by Robert Holman | www.DefensiveAdvisor.com
STOCK MARKET RATING (THE BIG PICTURE) … 5.0 (1-4 bearish, 5 neutral, 6-9 bullish). No change.
The upcoming two-day Federal Reserve FOMC meeting, 10/31-11/1, will be a key period for the stock and bond markets. Most observers think the Fed will pause their rate hikes to await further release of inflation and other economic data.
The worrisome thought here is that oil prices have been rising, and are still high due to the Israeli-Hamas War. Oil prices permeate almost all economic activity - they affect the cost of goods derived from petroleum, transportation of manufactured goods, electricity, and jet fuel, just to name a few.
If the Fed decides to raise interest rates to discourage business price increases, it will catch the markets by surprise, and that week will most likely see remarkable volatility. I think there may be up to a 60% chance of this scenario happening. Yet, at some point, the Fed has to go dovish; it’s just a matter of time.
Bankruptcies were up again. The YTD September number of 516 was the second highest of the last 10 years, next to the September 2020 number of 518. A list of the largest bankruptcies of 2023 is available upon request.
If the downward trend of the S&P 500 Forward PE Ratio continues much longer, it will be in an indicated BUY zone, when one views a chart of such data for the past 10 years. However, the ratio has on occasion lingered in this zone for multi-year periods.
To sum up, caution is still warranted until we are more certain about the Fed, the Israeli-Hamas War, and ongoing inflation.
PORTFOLIOS… After reading this report, if you are unsure how to position your portfolio to take advantage of these conditions, call me to discuss your circumstances. If you would like, I’ll do a complimentary portfolio evaluation, and I’ll explain what ought to be done to improve your situation.
TO MY CLIENTS … THANK YOU FOR YOUR TRUST. We’ve had great success since we started this RIA in mid-2018 and are doing better than the market return since that time period.
Learn from the Bible: Proverbs 15:22. CEV - Without good advice everything goes wrong — it takes careful planning for things to go right. MSG - Refuse good advice and watch your plans fail; take good counsel and watch them succeed.
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Opinions in this post are for general information only and are not intended to provide specific advice to, or recommendations for any individual, without our complete knowledge of that individual’s total financial profile. No strategy assures success or protects against loss. Past performance does not guarantee future results.