'Strongly Differing Views'
The latest from today's Federal Reserve meeting... The central bank lowers rates again... A December cut is 'not a foregone conclusion'... The AI spending spree's overlooked winner... Mailbag: More on AI, robots, and jobs...
A cut in the road...
As was widely expected coming out of its latest policy meeting today, the Federal Reserve lowered its benchmark interest rate by 25 basis points. That marks its second such rate cut in as many months, and it brings the federal-funds rate range to between 3.75% and 4%.
Also today, the central bank said it will stop trimming and begin freezing the size of its balance sheet on December 1. As we wrote at the time, Fed Chair Jerome Powell telegraphed this move a few weeks ago... It's essentially another form of economic juice – without lowering rates.
But beyond that, though, it's hard to say what will come next...
The Fed approved today's rate cut by a 10-2 vote by the Federal Open Market Committee. And the two dissents came for opposite reasons... which is a sign of likely more uncertainty about the economy and Fed policy to come.
Stephen Miran, President Donald Trump's hand-picked voting member for the rest of the year, voted for a bigger 50-point cut... just as Trump has called for.
Meanwhile, St. Louis Fed President Jeffrey Schmid dissented from the consensus, too, but because he thought the Fed shouldn't cut at all.
That's likely because Schmid considers the path of inflation to be either as big or a bigger problem than the state of the labor market right now. That's reasonable given the latest official inflation numbers are showing price gains above a 3% annualized rate.
The split reflects today's environment...
In a post-meeting press conference today, Powell poured cold water on the market's idea that the Fed will definitely cut rates again at its next meeting in December. Rather, Powell said...
In the committee's discussions at this meeting, there were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it.
That statement sank the major U.S. indexes, which had all been slightly positive most of the day. The most rate-sensitive small-cap Russell 2000 Index ended the day down roughly 1%, while the S&P 500 Index was flat and the Nasdaq Composite Index finished the day up 0.6%.
Powell warned that "we continue to face two-sided risks" as the Fed sets monetary policy. In other words, he sees threats to both ends of the central bank's dual mandate of "stable prices" and "maximum employment."
Right now, Powell sees a "gradually cooling" labor market (due to less immigration) and a chance of higher inflation (partly because of tariffs). However, he said he's becoming less concerned about the latter risk.
Still, with that backdrop, Powell said the Fed could skip cutting rates in December. Asked for some clarification on the "not a forgone conclusion" point, Powell said...
We've now moved 150 basis points [since starting to cut rates last year], and you are in the range between 3% and 4%, where many estimates of the neutral rate live... You are there now...
I think for some part of the committee, it's time to maybe take a step back and see whether there really are downside risks to the labor market... There was a sense, for some, let's pause here kind of thing, and a sense from others who wanted to go ahead. But that is why I say differing views, strongly differing views.
The market has been banking on one more rate cut by the end of the year and even more in early 2026. So Powell's "hawkish" tone, and his account of various opinions in the Fed meeting room, insert a dose of uncertainty.
Fed-funds-futures traders lowered their odds of a December rate cut to around 65% after Powell's comments today, down from around 90% yesterday.
Still, the picture isn't completely new.
First, Powell spoke of a "pause" at most, and not stopping rate cuts completely.
Plus, remember that a "low-interest person" is on the way to sitting in the Fed's head seat by May at the latest. We just don't know who it is yet. But Powell's term is about to end, and Trump will name a replacement who'll vote for rate cuts.
Powell wants to be cautious. But his choice won't matter for much longer.
Eyes on the 'Mag Seven,' too...
We wrote on Monday that today marked a big day for earnings reports... A trio of "Magnificent Seven" companies – Microsoft (MSFT), Alphabet (GOOGL), and Meta Platforms (META) – were set to report their quarterly financials after the market closed.
We'll have much more on these reports (and the market's reaction to them) in tomorrow's edition, but the quick story is that Microsoft, Alphabet, and Meta all beat consensus Wall Street expectations.
Notably, Microsoft and Alphabet cloud revenue grew 40% and 34%, respectively, but only Alphabet's shares rose in after-hours trading. Microsoft slipped on some apparent questions about planned capital expenditures, while Meta shares were down after the company also reported a one-time $16 billion tax charge related to the "Big, Beautiful Bill."
The AI spending cycle's under-the-radar winner...
On a related point, by now, you're probably familiar with Mag Seven's huge spending plans to ensure they're not left behind in the AI race (wherever it takes us).
Just these seven companies – Apple (AAPL), Amazon (AMZN), Alphabet, Microsoft, Meta, Nvidia (NVDA), and Tesla (TSLA) – have pledged to invest more than $300 billion in AI infrastructure this year.
Some of that spending is straightforward to analyze. Chipmakers like Nvidia and Advanced Micro Devices (AMD), data-center operators like CoreWeave (CRWV), and construction companies building new data centers are all obvious beneficiaries of this spending from Big Tech customers.
But there's one area of the great AI spend that's eating up more capital than any of those segments, and it's probably not what you think. Private-equity firm a16z posted the following data on the social platform X over the weekend, and we want to call your attention to the blue part of the bars in particular...
You'll notice semiconductors and servers (green and yellow) have seen a huge increase in spending versus 2022. But the biggest increase in the past three years went to heating, ventilation, and air conditioning ("HVAC") systems.
Stansberry's Investment Advisory subscribers heard it first...
Our Stansberry's Investment Advisory team first covered the investing opportunity in HVAC, as it relates to AI, in an April special report... then dove deeper into the subject in their May issue.
As Investment Advisory lead editor Whitney Tilson and his team wrote in that April special report...
America's nonresidential construction spending, which excludes single-family homes and apartment buildings, has reached an annualized rate of nearly $1.3 trillion. That's up from a pre-pandemic level of less than $900 billion. Even after adjusting for inflation, construction spending is up 25% in just three years.
As they noted, a lot of that spending is going toward new data centers to run AI models for Mag Seven companies. And as many people overlooked... HVAC systems are critically important to data centers. More from that April report...
These facilities have advanced cooling needs because computer servers run hot under intensive use.
In a computer, heat is the enemy of efficiency, and so cooling becomes, along with electricity, the key input into a data center.
In simple terms, for every Nvidia chip sold, there's additional cooling demand.
Alongside power outages, cooling issues are one of the biggest reasons for a data center to go offline. When an AI data center is down, AI companies can't run their models – so all that heavy investment is temporarily wasted.
So it's easy to see just how important HVAC systems (and spending) are to the ongoing AI megatrend – even if it's not the first industry that comes to mind.
This hidden HVAC role led Whitney and his team to recommend one company in particular...
That's Comfort Systems USA (FIX) – and, just over six months later, their recommendation is up big...
Comfort Systems is America's top installer of mechanical, electrical, and plumbing equipment. That leading position is great for the company. From the Investment Advisory team's April special report...
Comfort Systems specializes in big, complex projects where its well-earned reputation for design excellence lets it collect higher margins. It's not the company you hire to replace your home's air conditioner. It sometimes charges more than $100 million for a single job... like installing the HVAC system for a massive new factory.
And Comfort Systems has already carved out a huge market in technology construction. As the Investment Advisory team wrote, in 2024, one-third of Comfort Systems' revenue was in the technology sector. That was up from essentially zero in 2019.
That shift to grab some of the flood of money going into AI and technology has already paid off for shareholders. FIX shares have soared roughly 200% since Whitney and his team recommended them in April. That includes a 25%-plus jump just last week after a third-quarter earnings report that blew away Wall Street expectations and included news of a dividend hike for shareholders.
We're tipping our cap to the Stansberry's Investment Advisory team on this call...
And while FIX shares are now well above the team's recommended buy price, make sure you're following our flagship Investment Advisory. Whitney and his team are always on the hunt for investing opportunities and big winners just like this one...
And now is a great time to get access to the newsletter if you don't already have it. Subscribers (and Stansberry Alliance members) will receive a fresh recommendation in their monthly Investment Advisory in their inbox next Friday.
Click here to learn more and get started today.
New 52-week highs (as of 10/28/25): ABB (ABBNY), Altius Minerals (ALS.TO), Broadcom (AVGO), Alpha Architect 1-3 Month Box Fund (BOXX), Cameco (CCJ), Ciena (CIEN), Cisco Systems (CSCO), Western Asset Emerging Markets Debt Fund (EMD), iShares MSCI Emerging Markets ex China Fund (EMXC), Enel (ENLAY), iShares MSCI Spain Fund (EWP), iShares MSCI South Korea Fund (EWY), Cambria Emerging Shareholder Yield Fund (EYLD), Franklin FTSE Japan Fund (FLJP), iShares Biotechnology Fund (IBB), Lumentum (LITE), Mueller Industries (MLI), Microsoft (MSFT), Palo Alto Networks (PANW), ProShares Ultra Technology (ROM), ProShares Ultra Semiconductors (USD), Vale (VALE), and Vanguard S&P 500 Fund (VOO).
In today's mail, more talk about a future world filled with AI and robots – a hot topic in the mailbag over the last week... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"Clearly, the likely path of the future sparks a lot of discussion. We can all agree that technology has advanced and changed society for thousands of years, but I question whether we should liken AI/robotics to the technologies of the previous thousands of years. None of those technologies were intended to have a superior intellect (AI), or be able to replicate human movement and function (robots), or to marry those capabilities with the express intent to replace a very large percentage of the human workforce with machines that can think and act...
"AI/robotics seems to also be an unprecedented leap in technological capability. This raises the question of how a workforce of approximately 171 million people (US only for this example), would deliver value if they are replaced by AI/robots that are more capable of producing and distributing many products and services. Even with the example of podcasts, or sending emails, as ways to make money, that is a miniscule percentage of the workforce.
"Maybe a useful starting point would be a Digest article on current projections from experts, on what jobs AI/robots will dominate within the next 5/10/20 years. These are the individuals who can best articulate to what extent AI/robotics will be designed to displace humans from the current job environment. This would give us a more defined idea of what is 'missing,' and would still require humans in the workforce. Maintenance of infrastructure or humans is likely one area (for example plumbing, electrician, doctors/nurses, etc.) But we still need to be able to describe what 171+ million people would do to earn a paycheck. The lists I've seen on the internet so far are highly specialized and wouldn't come close to employing our large workforce." – Subscriber E.G.
Corey McLaughlin comment: Thanks for the note, E.G. We'll look to put together an analysis soon. It's of course a big topic. In the meantime, our colleague Steven Longenecker wrote some about this just yesterday on our Stock Market Trends website.
As you've likely heard, Amazon (AMZN) just announced plans to cut 14,000 corporate jobs, with some reports suggesting the company is planning 30,000 layoffs in total – while simultaneously talking up the potential of AI. In this context, Steven shared a couple industry projections about AI-related job losses, like this one...
Goldman Sachs says that AI can already replace 2.5% of the American workforce – that's more than 4 million employees. And looking ahead, it expects as much as 14% of the current U.S. workforce could ultimately be at risk within the next five years.
That would be roughly 22 million Americans... which would certainly make for a vastly different labor market than we have today, with winners and losers among it.
Check out Steven's full piece here, which also includes some advice on how to navigate these rapidly changing moves and put AI on your side.
All the best,
Corey McLaughlin and Nick Koziol
Baltimore, Maryland
October 29, 2025