A strong, but slightly cooler jobs report
The labor market is still strong, with wages growing over inflation. However, there is a slight slack in available jobs, which are still above pre-pandemic levels. This is a perfect, not too hot, not too cold scenario. The number of job openings has dropped, which aligns with the Fed’s expectations, as more people are looking for jobs.
Better quits number
Less people are quitting their job, which means there’s probably not as many attractive other jobs out there to the one you currently have.
Inflation is moderating
Inflation is moderating and increasing at a slower pace than a year ago, with a lag in the shelter component. Rents are coming down, indicating that inflation numbers will continue to decrease this year and next.
”The other bright side is that wages have gone up, people are still spending money. They're still traveling.
Chris Payne
”This is exactly what the Fed wants to see. There's a good chance .. they might even start lowering rates next year.
Ryan Payne
Earnings estimates going up
Analysts have adjusted their earnings estimates up across every industry for this year, next year and the following year.
”What really matters about stocks if you're an investor is profits and earnings.. estimates have been going up across every industry..
Bob Payne
Productivity is coming back
Productivity is increasing as people return to offices, leading to disinflationary wage growth and increased efficiency. Margins will expand and AI and autonomous technology will benefit businesses.
”I see that in my building here in New York.. all of a sudden, businesses are moving in again.
Ryan Payne
The Tipping Point
Short-term decision making
“I’ll just put my money in a 5% money market or three-month T-bill and that will get me to my financial goals.”
“Why don’t we just get rid of everything and put it into the Magnificent Seven?”
This kind of short-term decision-making can be extremely detrimental to your long-term financial goals.
Payne Points:
- Money market rates don’t last forever and inflation averages 3% over time, so a long-term plan investing in the stock market is necessary to achieve financial goals over time.
- There’s a good chance the Fed is going to lower interest rates next year. So next year, all of a sudden that 5% money market fund could be paying 3%. Meanwhile, you be locking into longer-term bonds and getting into the market while valuations are relatively cheap.
- Some investors make the mistake of letting recency bias influence their decisions. But common sense tells us things always change and you’ve got to position yourself for the unexpected.
- Here at PCM, we like to follow what we call the Wayne Gretzky strategy: Don’t invest in where markets are today, you want to invest in where markets are going.
”I've got a name for that strategy. It's called tech and T-bills, and it doesn't work.
Chris Payne
”Follow the momentum of what's obvious and it's always going to end in tears. It's it's the worst thing you can possibly do.
Bob Payne
”People are missing the boat right now and they're thinking too short term because 5% for one year is not going to get you to your retirement goals over 20, 30 years.
Ryan Payne
Hidden Facts of Finance
Attendance was still less than half of pre-COVID levels across ten of the largest US business districts as of early August, according to data from Castle Systems, that figure is roughly unchanged compared to where the start was in 2023.
it was almost 250 years ago, the first registered family shoemaker, Johann Adam Birkenstock, began calling shoes near Frankfurt, Germany, in 1774, even before Independence, that Birkenstock now looks to be going public. Recently, there was an auction of Steve Jobs, brown suede, Birkenstock Arizona’s that fetched $218,000.
