Marquette Associates

The Fed turned the page and began lowering interest rates with an outsized 50 bp cut at its September FOMC meeting. While Chairman?Powell described the risks to achieving the Fed’s dual mandate goals of maximum employment and stable prices as balanced, the market’s reaction to Powell’s press conference seemed to reflect anxieties that the labor market is now the chief concern and the Fed’s larger rate cut was perhaps a result of not only foresight but fear. Our latest newsletter by Jessica Noviskis, CFA puts recent labor market data into historical context as the Fed considers the pace of additional rate cuts in the coming months. Read it here: https://lnkd.in/g4myy6xq

The pullback in global equity indices at the beginning of August left many investors racing to understand what had caused such outsized volatility. Amid this market turbulence, there were two seemingly unrelated economic events that occurred on different sides of the globe. On July 31, the Bank of Japan surprisingly announced that it would raise its benchmark interest rate from 0.10% to 0.25%, continuing its transition from the ultra-low rates that had been commonplace in recent time. Later that week, the July U.S. nonfarm payroll employment data, which many use to gauge the health of the domestic labor market, came in below estimates. This report led investors to question the strength of the U.S. economy and whether the Federal Reserve had waited too long to cut its policy rate. Simply put, equity markets reacted negatively. Read on in our #chartoftheweek, "A Cross Pacific Current," by Zach Houston-Read: https://lnkd.in/g_A9m3mZ

Sam Frymier will be speaking on the Investment Consultant Roundtable at the Georgia Association of Public Plan Trustees? (GAPPT)'s Tenth Annual Trustee School today. https://lnkd.in/gh8eFVqY

At the start of this year, economic forecasts called for up to five 25 basis point interest rate cuts by the Federal Reserve throughout 2024 beginning as soon as the first quarter. That said, over the course of the year, these expectations moderated significantly due to stubbornly high inflation, stronger-than-expected economic growth, and a resilient employment landscape. As recently as July, investors expected only two rate cuts before 2025 based on implied probabilities from options markets. Sentiment shifted once again in August, however, after a spike in equity market volatility and weaker labor market data. As can be seen in our #chartoftheweek by Rodrigo De la Pena Alanis, investors now anticipate four to five 25 basis point cuts before year-end, with an additional four to five cuts coming in 2025. Should current expectations come to fruition, the effective federal funds rate would fall to below 3% within the next 12 months. Read “The Path Ahead” here: https://lnkd.in/gT2P6hpq

Evan Frazier, CFA, CAIA will be speaking at Portfolio Summits‘ inaugural Fiduciary Investor Central Summit today in Chicago, moderating the “Diversifying Your Portfolio” panel. https://bit.ly/EFfics2024

As the leaves change to autumn and the authors cheer on their Fighting Leathernecks, fall is the perfect time for investors to reassess their fixed income portfolios. Fixed income is a hybrid security that offers both offensive and defensive properties. Much like a good football team, a fixed income portfolio needs to combine a strong offense with a solid defense. This white paper by Frank Valle, CFA, CAIA and James Torgerson outlines offensive and defensive fixed income characteristics and strategies and considerations for investors when building a “gameplan” for their fixed income allocation. Read it here: https://bit.ly/ReadyFixInc

Ryan P. Tracy, CFP??will be speaking at Portfolio Summits' Colorado RIA Summit today in Denver, moderating the opening panel, “Global Market Outlooks and Opportunities.” https://lnkd.in/gn2ZzRxq

The S&P 500 Index pulled back by more than 2% yesterday in a move that is not unprecedented based on the history of the benchmark. Specifically, the bellwether equity index has averaged a return of roughly -0.7% in the month of September dating back to 1928, which is particularly striking given that average performance of the benchmark has been positive in every other month of the year. There are several possible explanations for the potential anomaly that some have dubbed the “September Effect,” outlined in our #chartoftheweek by Evan Frazier, CFA, CAIA here: https://bit.ly/SeptCruel

Following last week’s preliminary annual benchmark review from the Bureau of Labor Statistics that suggested U.S. job growth has been weaker than initially estimated, investors have been closely monitoring the labor market for signs of strain. Corporate profit margins may be particularly important to watch as they directly impact the employment landscape and have historically served as a leading indicator of layoffs and economic frailty. This #chartoftheweek by Chad Sheaffer, CFA, CAIA illustrates this relationship and underscores the importance of monitoring labor market and profitability metrics in tandem. Read here: https://bit.ly/4dJfySm

The U.S. economy has long been driven by consumers, with consumption constituting more than two-thirds of GDP growth: As the consumer went, so went the economy. More recently, robust consumer spending has fueled positive domestic GDP growth and helped buoy the prices of financial assets. That said, there are now signs that these trends may be shifting. For instance, delinquency rates across various consumer loan types have ticked up, as have debt burdens as a share of overall household income. Additionally, personal savings rates in the U.S. have now dropped below long-term averages. From a big picture perspective, what do these trends mean for the overall health and growth of the economy? This newsletter by Evan Frazier, CFA, CAIA, and Lauren Smith examines long-term tailwinds and emerging headwinds for the American consumer and expectations?for both consumers and overall GDP growth going forward. Read it at the link below.