How significant is today's Fed decision for the technology sector? I think it's definitely very important for the tech sector as well as the entire market. I think that if the yields keep moving higher, as we've seen here as of late, then that's negative for technology. And technology is rallying on the anticipation that we're going to get 50 basis points from the Fed today. If that doesn't occur, I think that that's going to put this rally in technology at risk. There is a part of the Meg seven story Meg and where those names are performing in isolation of everything else that's happening in our world because of the commitment to invest in the infrastructure supporting AI. How closely tied to the two stories that and central bank policy. Well, I think central bank policy. And then there's the story around technology. They're separate things. You know, the infrastructure with tech, with technology, the advancements that

We're going to see, this is going to evolve over time. But the valuations that you're seeing on these stocks are linked to interest rate policy and as well as yields. If this interest rate policy does not deliver with what we're in, with what these heightened valuations are anticipating, then you're going to see some valuation correction in these names. Is that limited to the big caps or more broadly across technology in and of itself? Megan. I think it's broadly across technology and even some of the communication services. Any of these growth-type of names that you've seen and with these very high valuations, these high valuations are pricing in perfection. They're pricing in that the Fed will come in, deliver with these interest rate cuts. They'll come and save the day like we've been used to over the past couple of decades. And they're also pricing in perfection for the economy.

These things, none of this is set in stone right now. So I think that there is still a big risk here for some of these growth and high-level tech sectors. Is that just the US, or do we see the wind taken out of the sails of European tech too? Meghan Bell. Well, we don't have as much technology in some of the European indices. They're not as tech-heavy as the U.S. is, but we have seen the correlation here. When we have the sell-off in the growth of technology here in the US, it does tend to filter into overseas as well. Megan, how important to you and the technology investor around the world is the path forward there off that? We can't help ourselves, right? We've been waiting for September 18th, and we already ask then what increments we have further rate cuts in the path from that. Right. That's a great question, because they

can do several things today at this meeting. They can deliver with 25 basis points, which is why I think that they should do. They should reiterate that they're going to continue to monitor data. They'll act accordingly. It's meeting by meeting. And then if they go with 50 basis points, they could come in and say, this is a fine-tuning. We're going to be on hold now, and then you're going to get the cuts that are priced into the market for the rest of this year, move out. The most important thing today, whether it's technology or the rest of the stock market, is what are they going to say from the DOT plots going forward? What are they saying for the unemployment, their estimates that they're going to have to put out? What are they saying as far as inflation? Because let's keep in mind, inflation has come down significantly, but it's still in certain areas is very sticky.

So their press conference and the projections that they put out after the meeting, they're more important, obviously, in fact, to us than whether it's 25 or 50 basis points today. Meghan, there's a whole other parts of the capital structure you can own within technology. What does this mean for the debt, corporate debt of Apple, of some of the names that have just so much cash on the balance sheet as well? Two bond markets feel the pressure in the same way that the equity side will. I think bond markets do where they will feel the same way. I mean, let's be honest, the yields have come down quite a bit. They're backing up a little bit now, but yields have come down substantially. And then when you look at the longer term over the over yields and whether you're looking at long term debt, there's just focus on treasuries. There's a main, there's a major issue from the Treasury side of things.

That is the deficit. And there's not been anything to address that. And I don't see, even with an election coming up, that there's anything that's going to change, that the amount of issuance on that long end of the curve. So anybody who's focusing on debt or has debt is debt-heavy. And I realize the technology sector is not as debt-heavy as other sectors. And I have an impact on these long end of the yield curve. Megan, I'd like to end the conversation by trying to learn from the year that's gone about what might happen in the year ahead. And I use Nvidia as the case study for capital expenditures and investment. But the other sort of nominal that's happened is retail investors have piled into Nvidia as well. How does a change in interest rate environment just kind of change the fanfare of the market and the psychology of the market over the next 12 months?

Well, it all comes down to what's what is the price of those stocks. And when you look at stocks that have very high elevated price-to-earnings multiples, we saw what happened in 2022. If interest rates rise across the board and then you see those high-level stocks, and that's technology specifically, they end up getting hurt by this. So going into next year, I still think the Fed has the flexibility to continue to cut rates. I just don't think that they're going to deliver the way that the market is pricing this and right now.

Big Tech Performance Ahead of Fed Decision

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Big Tech Performance Ahead of Fed Decision

Big Tech Performance Ahead of Fed Decision

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