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Transcript

Fed Cuts Rates: Market Impact · HPK Provident Advisors: The Weekly Bull

• 0:09
  Speaker 1: Welcome to Friday Live.
• 0:11
  Speaker 1: For those of you who don't know me, my name is Michael Kutch.
• 0:13
  Speaker 1: I'm the Portfolio Manager here at HPK Provident.
• 0:16
  Speaker 1: I will be the solo host today, but don't worry, next week we'll have Brian or David back on and I'm excited to announce we're going to start bringing on some guest features.
• 0:26
  Speaker 1: So next week I'm hoping to have my local realtor, who does not only sells houses for clients but also as a property manager.
• 0:34
  Speaker 1: So hopefully with the latest Fed interest rate changes we can get some insights on the local housing market.
• 0:41
  Speaker 1: So this week it was all about retail sales, the FOMC meeting and the labor market.
• 0:44
  Speaker 1: So this week it was all about retail sales, the FOMC meeting and the labor market.
• 0:49
  Speaker 1: So I'm going to start with the FOMC meeting, because I see that as the highlight of the week.
• 0:54
  Speaker 1: So, as anticipated, we got a 25 basis point cut and it was pretty uniform among members.
• 1:00
  Speaker 1: Only one member dissented.
• 1:02
  Speaker 1: That was the new guy that just came in.
• 1:05
  Speaker 1: He's actually part of the executive branch right now, so maybe a little biased.
• 1:09
  Speaker 1: He was looking for a 50 basis point cut.
• 1:11
  Speaker 1: Also, he's looking at five more interest rate cuts this year.
• 1:16
  Speaker 1: So the market reaction was pretty muted.
• 1:21
  Speaker 1: I mean it was all over the place but it ended up near the flat line.
• 1:24
  Speaker 1: But yesterday we made all-time highs.
• 1:28
  Speaker 1: Let's give a round of applause for that.
• 1:29
  Speaker 1: Nothing better than going into the weekend at all-time highs.
• 1:37
  Speaker 1: So the dot plot showed that they see growth actually ticking up, as well as inflation, while the labor market, the unemployment rate, remains relatively stable.
• 1:47
  Speaker 1: Their forecast didn't change on that.
• 1:48
  Speaker 1: So Powell really emphasized you know, the labor market's definitely slowing.
• 1:54
  Speaker 1: The pace of hiring slowing, however, so is the supply of labor, and that's due to mainly immigration and just the labor force participation, due to mainly immigration and just the labor force participation.
• 2:09
  Speaker 1: So his theory is that if they come down together then it's not really going to cause a big change in the unemployment rate.
• 2:12
  Speaker 1: So although hiring is slowing, people aren't getting laid off yet.
• 2:16
  Speaker 1: I was getting very concerned about the labor market.
• 2:19
  Speaker 1: Over the last six weeks We've seen a big downtick in the pace of employment growth.
• 2:25
  Speaker 1: We were at about 150,000, and now we're closer to 29,000.
• 2:29
  Speaker 1: So I was getting concerned about that.
• 2:31
  Speaker 1: We may start to see negative ratings.
• 2:33
  Speaker 1: Last week we had that big uptick in the jobless claims which gave me even more concern that maybe layoffs are just around the corner.
• 2:40
  Speaker 1: However, this week's jobless claims came in about 30,000 lower, so we're back to the low end of the range, about 233,000.
• 2:49
  Speaker 1: So that is definitely a good sign for economic growth.
• 2:52
  Speaker 1: I'm hoping that trend continues.
• 2:57
  Speaker 1: In terms of spending, retail sales are actually pretty good this month.
• 3:00
  Speaker 1: It came in at 0.6% on a monthly basis, which was in line with last month, but higher than consensus Looking at the control group.6% on a monthly basis, which was in line with last month, but higher than consensus.
• 3:06
  Speaker 1: Looking at the control group, which feeds directly into GDP, that was even better.
• 3:10
  Speaker 1: So maybe there's some resilience.
• 3:12
  Speaker 1: But I am concerned that with tariffs companies seem to have been eating a lot of those costs.
• 3:18
  Speaker 1: So whether that affects their hiring spending plans going forward we'll have to see.
• 3:24
  Speaker 1: This week, blog post wise, we had the week ahead post that we do every Monday, just outlining what we see going on, what we're looking for in the markets and the economy.
• 3:33
  Speaker 1: Then we had a post go out Wednesday what happens when the Fed adjusts rates.
• 3:37
  Speaker 1: We thought that was very appropriate and that talks about the dynamics of the housing market, which I mean it can have a lower rate effect which could help the mortgage rates, but I'm not really sure that dynamic, with how high the debt levels are and just the threat of inflation staying high, we might not see a big drop in the long end.
• 4:01
  Speaker 1: Really, from the bond market perspective, it was really a buy the rumor, sell the news, and what I mean by that is we saw a nice decline on longer term yields heading into the Fed meeting and then since then we're up about 12 basis points.
• 4:16
  Speaker 1: So that's certainly not going to help the housing market if that trend continues to bounce upward.
• 4:23
  Speaker 1: David had a nice post.
• 4:26
  Speaker 1: I did a post after the Fed meeting just talking about the labor market dynamics, and then David had a nice post that went out today just talking about what's going on in our nation and just being grateful.
• 4:41
  Speaker 1: So definitely check that out.
• 4:43
  Speaker 1: We also had our weekly series that comes out on Thursday about the OB3, the new tax rate changes and all that included in the new bill.
• 4:54
  Speaker 1: What that was highlighting was the exemption in estate taxes going up to 15 million for individuals and 30 million for joint couples.
• 5:04
  Speaker 1: I think a lot of us are in the boat that that's not really going to affect us.
• 5:08
  Speaker 1: So it is what it is.
• 5:12
  Speaker 1: But back to the consumer.
• 5:13
  Speaker 1: Like I said, retail sales are doing pretty well.
• 5:16
  Speaker 1: However, it's definitely a divided economy.
• 5:20
  Speaker 1: You have the people that own homes and stocks that are feeling pretty decent about things they're really carrying the spending and then, on the flip side, those lower to middle income cohorts.
• 5:30
  Speaker 1: They're definitely feeling higher inflation and potentially maybe some of the slower growth that's going on.
• 5:38
  Speaker 1: So next week the highlights are we have some housing data coming out, but the main thing that could potentially drive markets is the Fed's preferred measure of inflation, which comes out on Friday.
• 5:49
  Speaker 1: So hopefully we see a downtick in that.
• 5:52
  Speaker 1: That would certainly be good for the stock market and the bond market.
• 5:56
  Speaker 1: But we'll have our look ahead post on Monday and some other good blog posts coming out, so make sure you tune in for those and then, as always, we'll be back on Friday.
• 6:07
  Speaker 1: Live.
• 6:08
  Speaker 1: Let me just show you we are having that social security seminar.
• 6:12
  Speaker 1: If you go to our resource tab and then events, you can register right there.
• 6:18
  Speaker 1: Brian is an expert in social security, so he's going to show you ways to maximize that benefit for you.
• 6:24
  Speaker 1: You worked really hard getting saving money and feeding into the system, so we want to make sure you get the most out of it, so make sure you register for that.
• 6:33
  Speaker 1: That's going to be a great webinar event and then David's also going to be doing a women's financial independence seminar in Sarasota in, I believe, in October.
• 6:44
  Speaker 1: So we'll have that event on our website pretty soon, so make sure you tune into that Before we go.
• 6:51
  Speaker 1: I'm just going to flip on the disclosures.
• 6:52
  Speaker 1: Nothing we say should be taken as a specific recommendation.
• 6:59
  Speaker 1: Make sure you consult with your financial professional and here it is.
• 7:01
  Speaker 2: Security is offered through LPL Financial LLC member FINRA and SIPCorg Advisory services offered through LPL Financial LLC, a registered investment advisor.
• 7:11
  Speaker 2: Brian Peluso, michael Kutch and David Harper are registered representatives of LPL Financial LLC.
• 7:17
  Speaker 2: Content discussed is for informational purposes only and not intended as an offer or solicitation to buy or sell any security or investment strategy.
• 7:26
  Speaker 2: Any opinions expressed are those of the authors and do not necessarily reflect the views of LPL Financial or its affiliates.
• 7:33
  Speaker 2: All investments involve risk, including the possible loss of principal.
• 7:37
  Speaker 2: This communication may include links or references to third-party websites.
• 7:41
  Speaker 2: These links are provided as a convenience only.
• 7:43
  Speaker 2: Lpl Financial and its representatives are not responsible for the accuracy or content of such sites.
• 7:49
  Speaker 2: Brian, mike and David and HBK Provident Advisors may only transact business in states where they are properly registered or exempt from registration.
• 7:57
  Speaker 2: Please contact us directly for information regarding licensing and registration status.
• 8:03
  Speaker 2: We'll see you next time.