“The elements of good trading are (1) cutting losses, (2) cutting losses, and (3) cutting losses.” – Jesse Livermore.

1. Fed Cuts Rates With Three Dissents, Projects One Cut in 2026 — The Federal Open Market Committee voted 9-3 Wednesday to lower the benchmark federal funds rate by a quarter point to a range of 3.5%-3.75%. It also subtly altered the wording of its statement suggesting greater uncertainty about when it might cut rates again. When asked if it were a foregone conclusion that the Fed’s next move would be a cut, Powell demurred, but added that he didn’t see a rate hike as any official’s base case. Wednesday’s dissents and the rate projections highlight divisions among policymakers that have emerged over whether weakness in the labor market or stubborn inflation represent the larger danger to the US economy.
2. Some Republicans Break With Leaders in Healthcare Fight — A growing chunk of Republicans in both the House and Senate are breaking with party leaders and saying the GOP should extend expiring Affordable Care Act subsidies, seeing that as the only way to avert big cost increases for 20 million households next year and buy time for a bigger overhaul. Already, some GOP lawmakers have sponsored or signed onto bills that would extend the tax credits for one or more years, while including changes designed to crack down on fraud and limit eligibility to exclude higher-income households. They include Sens. Susan Collins (R., Maine), Jon Husted (R., Ohio) and Roger Marshall (R., Kan.)—all of whom are up for election next year—and vulnerable House Republicans like Reps. Rob Bresnahan (R., Pa.) and Mike Lawler (R., N.Y.).
3. US Trade Deficit Unexpectedly Shrinks to Smallest Since 2020 — The goods and services trade gap shrank nearly 11% from the prior month to $52.8 billion, Commerce Department data showed Thursday. The median estimate in a Bloomberg survey of economists was for a $63.1 billion deficit. Large monthly swings in trade this year related to US implementation of tariffs have introduced similar volatility in the government’s measure of economic activity — gross domestic product. The September trade figures will help economists fine tune their estimates for third-quarter GDP.

The week ahead — Economic data from Econoday.com: