By Peter R. Wechsler
President & Co-Founder, Franklin Retirement Solutions
[email protected]
It’s Wednesday morning and I am penning this column 34,000 feet in the air on the way to a conference in Nashville. I’m traveling with Jeremy and Rob and we’ll return late Friday. We got a pleasant email from American Airlines on Sunday that we were all upgraded to first class. Not a big deal on a short flight but still nice.
The market just opened higher again this morning, again in record territory. Let’s hope it continues, although we never know when a correction could happen. What’s propelling the markets and what could change? What’s the rest of the month looking like?
- The Producer Price Index report this morning showed no increase in wholesale costs last month. Consumer inflation figures (CPI) will be released on Thursday.
- The Fed will hold their September meeting next week. Odds are good that they’ll cut rates a quarter point. But with these lower inflation numbers and with employment down, the Fed could actually lower the rate by a half percent.
- Should the Fed lower rates, this could provide a spark to a slowing housing market.
- The big story is the budget talks and whether there will be a government shutdown on October 1st. The Ds and Rs seems to be pretty far apart on the budget and neither side seems in the mood to compromise. Our senators and house members should remember that a good deal is one in which neither side is happy.
Year to date, the S&P 500 is up 11% while the Dow is up 7%. After two great market years in 2023 and 2024, I think most of us would be happy if we closed out the year close to where the market averages are now. A government shutdown could frustrate investors and markets.
The big concern is earnings reports that will start to flow in early October, after the close of this quarter. With the S&P selling at a high multiple of 22-23 times earnings, and with the concerns listed above, any trend seen towards lower corporate earnings could wreak havoc on the markets through the end of the year.
As I finish writing this missive on Thursday morning, (the flight attendant made me shut down my computer so they could land), I’m thinking what a crappy morning this is. Another senseless school shooting (this time in Colorado) and the senseless shooting of Charlie Kirk, coupled with the 24th anniversary of 9/11, not much to be joyful about today.
That being said, GO EAGLES against the Chiefs!!!
Peter