CME

The Federal Reserve is expected to raise interest rates again by December 2026, with a 90% probability according to CME FedWatch. Rising inflation, driven primarily by fuel and gasoline prices due to the Iran war, has prompted Fed Chair Kevin Warsh to aggressively target the 2% inflation goal.

This could significantly impact markets, similar to 2022 when rate hikes caused the S&P 500 to decline over 19%. Investors are advised to diversify their portfolios, with oil and gas stocks potentially serving as hedges against current market conditions.

CME Group and Coinbase Global represent two different approaches to financial infrastructure. CME operates a high-margin derivatives marketplace with a 62% net margin and strong cash generation, while Coinbase scales rapidly in crypto trading but faces regulatory uncertainty. The author recommends CME due to its superior profitability, lower valuation multiple, dividend payment, and skepticism about crypto's fundamental value.

CME Group is expected to report Q3 2026 earnings of $2.98 per share (11.2% YoY growth) and revenues of $1.71 billion (11.4% YoY growth) on October 21. The company's Earnings ESP of +0.73% combined with a Zacks Rank #3 suggests an earnings beat. Strong trading volumes (up 16% to 29.4 million contracts) and market data revenue growth (up 16.7%) are key drivers, though expenses are expected to rise due to employee compensation and technology investments.