Money Matters with Greg
Needing guidance on finances, or just curious about investments? Join CEO and Owner of Farrall Wealth, Greg Farrall, as he dives into all things relating to money and often interviews interesting people he is fortunate enough to call his friends.
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Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.
Money Matters with Greg
Episode #163: Bears, Bulls, and Rate Cuts: A Financial Fumble or Touchdown?
The economic landscape is shifting beneath our feet as we transition from summer to fall. Recent data has painted a concerning picture of economic slowdown, with the latest jobs report delivering disappointing numbers and significant downward revisions spanning multiple months. What was once a resilient labor market is clearly losing steam, signaling broader economic deceleration that's reshaping Federal Reserve policy expectations almost overnight.
Market sentiment has undergone a dramatic transformation. The probability of a September rate cut has surged from 25% to over 80% in just one week. Fed Chair Powell's less-than-definitive comments triggered substantial market volatility, but the subsequent weak jobs data has convinced investors that monetary easing is now inevitable. We're likely looking at two to three rate cuts before year-end, a complete reversal from earlier expectations.
Yet amid this economic uncertainty, corporate America continues to demonstrate remarkable resilience. Earnings have significantly outperformed expectations, with growth tracking above 10% year-over-year – more than double what analysts initially projected. Technology giants have been the primary drivers, fueled by substantial investments in artificial intelligence that are transforming business models and creating new growth opportunities. This earnings strength suggests companies are adapting effectively despite headwinds.
For investors, the message remains clear: stay invested but stay vigilant. Market pullbacks, while uncomfortable, are healthy components of bull markets that often create buying opportunities. A well-diversified portfolio remains your best defense against the complex crosscurrents we're navigating. The combination of slowing economic growth, potential rate cuts, ongoing trade tensions, and remarkable corporate resilience creates a challenging but navigable investment landscape.
Have questions about positioning your portfolio for what lies ahead? Reach out to discuss how these economic shifts might affect your financial future. And don't forget to subscribe to Money Matters with Greg for weekly insights that help you make sense of the financial forces shaping your life.
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.
The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may suit you, consult the appropriate qualified professional before deciding.
Welcome to Money Matters with Greg, where we dive into the money conversations shaping your life, from investments to estate planning, insurance to taxes. We cover it all with a fresh perspective. Join Greg and his guests each week to get inspired and take control of your financial future. Let's get started. Securities and investment advisory services offered through LPL Financial, a registered investment advisor, member FINRA, sipc.
Speaker 2:Hey, hey, good afternoon. It's Shows Money Matters with Greg. I'm Greg Ferrell, ceo and owner of Ferrell Wealth Management. It's a wealth management firm here in Valparaiso, indiana, and we do this podcast about money, basically anything that has to do with money, trying to help you with your money, increase your monies as well and add some value to you and your family along the way. The show is broadcast on WVLP 103.1 FM here locally here in Valparaiso, indiana, and we're very excited to always be a partner and be a part of WVLP and its mission. I want to thank WVLP, as always, for the opportunity, and we also broadcast on Spotify, apple, anywhere else you pod, as far as the pods and as well as WVLPorg live on Thursdays at one o'clock central and then replayed on Saturdays at 1 o'clock on Saturday.
Speaker 2:Always like to mention that the opinions voiced in this podcast are for general information only and not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may suit you, consult the appropriate qualified professional before deciding. There's my laundry list of things to do. Again, always excited to be here with you. We're going to talk a little bit about what happened here at the end of July in the market and the beginning of August, and a little bit of economy. We're going to talk a little bit about the data that's out there and a little bit of economy Going to talk a little bit about the data that's out there today. I just want to update everybody on sort of the mid-year number and mid-year outlook as we go into the fall. I also want to say it's football in the air and camps have started. You can see from my video here we're very excited about our Chicago Bears. It would be better to win more games than five games, because they sucked last year. So very excited to be a little bit better this year. So we're going with better than five. Okay, vegas has us at eight and a half points or eight and a half wins and I don't know, we'll see. We are always optimistic because we are 0-0 right now. We are undefeated, everyone is, and it's very exciting that we have football in the air.
Speaker 2:I hope everybody's ready for school. So getting excited for the opportunity for these kids to get out of the house it's always a wonderful thing and not so wonderful thing. It's sad too, because you've had a great thing and not so wonderful thing. It's sad too because you've had a great summer and a great opportunity, but more than likely, if you're anything like we were with three kids, we were ready for August to turn the page and to ship them out. Get that education and go to work, get that education and go to work. So I hope you're ready for the fantastic fall and certainly August as well.
Speaker 2:I get the chance to jump to a conference for what's LPL's called. It's called their focus. It's a really nice honor because only the top advisors that are working with LPL and LPLcom and the broker dealer where we work with are invited to this and a part of this. So we have obviously flattered and honored to be a part of it. I've gone many, many times. It's in San Diego and it's four days of a ton of work, but it's always very refreshing and it does get you to focus. So I'm looking forward to bringing back many of the strategies and many of the things that I'm seeing out there. It's literally like a Chicago auto show or Detroit auto show. They take all the conferences conference space out in San Diego and we basically take over. It's everyone's at LPL badge or LPL advisor, um, all the restaurants are full. It's pretty, it's pretty incredible and, um, it is a great opportunity. All the big names are there the JP Morgans, the Goldman Sachs, um, all the different fun families Eaton, vance, uh, principal Prudential, you name it they're there. Um, so it's a great opportunity for me to be able to kind of talk to the people that are in the industry. Uh, the people that I see really only on video at times In person, uh put a name to a face, which is really great, and I'm very excited to be a part of that. I will have more information on that, um, as uh, as I return in the meantime, um, just kind of want to update everybody on a number of things that uh have been happening. Uh, really, it's uh been amazing. Sort of end of july, um, the market did well at the end of july.
Speaker 2:Uh kind of followed through here the last few days of July and really the beginning of August really sort of brought a flurry of key economic data that we've had to figure out and sort of here are the takeaways really for us. As far as you know, the week of July 28th and where things were, the main thing is really the slowing of the US economy. Last week the jobs number was terrible and I was very surprised because there was a revision from not only one month but three months and the second quarter gross domestic product grew at 3% Through. Much of the growth, you know, much of that growth sort of stemmed from a sharp drop in imports after companies rushed orders ahead of tariffs. That's really kind of what we saw in July and June were numbers that were you kind of had to sift through them because they weren't really real because everyone was trying to get inside the tariffs.
Speaker 2:But the jobs report really showed a slowdown in hiring, signaling labor market losing some steam and just sort of overall that shows support that the Federal Reserve would be willing to ease. We've been of the ilk that they've been late to ease and to cut. Their argument was always about inflation and we're not seeing that. So it'd be nice to know whether we get that cut after the week. I think the probability of a cut in September at the time was 25%. I think it's over 80% now. So that's how much things changed just in a week overall.
Speaker 2:So yeah, the one thing that's really positive is the resilient corporate earnings that we've had. We have gone through earnings we're pretty much winding down now in the last four or five here coming in here Thursday, friday, the last overall earnings. But the earnings season has been better than we anticipated for sure, really just sort of showed that the corporate America has the earnings power that no one really previously thought, and analysts have called for the S&P earnings to grow a little bit to like 4% or 5% for the year year over year. When the earnings season began, we expected some upside and perhaps around 8%, but companies are collectively on track to grow earnings by over 10%, and that comes from FactSet. The big tech companies have been really the key driver, for sure, and another accounting for the. You know, really those account for half of the growth, amid the big investments in artificial intelligence You've got the names that you all know putting hundreds of millions of dollars into billions of dollars into AI, and that's been something to watch for sure. But really the market wants to watch and the stage is really just sort of set for a September rate cut.
Speaker 2:Fed rates have really been sort of steady. They were held steady on July 30th, so the week was busy with that. Fed. Chair Powell's comments were less definitive than the markets had hoped. It's why we dropped over 500 points in the Dow and almost 2% in the S&P. Last Friday In the week jobs report on August 1st sort of revived these expectations. That rate is going to cut in September, like I said, and two cuts of 25 basis points each are more likely this year, if not three, we'll see. Maybe we'll get a 50 basis point one in there, which is what they did last time. So that's, you know, we'll see. That's a long time coming. We're very frustrated that that hasn't happened already.
Speaker 2:But a couple things. The last thing I want to mention to you is the. I don't want to dismiss any trade risk yet. The August 1st negotiation deadline has passed and with several countries slated for tariffs coming up here well above the floor, that is, at 15% or even 10% overall, only about a half of the presumed tariffs have been implemented. So I really want to keep an eye on that because that really means more upward pressure on prices and company profit margins that still lie ahead.
Speaker 2:We don't really know what the rules are. I've always said this business owners and businesses they just want to know what the rules are. Just tell us what the rules are, we'll play by them. And we don't know what the rules are. So a lot of companies are having just a really tough time getting through. You know the negotiations and there are still being negotiations made with China, so that's another thing. That's. You know that's weighing on the market as well.
Speaker 2:So what does this all mean for you, right? So give me the update. That's weighing on the market as well. So what does this all mean for you, right? So give me the update. That's what happened. The S&P overall is still on a really positive move. Here has been since April. We've retraced and increased growth and returns since April of 2025. And that's really really good. We're seeing there's no reason to panic here, but we are seeing data that is definitely softer than we like, especially the revisions. So, ultimately, that's what we try to do in this show, which is Money Matters for Greg and talking about your money. How does this affect you?
Speaker 2:So the market has really been navigating this sort of complex landscape and we're not used to this. Nobody's seen this before. I always say you know, I traded through a dot-com boom, dot-com bust. I traded through devaluation of the pay cell. I've traded through some absolute black swans events um, throughout my career, um, and then I tried to trade through a pandemic, which nobody's ever done, and now we're trading through a trade war, which is not easy. So, um, keeping an eye on all this is a lot of responsibility and a lot of effort. But it's our effort and it's our responsibility to do right by clients and do right to everyone out there, to just get you as much information as you can so you can make informed decisions.
Speaker 2:And this is a complex landscape, without a doubt, and several economic and policy cross-currents have been happening here back and forth, and a really slowing economy, tariff implementation, a seasonal stock market weakness that always August, always usually sucks, whereas the average at best, so it kind of points to like the potential bouts of volatility ahead. For sure, the VIX is very low, the volatility fear index is very apathetic and oh, by the way, we all kind of expected rate cuts. Fed pal, thanks for that. That would have been nice to have done. But obviously he has an agenda and, uh, it's not as data driven as um once thought. I mean, he literally decided you know he saw this data before it came out, um and they decided to hold pat and then jim was terrible. All right, sorry about that. I'm babysitting a very small Boston Terrier from my sister-in-law at the office today and he likes to bark at FedEx drivers, so sorry about that mentioned the expected rate cuts that we thought we really would have liked, but the AI investment and the impending stimulus from tax and spending legislation passed last month is really kind of helping buoy the investment sentiment, investor sentiment out there for sure.
Speaker 2:Look, pullbacks are inevitable. They can refresh bull markets and they're necessary and healthy and, um, you can really set them up for the leg higher. Uh, you know they are necessary, they are needed, even though they can be painful. Uh, just being a realist here that, uh, you know things are pretty quiet, uh, in the month of august, so we will see, but it's, it's really important to stay invested and if you have a well-diversified, modern portfolio that we talk about here on this show all the time, you know looking for those opportunities to for those equities to dip. You saw many of the markets rise after Friday's losses very, very quickly because it looked like opportunity. More than anything, economic and corporate fundamentals remain in great shape.
Speaker 2:So keep the faith and, as always, please contact your financial advisor with any questions. Certainly contact us as well, and if you have any questions too, I always like to say g? Uh, gregatfairwealthcom is my email. Please email me anything you want to talk about, um, and any suggestions for the show. You can also find the show on our website. You can find out all of our socials at Fairwell Wealth and, uh, I also want to mention too, at Fairwell Wealth, uh, nil, uh is our other company helping college athletes out, college athletes out with their financial literacy and their monies as well, because many of the athletes that we work with and, being an ex-player D1 player myself, I really enjoy working with these kids and they are kids, they're in their 20s and doing great. I mean, they're grown adults, without a doubt, but they're not, you know, not there yet, as we know, and they're certainly learning and that's what they're, that's what they should be doing, just like everybody. So, um, you can find those socials as well at fairwealth NIL. And if you have any questions on the NIL side and what we're doing there and what we're seeing there, uh, we'll have multiple podcasts coming out, but you can always write me an email. I'd love to hear from you and discuss.
Speaker 2:So the show's Money Matters with Greg. I'm Greg Farrell, ceo of Farrell Wealth. It's a wealth management firm here in Valparaiso, indiana, serving clients in 23 states. We're at WVLP 103.1 FM registered financial advisor, talking about finances and talking about money here, and I'm just excited to have another episode. I think it's 162 or 163. Looking forward to my big push to the conference out at LPL, I can't wait to bring back some of the stuff that I learned out there in a very intense four days. It's a workshop, starting uh at uh 7 AM, uh California time, all the way to uh five, six California time, and then uh, obviously dinners and all this other stuff that goes on out there. So, um, very excited to bring that to you. Looking forward to that, I hope you have a very profitable week and, um, we will catch you uh on the next one, see you.
Speaker 1:Securities and investment advisory services offered through LPL Financial, a registered investment advisor. Member FINRA, sipc.
