Markets rallied on rate cut excitement despite Fed Chairman Powell’s warning that “there is no risk-free path.”
MACROECONOMIC UPDATE
- The National Association of Home Builders (NAHB) Builder Confidence Index held steady near its lowest reading on record at 32 indicating that builders remain very pessimistic about the current and near-term outlook for the housing market.
- Housing Starts fell -8.5% in August and Building Permits fell -3.7% to a new cycle low. The breakdown in Permits is a warning flag for the housing market, and a leading signal that the economy could be in trouble.
- The Leading Economic Index from the Conference Board fell -0.5%, well below expectations, as it continues to trigger the Conference Board’s Recession signal.
TECHNICAL UPDATE
- Margin Debt was released for August, increasing by $40 billion and pushing the Margin Debt Carry Load up to a new all-time high. Read our Market Insight for more on this critical development.
- InvesTech’s Artificial Intelligence Index moved higher this week as speculative enthusiasm regarding AI investment reached new heights. This will be critical to watch in the coming weeks as a breakdown in investor exuberance would signal broader trouble in the market is likely to come.
InvesTech Model Fund Portfolio
The Model Fund Portfolio is 57% invested in quality equity ETFs, 5% in an intermediate Treasury ETF, and 38% cash. The cash portion of the Portfolio (38%) is held in short-term Treasurys or a money market fund to provide an attractive yield and defensive buffer.
Latest Issue of InvesTech Research available later today!
Major battles rage on in today’s market as excessive excesses fight for control, the Fed walks the tightrope of balancing their dual mandate, and the economy grapples with avoiding a recession. So, in this issue we dive deep into critical updates for all 3 of these battles and we reveal what could be the most important bear market indicator to watch.