Good morning.

I watched some NFL games yesterday without much emotion as … with my team “out of it” (something which happens around November every year) … I didn’t know exactly who to root for.
This seems similar to what many investors might be facing regarding the economy as, while they certainly do have emotion, some must be debating if they should cheer for a strong, robust economy … or hope the economic engine slows enough to give the Fed reason to cut rates.

Recent job strength brings doubt that the Fed will be cutting any time soon and Bloomberg reports the market is pricing in only 29 basis points (0.29%) by the end of this year.  On top of this at one-point things looked quite likely that inflation would quickly move towards the Fed target of 2% … as market pricing for end-2025 (listed only 4 months ago) showed it to dive below 3%.  Those days and that hope seem long gone … as the view is this has suddenly spiked above 4%.

But even this concern worsens a bit … as Goldman Sachs projects a near-35% chance we will actually see a rate hike over the next 12 months … which was given odds of near 0% pre-election.

Yes, the tariffs do have a few worried but … to be fair … no one knows where this will end up as concessions by foreign firms might be offered.

Right now, we are focused on stocks and markets and … blah, blah, blah … as if this is the most important thing to be concerned with.  Well, of course it does have importance … but when you think about what many have gone through … and continue to go through … in California and even areas of North Carolina … things like commentary over the next Fed move take a back seat.

And the California winds are picking up again. Oh my.

I don’t mean to end today’s writing on a somber note … but somehow my worries about the next quarter-point Fed move seem irrelevant by comparison.

I’ll be better tomorrow.

Have a great day,

Joseph G. Witthohn, CFA

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