Hello, TradeWatch readers — time to review yesterday’s market snapshot.

Fed’s Williams is signaling possible rate cuts due to labor market concerns, even amid persistent inflation. Meanwhile, Delta Airlines is soaring after solid earnings reports, a sign of strong consumer demand.

These developments raise a key question: can the Fed successfully balance inflation and employment, and is Delta’s success a sign of continued economic resilience or a short-term boost?

In today’s financial recap:

  • Fed’s Williams hints at rate cuts amid labor market worries

  • Delta reports robust earnings, projects strong year-end

  • Renewables gain traction due to AI energy demands

  • Trade tensions disrupt U.S. soybean exports

Fed’s Williams Signals Support for Further Rate Cuts

The TradeWatch: Fed’s Williams indicates backing for more interest rate cuts this year given a potentially slowing labor market, according to a recent interview. This stance balances concerns over inflation with the need to support employment.

Unpacked:

  • Williams told the New York Times that he anticipates lower rates this year, dependent on economic data aligning with expectations of around 3% inflation and a slight increase in unemployment.

  • The Fed is trying to balance its policy to lower inflation, which remains above the central bank’s 2% target, while simultaneously supporting a job market showing signs of weakness.

  • According to Williams, the current monetary policy is modestly restrictive and is helping to achieve the 2% inflation target on a sustained basis.

Bottom line: Williams’ statements suggest the Fed is leaning towards further easing, but the path forward depends on incoming economic data. The central bank aims to manage inflation without unduly harming the labor market, a challenging balancing act for the months ahead.

Delta Soars on Q3 Earnings, Projects Strong Finish to Year

The TradeWatch: Delta Air Lines reported strong Q3 earnings and raised its full-year guidance, sending airline stocks higher and signaling continued consumer resilience in the travel sector.

Unpacked:

  • Delta’s adjusted revenue for the quarter reached $15.197 billion, exceeding estimates and marking a 4.1% increase year-over-year.

  • Adjusted earnings per share (EPS) hit $1.71, surpassing expectations, with CEO Ed Bastian citing a “significant improvement” in the revenue outlook.

  • The airline projects full-year adjusted EPS of approximately $6, placing it in the upper half of its prior guidance, while also noting that corporate survey results show 90% of companies anticipate steady or increased travel volume in 2026.

Bottom line: Delta’s performance points to the sustained strength of premium travel and consumer demand. Solid financials and positive forecasts boost confidence in the airline sector’s ability to navigate economic uncertainties.

Renewables Stocks Power Up on AI Demand

The TradeWatch: Renewables stocks are experiencing a resurgence, fueled by rising energy demand from AI data centers and increased policy certainty, marking their strongest quarterly rise since early 2020s.

Unpacked:

  • Fund inflows are returning to renewable energy stocks as investors bet on increased electricity demand from Big Tech’s AI data center build-outs, reversing two years of bearish sentiment.

  • Clean energy indices, ETFs, and individual stocks have seen double-digit gains, with Bloom Energy, which teams up with Oracle to deploy fuel cells at data centers, becoming the biggest weight in the iShares Clean Energy ETF.

  • A shift from policy and subsidies to market-driven demand is shaping the renewable energy sector, requiring all forms of energy as cumulative new U.S. power generation demand by 2030 is expected to be largely met by renewables.

Bottom line: Renewables are no longer reliant on subsidies due to the major electricity demand coming from AI and tech; investors are seeing earnings momentum, particularly in companies that are deeply involved with AI, data centers, and grid development.

Trade Tensions Hit Soybean Exporters Amid China Dispute

The TradeWatch: US farmers are facing a financial crisis as trade tensions with China disrupt soybean exports, impacting commodity prices and farmer livelihoods. The dispute has led China to seek alternative suppliers, creating uncertainty for American soybean producers.

Unpacked:

  • China, once the leading importer of soybeans taking in 61% of the world’s supply, has halted purchases of American soybeans in retaliation for tariffs, causing significant financial strain on U.S. farmers.

  • Missouri farmer Brad Arnold notes that losing their ‘number one customer’ has huge impacts, as domestic alternatives like renewable diesel cannot compensate for the loss of Chinese demand.

  • The trade dispute could have long-term effects, as South American producers like Brazil and Argentina are likely to take advantage of China’s demand, potentially eroding the market share of U.S. farmers, especially without a trade deal.

Bottom line: The ongoing trade dispute requires a resolution to provide American farmers with a level playing field. Without dependable trading partners and access to global markets, U.S. farmers face increased financial risks and the potential for long-term market share erosion.

The Shortlist

  • Colgate-Palmolive continues to be a popular pick for analysts, recommending an earnings recovery into next year.

  • Apogee is pricing its public offering at $41 a share, aiming to raise ~$300M in gross proceeds.

  • Banco is launching a massive share repurchase program worth up to Ps.$225B.

Cheers,

— Michael & the TradeWatch.io editorial team