI graphics processing units.
The second, a Cobalt 100 Arm chip, is aimed at general computing tasks and could compete with Intel processors.
The chip is designed for training large language models (LLM’s) like ChatGPT and powering AI applications. Microsoft has been developing the chip since 2019 using Taiwan Semiconductor’s 5-nanometer process. The chip is currently being tested by a small select group of Microsoft and OpenAI employees.
Long-term objective
Microsoft’s objective is to reduce its dependency on third-party hardware providers and to customize its AI infrastructure for its own projects.
Microsoft has invested billions in OpenAI, which makes ChatGPT, to enhance its position in the AI field. The Athena chip could also enable Microsoft to add AI capabilities to its Office products and GitHub, but it has already achieved this using the OpenAI system.
Microsoft has not announced when the chip will be available to the public or to its Azure cloud customers.