Welcome to the Forward Guidance newsletter, brought to you by Casey Wagner and Ben Strack. Here’s what you’ll find in today’s edition:

• Today’s GDP report paints a pretty nice picture, but a lot more data’s coming this week. 

• Ben sits down with the manager of T. Rowe Price’s new tech-focused ETF. 

• The AI mania appears to be continuing. Here’s the latest.

GDP estimates boost hopes for a soft landing 

Gross domestic product came in marginally softer than expected for the third quarter of 2024, but the pace of growth still indicates that a soft landing is within reach — or, according to some analysts, already here. 

GDP in the third quarter rose at a 2.8% annualized pace, according to advanced estimates, coming in just below expectations of 3%. The figure was boosted by strong consumer and government spending. Personal consumption increased to 3.7% during Q3, marking it the strongest quarter since the beginning of 2023.  

Quarterly personal consumption expenditures index increased 1.5% annually vs. 2.5% during the second quarter. The monthly PCE index for September is scheduled to be published tomorrow. 

Today’s GDP reading comes after the Atlanta Fed’s GDPNow model lowered its third quarter estimate from 3.3% to 2.8% Tuesday. 

Kathy Jones, chief fixed income strategist at Charles Schwab, called Wednesday’s figures “soft landing numbers.” 

James Bullard, former president of the St. Louis Fed, told CNN earlier this month he thought we should already “declare a soft landing.” 

I’ll hold off on making any declarations for now. Tomorrow’s PCE numbers and Friday’s US employment report are going to be very telling. Plus, the JOLTS data we got yesterday doesn’t paint the prettiest picture. 

The JOLTS report showed that US job openings in September fell to the lowest point since the beginning of 2021. Available positions also declined to 7.44 million from 7.89 million in August, missing economists’ expectations of 8 million. 

Tom Essaye, founder of Sevens Report Research, said the report “was not enough to derail the soft landing thesis by itself, but it was a step in that direction as investors will want to start seeing the decline in headline job openings slow as part of a soft landing dynamic and still-healthy labor market.”

Like I said, the September jobs report is going to be key. 

Markets are, unsurprisingly, still all but certain (96% sure) the Fed will opt for another 25-basis point interest rate cut next month, according to data from CME Group.

— Casey Wagner

Bitcoin was hovering in the $72,000-range Wednesday afternoon in New York, extending a decline that had the cryptocurrency nearly hit a new all-time high price Tuesday. 

“This bullish momentum can be attributed to several factors, including massive inflows into spot ETFs and an increasing likelihood of a Trump victory in the US presidential race,” Mike Tauckus, head of trading at BitOoda, said. 

BTC’s last record-breaking high price was hit in March when the crypto surged to $73,750.

Dominic Rizzo, who manages T. Rowe Price’s new technology-focused ETF, is “a big believer” in crypto, DeFi and stablecoins. 

“Over the long run, I think there are going to be plenty of applications that utilize the technologies,” he said. “Unfortunately, right now — as a public market equity investor — there are actually not a lot of ways to get exposure to those trends (that fit my investment frameworks), outside of Coinbase.”

0.89% of the fund’s total holdings are in COIN, as of Tuesday. A drop in the bucket when compared to the roughly 30% combined positions in Nvidia, Apple and Microsoft, sure — but still a component.  

T. Rowe Price’s technology ETF invests in companies across the hardware, software, internet and payments segments. Within those categories, Rizzo said Coinbase fits his three-part checklist of being a “linchpin technology”; innovating in a secular growth market; having improving fundamentals; and sporting a reasonable valuation.

Coinbase is “a unique animal,” Rizzo added. Outside of the trading business, he noted its custodian status to most of the US crypto ETFs, as well as its partnership with USDC issuer Circle and its layer-2, Base.

COIN was up 40% year to date, as of Tuesday’s close. 

“It comes to this thesis on Coinbase being kind of the ultimate linchpin for the on- and off-ramp of crypto into TradFi and vice versa,” Rizzo explained. 

Other crypto-related stocks (MicroStrategy or bitcoin miners, for example) don’t fit that “linchpin” definition, he said — meaning they’re mission-critical to the success of their customers or make users’ lives dramatically better.

Rizzo would like more crypto equity opportunities, and believes more will come.

“We’re trying to make sure we’re on top of it,” he said, “because I think this is such a big trend.”

— Ben Strack

The artificial intelligence craze is alive and well — at least, if Alphabet earnings and investments in Elon Musk’s new venture are any indication. 

Alphabet (GOOG and GOOGL) stock surged almost 7% in the first hour of trading Wednesday on better-than-expected earnings from Google’s parent company Tuesday evening. 

Alphabet said Tuesday its AI investments are “paying off,” as demonstrated by an increase in its Cloud and Search businesses, which jumped 35% and 12%, respectively, during Q3 2023. 

“This business has real momentum, and the overall opportunity is increasing as customers embrace gen. AI," Google CEO Sundar Pichai said Tuesday of the company’s Cloud product. 

The earnings report comes as fundraising in the AI space continues to explode. 

Reports swirled yesterday that Elon Musk is in the midst of a funding round for xAI that would value the startup at around $40 billion. The news comes just months after the company closed a $6 billion round over the spring, which valued xAI at $24 billion. 

OpenAI earlier this month secured a $6.6 billion round, putting the company at a $157 billion valuation. 

On tap after the close today we have earnings reports from two more of the Mag 7: Meta and Microsoft. 

Analysts expect Meta to post an 18% increase in year-over-year revenue, largely driven by the company’s growing use of AI-driven advertising strategies. 

Microsoft’s third quarter report comes just after the company announced its GitHub product will bake in AI models from Anthropic and Google into its coding assistant. 

Should be an exciting day in after-hours trading. We’ll be back tomorrow unpacking all the details.

— Casey Wagner

• Polymarket odds are still heavily favoring Trump over Harris (67% to 33%) even as national polls report the race will be neck and neck. The bets will settle on the platform once the Associated Press, Fox News and NBC all call the election for the same candidate. 

• Another sentencing in the FTX legal saga is scheduled for today. Nishad Singh, who served as the director of engineering at FTX ahead of its collapse, will be sentenced in Manhattan this afternoon. Keep an eye on Blockworks.co for updates. 

• The Yankees narrowly avoided a sweep thanks to last night’s win. We’ll have to see if they can pull off another one tonight. Casey, on the advice of her practical father, will be rooting from outside the stadium.