Markets were subdued this week as the outlook for further rate cuts from the Fed grew increasingly uncertain.
MACROECONOMIC UPDATE
- New Home Sales increased 20.5% in August as inventory ticked down 1.4%. This increase in sales was likely driven by aggressive incentives making homes more affordable as builders rush to sell inventory going into the slow winter season.
- Existing Home Sales dropped -0.2% over the same period, however, as sales remain sluggish due to extreme unaffordability. According to Redfin, homes are sitting on the market for a median of over 50 days, the longest in nearly a decade.
- Consumer Sentiment from the University of Michigan declined in its final reading for September as expectations regarding labor markets, business conditions, and personal finances all fell.
- The Personal Consumption Expenditures (PCE) Price Index came in as expected, rising 2.7% year-over-year. The Core reading, which excludes the volatile food and energy components and is closely monitored by the Fed, rose at a steady rate of 2.9% as expected. While in line with forecasts, this release shows inflation remains well above the Fed’s 2% target – further confirming the two-sided risk to its dual mandate of stable prices and maximum employment.
TECHNICAL UPDATE
- InvesTech’s Gorilla Index fell throughout the week as mega-cap tech stocks dragged the broader indexes lower. If this Index continues to fall, it will signal fading leadership from the heavyweight darlings and could be a key warning of broader weakness in the stock market.
- Our Negative Leadership Composite (NLC) remains neutral as the bullish Selling Vacuum continues to dissipate and bearish Distribution has yet to appear.
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.
Subscriber Notice
We’ll be making some improvements to the website early next week. These changes will include enhanced security and a more user-friendly experience.
We’re excited to serve you better with these exciting updates!
If you notice anything unexpected or have any questions, please reach out to us by emailing investech@investech.com or calling (406) 862-7777.