Farther’s Post

Market volatility continues to be top-of-mind for investors, particularly as the Fed prepares for its first rate cut in September. Our latest market commentary from Head of Investment Strategy, Min Zhang, CFA details how stocks and bonds have rebounded, what’s expected from the Fed, and how we’re helping clients stay prepared: https://bit.ly/3B1pGrd.

📊 Who’s Telling the Truth: The Bond or the Stock Market? It seems the Fed will have the last say! ❓ As rate traders anticipate more than 250 basis points of rate cuts until Sept 2025 and the stock market is at record highs, a key question arises: Are we heading toward a recession, or could we see stronger economic growth? 🔍 Current Market Dynamics: - The bond market seems to be pricing in a goldilocks scenario of 2% inflation and a stable labour market, while stock markets are trading near record highs with valuations above historical norms.  - Wall Street forecasts 15% EPS growth for the S&P 500 in 2025, signalling optimism for expansion. 💡 Fed’s Role: A Game Changer? Unlike during the COVID crisis, Fed actions today could have a more direct impact. With inflation closer to target and room for credit expansion, a potential bold rate cut could spur growth, especially in a post-pandemic environment where credit-driven models may take the lead. If the Fed cuts rates aggressively, it could spur economic expansion, raise stock prices, and push bond yields higher—challenging the bond market’s recessionary outlook. 📚 Learn more in the latest blog post. It's free 👇 #Finance #InterestRates #Economy #Stocks #Bonds #FederalReserve #Markets #Finance

U.S. equities bounced back sharply in May from April's selloff. While the Fed left interest rates unchanged, it announced plans to begin tapering its quantitative tightening program. Learn more in Element Pointe's Monthly Market Insights...

Sarah Hansen, Markets Reporter at Morningstar writes that If all goes as the market expects, the Federal Reserve is less than a week away from cutting interest rates for the first time since the onset of the covid-19 pandemic. Though the move is widely anticipated, its effects will likely play out across the markets for some time. With inflationary pressures finally easing from their recent 40-year highs, investors expect the central bank to reduce the target federal funds rate by at least a quarter of a percentage point from the current range of 5.25%-5.50%. More recently, investors have been debating the likelihood of a half-point cut. That would be a more aggressive move than markets expected a few months ago. A bigger unknown is how these rate cuts will play out for investors. In her article, she explains: "How Do Stocks Perform When the Fed Cuts Rates?" https://lnkd.in/g9rH28dH utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_morningdigest&utm_content=57624 #ratecuts #interestrates #economy #investing #investments

In this week in the markets - The U.S. Federal reserve cuts rates by 50 basis points, there biggest rate cut since the pandemic. U.S. stock futures hit record highs and gold, and copper prices surged. Wat does this mean for investors? The gap between the expected returns of equities and stocks are shrinking. Click here to learn more... #igwealthmanagement #wealthmanagement #financialplanning #planning #finance #personalfinance #emergingmarketing #federalreserve #ratecuts #investing #vannoort #pauljarvie https://ow.ly/wnCQ50TtQaH

In this week in the markets - The U.S. Federal reserve cuts rates by 50 basis points, there biggest rate cut since the pandemic. U.S. stock futures hit record highs and gold, and copper prices surged. Wat does this mean for investors? The gap between the expected returns of equities and stocks are shrinking. Click here to learn more... #igwealthmanagement #wealthmanagement #financialplanning #planning #finance #personalfinance #emergingmarketing #federalreserve #ratecuts #investing #vannoort #pauljarvie https://ow.ly/M8gI50TtQ8B

Investors have been waiting in anticipation for the Fed to start cutting interest rates. They believe that lower interest rates will help drive the markets even higher. History suggests things may not be quite as simple. We looked at the previous nine easing cycles, dating back to 1970. In the first chart, we’ve indicated (in red) periods that we believe to mark the beginning of an easing cycle. These are easily identifiable in recent easing cycles; however, those in the early 1980s aren’t and require subjective interpretation. The second chart shows the one- and two-year forward returns for various asset classes from the first rate cut of each cycle. Generally speaking, investors were rewarded in both timeframes. That said, certain assets, including those represented by the Russell 2000 Index, U.S. High Yield Index, and the Russell MidCap Index posted strong gains in the second year while experiencing choppiness in the first year. But wait, not all rate cutting cycles should be treated the same. If you were to look at the third chart closely, you should be able to see two distinct return profiles. Generally speaking, returns were favorable once the Fed began cutting rates with 2001 and 2007 being exceptions. Overall, it’s fair to say that the Fed’s rate-easing cycles were in sync with the flow of the natural economic cycle. However, the circumstances in 2007 and 2001 were unique: In 2001, the context around the Fed’s rate cuts included a stock market bubble, a recession, and 9/11; in 2007, the backdrop was framed by the global financial crisis. Today, our base case is that the Fed will likely cut later in the year amid what we believe to be a traditional economic cycle. Against that backdrop, investors returns will likely be positive moving forward. However, if something unexpected emerges, investors would be better served by proceeding with care. #markets #economy #bonds #stocks #advisors #recession #manulife Kevin Headland, CIM Manulife Investment Management #investing

In our weekly #iWealth #MarketUpdate, learn why investors are unsettled and focused on whether the Fed will make a big move in September: https://lnkd.in/gvden7RG #FinancialPlanning #WealthManagement #fed #FederalReserve #InterestRates

It’s been a volatile start to the year for stocks and bonds. Once again the conversation is revolving around what the the Fed might do, and when they might do it. I dig into the disconnect between investor expectations and Fed officials’ views in my new blog 👇 https://lnkd.in/guPWQnAu

There's essentially very little to add this morning to our last two video commentaries. In a nutshell: 1. Fed Chair Powell is comfortable setting market expectations at 3 rate cuts this year -- in essence dismissing the latest inflation data -- no longer, for the moment, concerned with an early 80s repeat... I will, however, add that not all on his team are on board, as we'll likely hear from some select commentary this week. 2. The economic data are improving, particularly in the manufacturing space -- notably reducing the odds of near-term recession -- i.e., likely, at a minimum, pushing the start-date further out. 3. Equity market technicals, and sentiment, point to increasing odds of an equity market pullback sometime over the next few weeks. 4. Given reduced recession odds, and an on-balance accommodative Fed, all things equal, odds would favor a buying of any decent near-term dip in equities. 5. #4 notwithstanding, there is large leverage (in the derivatives space in particular) underpinning these levels, which means a cracking of certain levels to the downside could indeed spark something far more meaningful than simply a buyable dip... That said -- and, again, all things equal -- odds favor #4. 6. We nevertheless -- given certain elements of the overall setup (present macro dynamics, risks highlighted above, historically high valuations) -- need to accommodate (via liquidity, diversification, and hedging) for the fact that, in markets, all things are indeed not always equal. In case you missed them: Click below to continue... #economy #development #power #economy #economics #macroeconomics #markets #investing #money #business #Fed #federalreserve #monetarypolicy #centralbanks #inflation #marketoutlook #financialmarkets #stockmarket #equities #valuation #SP500 #interestrates #bondmarket #commodities #realestate #homeprices #foreignexchange #continuingeducation #financialanalysis #CPA #CFP #CFA #RIA #profits #earnings