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September 20, 2024 • 11 mins

The Fed and the Market both surprised us a bit this week! How so? TUNE IN TO FIND OUT!!!

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Episode Transcript

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Disclaimer (00:03):
With chaos at the New York Stock Exchange.
The record never once was sold sold.
We are looking at major records for the Dow.
Now is the time to buy.
The law of gravity hit Wall Street today.
We're down by between 3 and 4.5%.
The stock market is now down 21%.

David Boothe (00:22):
Because we're now down 43%.
What in the world is happening on Wall
Street?
You?

Disclaimer (00:27):
gonna do something or just stand there and
bleed.

David Boothe (00:29):
The whole town's gone crazy.
Hello and welcome to this week's edition of
the Big Money Report.
I'm your host, david Boothe, president and
Financial Advisor at BIG Investment
Services.
That's BIG Boothe Investment Group.

(00:50):
We're a full-service financial advisory
based out of Delaware, serving clients all
across America, and you can read all about
us at abigplancom that's wwwabigplancom.
I like to put the show together once a week
just to give you a recap of the week behind
and a peek at the week and weeks to come,

(01:10):
trying to keep you up to speed with you and
your money, and we're glad you're with us
today.
It is Friday, september 20th 2024.
Going to start off with a really big thank
you to the state of Delaware for once again
putting us in the top spot.
It was the USA Today Community Choice
Awards, and we were all able to attend a

(01:33):
beautiful event there at Bally's in Dover
earlier this week, tuesday evening, where
we received top awards once again.
So thank you, delaware.
We really appreciate the love and you
giving us your votes for that award.
It's really, really awesome.
And look, while I'm talking about that,
I've got to give a major, major shout out
to our team at BIG, and I've said before

(01:53):
I'd put them against any team in this
industry.
You know, I had a conversation once with
the CEO of Wells Fargo Advisors.
We were having some issues, and so I'm
touching base, trying to iron a few things
out, and we're going through the list and
we get to the end of it.
He says you know, david, we're pretty much
aware of some of these inefficiencies
you're bringing up to me today.
He says but you know, you're the only firm
that's picked up on it.

(02:13):
Nobody else is even aware that this stuff
is going on, that we need to improve in
these areas.
He says you've really got the best team in
the business.
I've got to tell you he's right and it's
just gotten better.
I mean, from the folks that have been with
us for over a decade to our most newest
hires and folks have come on board to the
team.
I think we've got the best team assembled
that we've ever had at the moment ever.

(02:34):
So I think things only get better from here.
So big shout out to them, because they are
awesome and reason why we do so well.
So let's talk about the markets, jump into
numbers.
It was a good week.
It was a good week, I have to tell you.
The market and the Fed, they all surprised
me a little bit this week.
Let's talk about the numbers here.
Dow Jones up 1.6% this week, s&p 500 up
1.3% and hitting a new all-time high.

(03:00):
So it broke out of this range, hit a new
all-time high, broke out of the downtrend.
Nasdaq composite up 1.5% this week and the
Russell small caps up the most up 2% on the
week.
Volatility index drifted a little bit lower,
down 2.4%.
Long-term bonds also drifted a little bit
lower, down 1.5%.
We're seeing what's called a re-steepening
of the yield curve right now.
So it's kind of interesting.

(03:22):
Long-term interest rates have been drifting
just a little bit higher while short-term
interest rates have been coming down.
A lot of that's due to the Fed.
We'll talk about that.
When you take a look at the sectors really
the defensive areas consumer staples, which
is very defensive, down 1% this week,
healthcare also defensive, down 0.5%, and
real estate, also, looked at as a defensive
sector, down 1.1%.

(03:43):
Everything else was up and up pretty nicely,
anywhere from 2% to 3%, almost 4% for
energy.
So some nice moves to the upside across the
board.
It's pretty wide engagement there as far as
the market's concerned, and gold was up
1.4% and silver also up 1.4%.
So A few things moving markets this week.
First of all, we had some economic data.

(04:04):
That's actually was a little bit better
than expected.
We got a little bit better manufacturing
number earlier this week.
That's been a bit of a surprise as
manufacturing has been very weak.
We had a really good retail sales number
better than expected retail sales number,
showing that the consumer continues just to
hang in there.
They are not throwing in the towel, they
are still spending some money.
And of course, the big news of the week was

(04:26):
the Federal Reserve cutting interest rates,
as we expected they would do this week.
But they cut by 50 basis points as one half
of 1%.
Really big surprise to me.
The way this Federal Reserve has been.
Jay Powell's character and nature just
really lends itself to moving at a quarter
point.
But remember I told you last week that

(04:46):
there's some fishy things going on.
There are a few stories that were coming
out that kind of sounded like they could be
leaks from the Federal Reserve trying to
set the stage for a bigger rate cut.
Now look, I got to tell you I'm not
disappointed with it.
I thought they should have cut rates in
July.
I think they're late.
I think they should have cut a quarter
point in July and they should have been
doing another quarter point here this month.

(05:07):
So I thought they were late With this move.
They've caught up to where I think they
probably should have been.
I'm not sure if it's too late or not the
time will tell but it was out of character
for J-PAL.
Look some of the inflation data we've
gotten.
I mean it's been okay, but it hasn't been
so great that you should feel super
comfortable to go at 50 base point clip on
the rate cuts.
So that's a little bit I don't want to say

(05:29):
concerning, but something we want to keep
our eyes on.
Okay, the inflation monster is not fully
slain yet and that could still be an issue
moving forward.
Powell's favorite word during a press
conference was recalibrate, recalibrate,
recalibrate.
Look, I will say this they're out of step.
I mean the rates are way too high.
We're nowhere near neutral, we're very,
very tight.

(05:49):
Right now Inflation is down in the twos and
we're 5% on the Fed funds.
So it is definitely out of step and we want
to kind of get it more in line.
I just thought that they would take a more
measured and paced approach of concern.
Probably they would cause fear in the
market when the market's looking for 0.25

(06:10):
and you cut 0.50,.
Sometimes the market can be afraid that the
Fed's seeing something that it's not.
Oh boy, are we getting right ahead of our
cliff?
Is that why they're suddenly being so
aggressive?
But again, I think that floating this idea
through back channels last week, allowing
the market to adjust for it, not only did
the market adjust for it, the market was

(06:31):
expecting it by the time the decision
rolled around this week.
It was like a 55 or 60% odds of a 50 basis
point cut versus a 25.
I was kind of thinking we would be in a
situation where it would be a lose-lose 50
basis points.
Half the market wouldn't like it, it would
go down 25 basis points.
Half the market wouldn't like it, it would
go down.

(06:52):
But that's not how it played out.
Day one was a little sloppy.
Market was up a lot, drifted lower in the
close.
But yesterday, thursday, market really
ripped higher and it held a lot of those
gains today.
Today, things did drift back a little bit
and look, we're still not out of the woods.
As far as volatility is concerned, there's
a few indicators that are suggesting the

(07:12):
market's rich here.
The S&P oscillator I talk about that.
I subscribe to that.
Five or higher, expect a pullback, a close
of business.
Today it's like seven and a half, so that's
on the high side.
The DeMarc indicators we talk about Tom
DeMarc and his work.
They're showing getting really close to
some upside exhaustion.
I think we'll probably hit those numbers

(07:34):
next week.
So, as I've mentioned before, october and
the presidential election year is usually a
pretty ugly month.
We can't take that off the table.
That still may be how things play out, but
whether it does or it doesn't, I think the
market has done a few things to set itself
up for a strong finish and look, with some
of this better economic data, the market

(07:56):
may give us a bit of a move higher here,
especially with the Fed in easing mode.
So we might see a pretty good run
post-election into the end of the year.
I don't think we're out of the woods on
recession either.
Just because the Fed has cut rates doesn't
mean anything in that regard.
Historically, once they start cutting,
things get ugly.
The only times they don't are when they cut

(08:16):
and we don't get a recession.
But the odds of that happening are low.
They just are right.
It's almost wishful thinking.
Not that it can't.
I think we have to play the odds, and the
odds are we'll probably slip into a
recession.
Therefore, we're going to play it like that.
We're going to maintain a measured approach.

(08:37):
We're going to keep plenty of money in
bonds which are paying good rates of
interest, so we can do that.
Right, they're not hurting us like they
have over the 15, 16 years prior, where
they weren't paying much of anything.
Now we can get some yield so we can have
some money in bonds.
And if the market does slip into 2025, if

(08:57):
the economy does slide into a recession,
we've got that buffer that we can depend on.
And if it doesn't, the buffer is not a dead
weight.
Right, we're still making 5%, 6% yield and
that's not so bad.
I will say one more thing before I wrap up.
Fedex had a lousy number Lousy, lousy,
lousy, lousy Horrific.
I think it was down 15% today in trading.
That's a concern.
Talking about recession?
Right, that's a concern.
A big, big miss on FedEx, and transports

(09:19):
have not been playing ball.
There's this old theory, dow transport
theory.
What it states is that the transports need
to confirm the move of the market.
And if the transports don't confirm the
move of the market, then it's a false
breakout and things may slip back again.
Look, some folks say that's old school, it
doesn't apply anymore.

(09:40):
I kind of look at semiconductors these days
more than I look at transports.
But I'm not saying that rule is out of
effect at this point in time.
I'm not saying that I'm still watching it.
I think it's still valid until it's not.
So again, things I'm being mindful of.
So I'm going to wrap up.
Between now and next few meetings, you're
thinking about your future, your long-term
goals, all the things you want to do with
you and your money.

(10:00):
Maybe start your own investment firm and be
rock stars in the state of Delaware.
Thank you very much.
Maybe it is retire a little early.
Maybe it is take that big trip.
Hey, maybe it's go to Disney with your
family.
I had a client this week talking all about

(10:21):
that and she's paying the way to go.
So, uh, hey, you know what your goals are.
Don't just think about it.
Think big, think B I, g, and I will talk to
you next week.

Disclaimer (10:25):
Thank you for listening to this week's
edition of the big money report with your
host, david Boothe, president and financial
advisor at B I G investment services.
For more information on BIG and how you can
access their planning and investment
management services, visit them at
abigplancom that's abigplancom.
Or call them toll-free at 866-946-PLAN

(10:48):
that's 866-946-7526.
The foregoing content reflects the opinions
of David Boothe and Boothe Investment Group
Incorporated and is subject to change at
any time without notice.
There's no guarantee that the statements,
opinions or forecasts provided herein will
prove to be correct.
Content provided herein is for
informational purposes only and should not
be used or construed as investment advice

(11:09):
or a recommendation regarding the purchase
or sale of any security.
All investing involves risk, including the
potential for loss of principal.
There is no guarantee that any investment
plan or strategy will be successful.
Please consult a professional before
investing.
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