September 2024

The Fed has decided to go for broke. They're going big, slashing interest rates by a full half percentage point. How does this affect you and your portfolio? The Fed cut of 0.5% is actually their very first cut in about four years. For the last few years, they've been focused on inflation and for good reason. Now they're charting a course for another two cuts, and it's expected that there'll be a full 1% cut by the end of the year, followed by more cuts maybe in 2025. The new interest rate range now is 4.75 to 5% as of today on Wednesday, September 18. What does this tell us? It tells us the Fed has confidence that inflation is heading to 2%. Their preferred measure, the personal consumption expenditures index is already down to 2.5% since July, and they're expecting inflation to drop as much to 2% sometime...

Last Friday, U.S. stocks ended their worst week in 18 months. How will that affect us, and is it even relevant? On Friday alone, markets dropped 1.7 percent, closing out a one-week loss of more than 4 percent. Large tech stocks were hit particularly hard. The NASDAQ fell almost 6 percent, which underscores the fragility of a market heavily dependent on just a few tech giants. Since 2022, non-AI tech firms have underperformed quite badly. One factor from last week was a lackluster jobs report—not terrible, but below expectations. Markets tend to react to surprises like that. On the positive side, the yield curve is no longer inverted, and the Fed has managed to execute a remarkable soft landing, which has eased fears of a looming recession. Today, Monday, we've seen a bit of a market rebound. So, as investors, what should we be doing with this information? First, we've...