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The Fed Is Split, But Your Plan Shouldn’t Be

Author

Noah Zelvis
November 12, 2025

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Powell basically told markets that December’s rate cut is a maybe, not a promise. That’s not a cliff or a green light, it’s a blinking yield sign.

Your move is to keep risk sized, favor cash-flow machines, and use any headline wobble to leg into names that win whether cuts land in December or slip to January.

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The Fed cut in October, but Powell went out of his way to say a December cut is far from a done deal, highlighting a committee that’s genuinely divided.

One camp worries sticky inflation if the Fed eases too fast; the other worries a cooling labor market if the Fed pauses too long. 

With the shutdown scrambling official data, both sides can point to private surveys that confirm their prior beliefs, which is why the chair dialed expectations back.

That means a cut is still possible, just not automatic. 

What changes for you? Not much, at least, not the core playbook.

When policy shifts from “cut, cut, cut” to “let’s see,” markets key off speeches, soft data, and each little inflation read more than usual. 

Expect more intraday lurches that have little to do with long-term value.

Powell also reminded everyone that the Fed isn’t on a preset course, so December vs. January is a sequencing call, not a regime change. Treat it that way.

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Actionable Stuff

  • Buy in thirds. Add a starter, keep ammo for a no-cut scare, finish after the next big data drop.

  • Favor balance sheets. Names that don’t need to refinance soon sleep better (so do you).

  • Barbell it. Core of dependable cash-flow compounders + a sleeve of cyclical beneficiaries if cuts keep coming.

  • Keep optionality. Short T-bills/HYSA for dry powder; borrowers refi if you can meaningfully lower payment, don’t chase perfection.

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Top Picks

XPO (NYSE: XPO)

LTL freight is the heartbeat of services and e-commerce,  when new orders and business activity are decent, freight mix and yields tend to follow.

XPO’s turnaround has leaned on pricing discipline, network optimization, and density, drivers that don’t vanish if the Fed pauses a meeting. 

If cuts resume into 2026, industrial and retail volumes usually perk up, giving operating leverage more room to run.

Think of it as a services-adjacent cyclical with self-help: better freight mix, tech-guided routing, and cost control.

Risks are a sharper-than-expected slowdown in goods flow or competitive price wars.

But if you get in now, you get a path to margin expansion if activity holds and a cost-focused operator if it wobbles.

WEX (NYSE: WEX)

Fleet and corporate-payments rails with a fee-first model—translation: it clips a slice of spend without taking balance-sheet credit risk. 

In a “maybe we cut” world, travel & corporate volumes, cross-border flows, and fuel-linked activity can grind higher, while WEX’s data/controls tools keep customers sticky even if growth jogs, not sprints. 

Structurally, the shift from paper invoicing to embedded, rules-based payments is a long runway that isn’t hostage to the next dot plot.

If the dollar stays firm or rates pause, you still have secular adoption; if cuts continue, T&E budgets loosen at the margin. 

Risks are the fuel price volatility squeezing certain take-rates and enterprise sales cycles that push when uncertainty spikes.

Tetra Tech (NASDAQ: TTEK)

An engineering/consulting pure-play on water, environmental permitting, and climate resilience—funded by recurring municipal/utility budgets plus federal and state dollars that don’t swing wildly with one Fed meeting. 

Backlog and rate-case mechanics support visibility; easing policy merely greases financing for clients’ long-planned projects.

In a soft-shock economy, must-do work (PFAS remediation, water infrastructure, grid hardening) outruns nice-to-have.

TTEK’s asset-light model converts revenue to cash efficiently and tends to hold margins via mix and project selection.

Some things to look out for are award timing and occasional funding hiccups, but the need curve (aging pipes, tougher standards) is secular, not cyclical.

Choice Hotels (NYSE: CHH)

Asset-light franchisee of midscale and limited-service flags, this is exactly the part of lodging that holds up when consumers trade down but keep traveling.

If the Fed pauses, you still have business mix, contractor crews, and drive-to demand; if cuts continue, RevPAR usually gets a tailwind as rate-sensitive trips come back.

The franchise model throws off high-margin fees, which supports buybacks and brand investment without ballooning capex.

Add the extended-stay push and conversion pipeline, and CHH can grow keys and royalties while maintaining discipline.

Watch out for a stronger USD as it can pinch inbound tourism (less of CHH’s wheelhouse) and any broad jobs wobble could hit weekday demand, but the value segment historically flexes best.

Bottom Line

A split Fed doesn’t require a split personality from you.

Keep the core in durable cash-flow names, add selective cyclicals that benefit if cuts keep coming, and stage entries around the inevitable headline jitters.

December might be a maybe, but compounding isn’t, so stick to businesses that earn in both lanes and let time do the heavy lifting.

That’s it for today’s edition—thanks for reading! Reply to this email with any feedback or let me know which macro trends or markets you’d like me to cover next.

Best Regards,
—Noah Zelvis
Macro Notes