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I will now discuss the markets and have not political views…
Many people were worried about politics and the impact on their investments to begin the year. What looked like a bear market in April ended up being the furthest thing from that as the major indexes have rebounded dramatically as the narrative shifted from a major global trade war to a more controlled trade negotiation. The markets even coined a phrase for our President called “TACO trade = Trump Always Chickens Out”. The thought is that his bark is more than his bite as many times he back tracks on tariff threats. The rebound has been amazingly fast and supported more by retail investors than institutional investors and has forced institutions to chase. It seems the “smart money” wasn’t so smart, and the retail investors were smarter. The economy is doing well; tariffs have not caused the high inflation that was thought of, and many companies are investing billions of dollars into the US which will create jobs and economic growth. The president has secured some trade deals and is negotiating more agreements which is alleviating some market and economic anxieties. Companies are doing well, and the AI trade is alive and well and unlike the dotcom bubble, it has the ability to change businesses for a long time. Fewer analysts are now predicting a recession, and the stock markets are showing relief.
The outlook for the US is becoming more positive. Several countries have agreed to move manufacturing to the US and several US companies such as Apple have committed hundreds of billions of dollars to add manufacturing to the US. With this comes jobs, and towns will thrive as workers spend on housing, food, etc. Two major Middle Eastern nations have pledged significant investments in the US semiconductor and technology industries. Additionally, many countries have committed to reducing tariffs on US goods, bringing trade imbalances down. These developments will help the US economy and its citizens for years to come.
The Federal Reserve has started rate cuts again in September. Their primary reason for this after one year on hold is that the job market is weakening and has taken over as the primary concern for the Fed. Inflation still isn’t to the Fed’s goal of 2% (closer to 3% right now) but if the labor market continues to be weak consumers will have less purchasing power which should help moderate inflation. There are 2 more cuts in the Fed’s projections for 2025. This is termed easing of financial conditions and is good for companies as they can refinance debt and reduce borrowing costs. It is also good for consumers as short term interest rates decrease, and many forms of consumer debt financing will be lower. Lower interest rates are stimulative to our economy and to companies. This coupled with lower CD rates and less competition for stocks in short-term bonds means stocks should go higher.
If you would like to discuss any of these topics further or have any questions or concerns, please feel free to email me to schedule a time to talk.
Lastly, the regulations on financial advisors in the industry have changed and we are now allowed to publish on our websites any client recommendations or letters of appreciation. So, if anyone of you my clients feel like you would like to help me, please feel free to email me letters or words of appreciation.
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These views are those of the author, not of the broker-dealer or its affiliates. This material contains an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. All investments involve risk, including loss of principal. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources.