Last week looked dark for tech companies until the Fed Chairman’s speech at the Jackson Hole economic conference Friday sent stocks into a buying frenzy closing at record levels.
The Fed Chair’s speech indicated a pivot toward lowering interest rates. The consensus is there will at least be a quarter-point cut next month.
There is even thought it will be 50 basis points, but that seems foolish to me.
I think the Fed is concerned more about stagflation these days.
That is a situation where inflation continues, but the economy is not growing. The Fed has few policy proposals to fix that type of situation.
Lowering rates doesn’t stop inflation and higher rates don’t stimulate a slowing economy.
I don’t see this as the current problem. The economy seems to be moving ahead on a positive path even if it’s slowing.
Inflation seems stuck between 2% and 3%. The one real concern is the debt the country has taken on.
It is the current administration’s belief that the economy will surge and bring in more tax dollars.
I think we will recover more tax dollars with the value-added tax of tariffs and a growing economy.
My concern is that government will continue to spend. There is a good cause under every rock.
It was good to see small cap stocks climb out of their trading range and move north.
All of the froth around AI may get a reset.
Several Mag 7 companies announced a pullback in hiring.
One would worry that they are forecasting a slower economy.
I believe they’re focused on earnings and concluded that capital spending is a bit much.
There is no denying that AI is and will have a huge impact on future growth. Tariffs may reorder the trading environment.
There is much to digest over the last quarter of this year. I feel this is uncharted territory for the Fed and they are diving deeply into the data to get a feel for these uncharted waters.
Being optimistic in nature, I find it hard to see any real signal of a big pullback in stocks.
That does not say there are so many potential stumbling blocks ahead.
We have to stop fighting in the Middle East or Ukraine.
IT doesn’t even cover the problems in other areas.
We have no idea the real impact of tariffs, though I don’t see a trade war and feel it’s closer to a fair fight for once.
China, Russia, Iran and North Korea are a real and present danger and will be our enemies forever.
I could go on listing the vast array of concerns, but it misses the real point.
Earnings reports consistently are better than expected. While projections have tempered, CEOs get punished harder for over-exuberance than from caution.
The real factor is we are at record highs and how much higher can we go.
There are more than one projection for above 7500 for the S&P 500. I suppose we are all left with riding the wave and digging wherever we can to find the next Nvidia.
The problem with the wave is the shore is coming and finding the next gold nugget isn’t that easy.
It is no reason to be pessimistic at this point. To me 2025 will be one heck of a year for investors.
The ongoing problem is figuring out today what 2026 will bring.
