Last week the Federal Reserve cut the Fed Funds rate by 50 basis points.
The speculation is that further rate cuts are in the works for the remainder of the year.
Many think that a quarter point in both November and December.
The various indexes and averages were up last week.
The S&P 500 stock-index has climbed almost 20% this year.
Contrary to popular belief, a 5 to 8% gain on average is deemed a good year.
We are not to Dec. 31 just yet.
In fact, we just moved into the Fall season.
One doesn’t have to look far to see problems on the horizon.
We have an election in just over a month.
The war in the Middle East seems only to be expanding with no end in sight.
The war in Ukraine isn’t close to conclusion.
The labor market is striking in various industries.
The rate of inflation rising has cooled, but the impact of rising prices over the last four-plus years is hurting the middle class.
We are witnessing bankruptcies in major retailers.
The Wall of Worry is always there just hiding in the shadows.
As overpriced as this market currently stands, it would not take a Black Swan to send the market south at a rapid rate.
We have already witnessed two such events in the recent months.
We have, however, bounced right back and moved to even higher record closes.
Traders have been rewarded buying on the dips.
One wonders when and if this theory will fall by the wayside.
I still look at earnings reports. They have, for the most part, been positive.
The market priced for perfection expects and demands greater than expected results.
It seems to me that positive earnings will prevail.
That could lead to a real correction, which would move stock prices back to more historically reasonable levels.
Moreover, we have far too large a percentage of the current gains in far too few stocks.
In particular, the Mag 7 really have lead the way north.
They could do the same south.
I still believe that the economy is not headed for a recession and positive earnings will support the markets.
We have to get past the election and the honeymoon, and have to face the reality of the national debt.
It is almost impossible to get a real funding bill through Congress.
The reality of the extent of debt will be a real problem for the next administration and congress.
We simply can’t go on spending at current levels.
My concern is that should we increase taxes, we will only spend even more.
Good luck getting elected telling your constituents that we will tax you more and give you less.
That is a losing hand.
We have about made it through the tough trading month of September with all limbs in tack.
Should we make it through the middle of October, the holiday season will take over.
The last quarter of this year should be good for stocks.
My thoughts are to enjoy the end of the year as the ride could get really bumpy in 2025.
Contrary to popular belief, you are not going to pile substantial gains on top of substantial gains year after year.
History just doesn’t support anything near that.
