September 8, 2025 • 12 mins
In this episode of Paramount Wealth Perspectives, host Chris Coyle and Chief Investment Officer Scott Tremlett break down the latest market developments as investors weigh weaker U.S. payroll data against sticky inflation and Fed policy uncertainty. With September rate cuts on the horizon, Scott shares his take on the risks of moving too aggressively versus waiting too long, and what that means for Fed credibility.
The conversation also explores signals from the bond market, sector rotations driven by rate expectations, and the resilience of the housing market amid elevated mortgage rates. Globally, political shifts in Japan, France, and Argentina add to fiscal risks and currency volatility, while commodities and oil remain caught between demand softness and supply adjustments.
Scott also discusses whether equity leadership is broadening beyond mega-cap tech, how AI is reshaping enterprise spending, and what investors should watch in upcoming inflation reports and earnings season. The key takeaway: balance, diversification, and discipline remain essential as markets navigate slower growth, policy shifts, and global uncertainty.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Chris Coyle (00:00):
Intro song
Hello everyone.
Welcome to Paramount WealthPerspectives, your go-to podcast
for the latest updates on globalmarkets and current economic
events.
This is your host, Chris Coyle.
(00:21):
I'm the marketing director and afinancial advisor here at
Paramount Associates WealthManagement.
And today I'm joined by ScottTremlett, chief Investment
Officer here at ParamountAssociates Wealth Management.
Let's start with recent marketperformance.
The s and p 500 gained 0.3% lastweek, closing around 64, 80 up
10% year to date.
(00:41):
Scott, what stood out most inthe data?
Thanks, Chris.
What stood out most to me wasthe labor market.
Payrolls grew by just 22,000 inAugust.
Far below expectations priormonths were revised down,
leaving us with a net loss of21,000 jobs.
The unemployment rate rose to4.3%, although participation
(01:03):
rates did nudge higher.
We are not seeing mass layoffs,but hiring is clearly.
Slowly.
It's worth mentioning that theratio of job openings to
unemployed workers fell belowone for the first time since
2021.
A sign that the labor demand issoftening, add higher jobless
claims and weaker a DP payrollgrowth and is clear.
(01:25):
Momentum is fading.
Switching to talk about the fedmarkets are convinced rate cuts
are coming in September.
How do you see it?
Markets expect at least a 25basis point cut with growing.
Odds of 50 futures imply overone point a half percent of
easing through late 2026, butthe Fed isn't just following
(01:45):
markets, inflation, especiallyin services.
Remain sticky.
Chicago Fed President AustinGoolsby has said he wants to see
the August CPI before making aSeptember call.
That number is coming Thursday.
This is certainly a balancingact.
Weak labor data says cut, buttariffs and fiscal policy are
(02:07):
still pushing inflation higher.
My view is the Fed takes thesmaller step this month so they
retain more flexibility forfuture decisions.
And beyond September, what risksdo you see in fed policy?
Several risks.
First, the risk of cutting tooaggressively and reigniting
inflation that would hurt theircredibility, which was already
(02:30):
challenged during the 20 21, 2022 inflation surge.
Second structural changes in thelabor market.
Lower immigration means we needfewer new jobs to hold
unemployment steady.
That makes the August payrollmiss less alarming than
headlines suggest.
Third, politics with Fedleadership set the change in
(02:51):
2026.
Some investors are betting on amore dubbish regime if that's
driving market expectations.
It could misalign with currentpolicy makers.
Finally, the Fed's own forecastsalready assumed rising
unemployment and a 3% inflation.
By year end, so in their view,we're still on track.
(03:12):
That makes a rapid fire cuttingcycle less likely than markets
expect.
Bond markets are as sendingsignals too.
Treasury yields and creditspreads shifted last week.
How do you interpret that?
First for our listeners, whenbond spreads get wider, it means
investors are more worried andwant extra return for taking
risks.
(03:32):
When they tighten, it showsconfidences up and investors are
more comfortable lending at alower extra cost.
Back to your question, Chrisyields on treasuries move lower
after the weak payrolls data,but spreads on high yield and
investment grade bondstightened.
That suggests investors expecteasier fed policy, but they're
(03:53):
not panicking about creditrisks.
In fact, demand for yieldremains strong.
To me that shows markets arepricing in a soft landing
scenario, slower growth, but nota recession.
Instead, we're seeing confidencein corporate balance sheets,
even with policy uncertaintythat leads to inflation itself.
We've seen mixed signals in thedata.
(04:15):
What's your read on the trend?
Inflation has definitely cooledfrom its 22 highs, but it's far
from defeated.
Good prices have leveled off,but services remain stubbornly
high.
Things like housing, medicalcare, and insurance are sticky.
Tariffs are another wild card.
Adding cost pressures that workagainst Disinflation, the Fed's
(04:36):
challenge.
Is that even if headline CPIcomes down, underlying drivers
could flare up again.
That's why policymakers remaincautious about declaring
victory.
Now let's turn to sectors.
Communication services rose over5% led by alphabet's, 10% gain
after a court ruling.
Home builders also rallied whileenergy and financials dropped.
(05:00):
What explains this split?
It is rate sensitivity versuscommodities and weak jobs data.
Lower rate expectations boostedboth tech and housing while
weaker oil prices dragged onenergy.
Financials face headwinds fromthe weak jobs.
Data financials typicallybenefit from rising yields and
economic stability.
(05:21):
Investors seem to be rotatingcapital into sectors that
benefit from easing policy andaway from those tied to global
demand swings.
Speaking of housing, mortgagerates are still high compared to
pre pandemic levels.
How do you see that affectingthe housing market going
forward?
Housing has been remarkablyresilient.
Demand hasn't collapsed becausesupply is tight, but
(05:44):
affordability is stretched.
If the Fed follows through withrate cuts, mortgage rates could
ease further, which wouldsupport the builders.
Still structural issues remainlack of inventory, rising
construction costs anddemographic ships.
So while rate cuts provideshort-term relief, housing
affordability is likely to staya challenge.
(06:06):
A broad politics stirred thingsup.
Japan's leaders stepped downFrance facing a confidence vote
and Argentina's electionoutcome.
How do these filter intomarkets?
They all raise fiscal risk.
France's 30 year yield hit thehighest level since 2011, even
above Spain and Greece.
(06:27):
In Japan, the yen weakened onexpectations of looser fiscal
policy limiting the bank ofJapan's tightening.
And Argentina's losses addstress to emerging markets
together.
They're pushing.
Global Bond yields higher andamplifying volatility across the
currencies.
Oil prices dropped last week,but OPEC Plus is signaling
(06:50):
production changes.
Where do you see commoditiesheading?
Oil is really caught between twoforces right now on one side.
Slower global growth ispressuring demand, and the other
OPEC plus is trying to managethe supply.
Longer term geopolitical risksfrom the Middle East to Russia
add volatility.
For investors, it means oil andenergy stocks will stay choppy
(07:13):
with sharp swings up and down.
Gold, meanwhile has been strongas a hedge against uncertainty
reflecting how investors arepositioning defensively.
Equity markets have been led bybig tech.
Do you see leadership broadeningout?
Yes.
We have seen trading days withbroadening and, and that is
known to be healthy.
(07:34):
Small cap stocks and cyclicalshave had their days in the sun,
but I'm not a true believer.
There is a significantdifference in earnings growth
between the Mag seven and theother.
493 stocks of the s and p 500.
Broadening suggest investors arepositioning for rate cuts to
benefit from broader economy,not just a handful of mega cap
(07:54):
names on paper.
If breath continues to improve,it would make this rally more
durable.
The risk, of course, is that ifthe economy weakens too much,
small caps and cyclicals couldsuffer.
And in today's economy,sustainable earnings growth,
sustainable revenues make astock more defensive.
That doesn't mean lessvolatility in the short run, but
(08:17):
over a longer period earningsand growth.
Both do matter.
I'm not saying put all your eggsin the mag seven basket.
I'm saying that the old schoolterm broadening may not hold as
much weight these days.
There are many mid cap and otherlarge cap companies that share
characteristics with the megacap growth earnings
characteristics.
You just have to find them.
(08:39):
Stepping back, how would youdescribe investor sentiment
right now?
It's cautious optimism.
On the one hand, stocks havebeen resilient up double digits,
year to date.
On the other, there'srecognition that the cycle is
maturing.
Investors are hedging morerotating and pricing in
significant fed cuts.
Sentiment isn't euphoric.
(09:00):
But it's not fearful either.
It's a market waiting forclarity on inflation policy and
global politics.
That limbo explains why movesare sharp when the new data
hits.
Corporate earning season ispicking up again, what are you
watching Most closely techearnings will be front and
center this week.
(09:21):
Companies like Oracle and Adobegive us a window into enterprise
spending on AI and cloudcomputing.
So far, the narrative has beenstrong demand.
For AI infrastructure, but thequestion is whether that
translates into broad revenuegrowth or just concentrated
gains in just a few names beyondtech.
I'm watching consumer orientedcompanies, retailers, travel and
(09:45):
autos for signals about howhouseholds are holding up with
the higher rate environment.
Earnings will either confirm orchallenge the idea.
That the economy is justslowing, not slipping into a
recession.
Given this mix of US and globalrisks, how should investors
position themselves?
(10:06):
Definitely diversifystrategically within US
equities, there will be sectorwinners, especially in
everything ai.
I am a big believer in theprivate markets right now.
Credit infrastructure and equityare all compelling diversifiers
in my mind, and internationalequities.
Don't forget about them.
They do look stronger than theyhave in decades.
(10:28):
With healthier growth andcheaper valuations, US bonds
finally provide yield anddownside protection if growth
weakens further.
The era of just buying an indexis definitely fading and active
management matters.
Again, before we wrap up, whatshould Investors watch this
week?
The August inflation numbers arekey producer on Wednesday and
(10:50):
consumer on Thursday.
A softer number would cementexpectations for a September
cut.
Again, Oracle and Adobe earningswill be important for Gage and
enterprise AI and softwarespending and global politics.
From France's government turmoilto Japan's leadership vacuum
will keep investors cautious.
(11:11):
Scott, let me give you the finalword.
What's your big takeaway forinvestors listening today?
For investors, the key isbalance.
The US economy is slowing butnot stalling.
The fed is leaning towardseasing, but inflation risks
limit how far they can go.
Markets will stay volatile asdata shifts week to week for
(11:33):
investors, that means stayingdiversified, leaning into high
quality assets and keeping along-term focus.
Chasing headlines is tempting,but discipline will matter most
in the months ahead.
Well, thank you, Scott, fortaking the time to share your
thoughts.
Thank you to our audience fortuning in.
And remember to please submityour questions via email to
(11:54):
general@paramountassoc.com.
For now, stay informed.
Stay ahead and join us next timefor more key updates shaping the
global economy.
Intro song
Hello everyone.
Welcome to Paramount WealthPerspectives, your go-to podcast
for the latest updates on globalmarkets and current economic
events.
This is your host, Chris Coyle.
(00:21):
I'm the marketing director and afinancial advisor here at
Paramount Associates WealthManagement.
And today I'm joined by ScottTremlett, chief Investment
Officer here at ParamountAssociates Wealth Management.
Let's start with recent marketperformance.
The s and p 500 gained 0.3% lastweek, closing around 64, 80 up
10% year to date.
(00:41):
Scott, what stood out most inthe data?
Thanks, Chris.
What stood out most to me wasthe labor market.
Payrolls grew by just 22,000 inAugust.
Far below expectations priormonths were revised down,
leaving us with a net loss of21,000 jobs.
The unemployment rate rose to4.3%, although participation
(01:03):
rates did nudge higher.
We are not seeing mass layoffs,but hiring is clearly.
Slowly.
It's worth mentioning that theratio of job openings to
unemployed workers fell belowone for the first time since
2021.
A sign that the labor demand issoftening, add higher jobless
claims and weaker a DP payrollgrowth and is clear.
(01:25):
Momentum is fading.
Switching to talk about the fedmarkets are convinced rate cuts
are coming in September.
How do you see it?
Markets expect at least a 25basis point cut with growing.
Odds of 50 futures imply overone point a half percent of
easing through late 2026, butthe Fed isn't just following
(01:45):
markets, inflation, especiallyin services.
Remain sticky.
Chicago Fed President AustinGoolsby has said he wants to see
the August CPI before making aSeptember call.
That number is coming Thursday.
This is certainly a balancingact.
Weak labor data says cut, buttariffs and fiscal policy are
(02:07):
still pushing inflation higher.
My view is the Fed takes thesmaller step this month so they
retain more flexibility forfuture decisions.
And beyond September, what risksdo you see in fed policy?
Several risks.
First, the risk of cutting tooaggressively and reigniting
inflation that would hurt theircredibility, which was already
(02:30):
challenged during the 20 21, 2022 inflation surge.
Second structural changes in thelabor market.
Lower immigration means we needfewer new jobs to hold
unemployment steady.
That makes the August payrollmiss less alarming than
headlines suggest.
Third, politics with Fedleadership set the change in
(02:51):
2026.
Some investors are betting on amore dubbish regime if that's
driving market expectations.
It could misalign with currentpolicy makers.
Finally, the Fed's own forecastsalready assumed rising
unemployment and a 3% inflation.
By year end, so in their view,we're still on track.
(03:12):
That makes a rapid fire cuttingcycle less likely than markets
expect.
Bond markets are as sendingsignals too.
Treasury yields and creditspreads shifted last week.
How do you interpret that?
First for our listeners, whenbond spreads get wider, it means
investors are more worried andwant extra return for taking
risks.
(03:32):
When they tighten, it showsconfidences up and investors are
more comfortable lending at alower extra cost.
Back to your question, Chrisyields on treasuries move lower
after the weak payrolls data,but spreads on high yield and
investment grade bondstightened.
That suggests investors expecteasier fed policy, but they're
(03:53):
not panicking about creditrisks.
In fact, demand for yieldremains strong.
To me that shows markets arepricing in a soft landing
scenario, slower growth, but nota recession.
Instead, we're seeing confidencein corporate balance sheets,
even with policy uncertaintythat leads to inflation itself.
We've seen mixed signals in thedata.
(04:15):
What's your read on the trend?
Inflation has definitely cooledfrom its 22 highs, but it's far
from defeated.
Good prices have leveled off,but services remain stubbornly
high.
Things like housing, medicalcare, and insurance are sticky.
Tariffs are another wild card.
Adding cost pressures that workagainst Disinflation, the Fed's
(04:36):
challenge.
Is that even if headline CPIcomes down, underlying drivers
could flare up again.
That's why policymakers remaincautious about declaring
victory.
Now let's turn to sectors.
Communication services rose over5% led by alphabet's, 10% gain
after a court ruling.
Home builders also rallied whileenergy and financials dropped.
(05:00):
What explains this split?
It is rate sensitivity versuscommodities and weak jobs data.
Lower rate expectations boostedboth tech and housing while
weaker oil prices dragged onenergy.
Financials face headwinds fromthe weak jobs.
Data financials typicallybenefit from rising yields and
economic stability.
(05:21):
Investors seem to be rotatingcapital into sectors that
benefit from easing policy andaway from those tied to global
demand swings.
Speaking of housing, mortgagerates are still high compared to
pre pandemic levels.
How do you see that affectingthe housing market going
forward?
Housing has been remarkablyresilient.
Demand hasn't collapsed becausesupply is tight, but
(05:44):
affordability is stretched.
If the Fed follows through withrate cuts, mortgage rates could
ease further, which wouldsupport the builders.
Still structural issues remainlack of inventory, rising
construction costs anddemographic ships.
So while rate cuts provideshort-term relief, housing
affordability is likely to staya challenge.
(06:06):
A broad politics stirred thingsup.
Japan's leaders stepped downFrance facing a confidence vote
and Argentina's electionoutcome.
How do these filter intomarkets?
They all raise fiscal risk.
France's 30 year yield hit thehighest level since 2011, even
above Spain and Greece.
(06:27):
In Japan, the yen weakened onexpectations of looser fiscal
policy limiting the bank ofJapan's tightening.
And Argentina's losses addstress to emerging markets
together.
They're pushing.
Global Bond yields higher andamplifying volatility across the
currencies.
Oil prices dropped last week,but OPEC Plus is signaling
(06:50):
production changes.
Where do you see commoditiesheading?
Oil is really caught between twoforces right now on one side.
Slower global growth ispressuring demand, and the other
OPEC plus is trying to managethe supply.
Longer term geopolitical risksfrom the Middle East to Russia
add volatility.
For investors, it means oil andenergy stocks will stay choppy
(07:13):
with sharp swings up and down.
Gold, meanwhile has been strongas a hedge against uncertainty
reflecting how investors arepositioning defensively.
Equity markets have been led bybig tech.
Do you see leadership broadeningout?
Yes.
We have seen trading days withbroadening and, and that is
known to be healthy.
(07:34):
Small cap stocks and cyclicalshave had their days in the sun,
but I'm not a true believer.
There is a significantdifference in earnings growth
between the Mag seven and theother.
493 stocks of the s and p 500.
Broadening suggest investors arepositioning for rate cuts to
benefit from broader economy,not just a handful of mega cap
(07:54):
names on paper.
If breath continues to improve,it would make this rally more
durable.
The risk, of course, is that ifthe economy weakens too much,
small caps and cyclicals couldsuffer.
And in today's economy,sustainable earnings growth,
sustainable revenues make astock more defensive.
That doesn't mean lessvolatility in the short run, but
(08:17):
over a longer period earningsand growth.
Both do matter.
I'm not saying put all your eggsin the mag seven basket.
I'm saying that the old schoolterm broadening may not hold as
much weight these days.
There are many mid cap and otherlarge cap companies that share
characteristics with the megacap growth earnings
characteristics.
You just have to find them.
(08:39):
Stepping back, how would youdescribe investor sentiment
right now?
It's cautious optimism.
On the one hand, stocks havebeen resilient up double digits,
year to date.
On the other, there'srecognition that the cycle is
maturing.
Investors are hedging morerotating and pricing in
significant fed cuts.
Sentiment isn't euphoric.
(09:00):
But it's not fearful either.
It's a market waiting forclarity on inflation policy and
global politics.
That limbo explains why movesare sharp when the new data
hits.
Corporate earning season ispicking up again, what are you
watching Most closely techearnings will be front and
center this week.
(09:21):
Companies like Oracle and Adobegive us a window into enterprise
spending on AI and cloudcomputing.
So far, the narrative has beenstrong demand.
For AI infrastructure, but thequestion is whether that
translates into broad revenuegrowth or just concentrated
gains in just a few names beyondtech.
I'm watching consumer orientedcompanies, retailers, travel and
(09:45):
autos for signals about howhouseholds are holding up with
the higher rate environment.
Earnings will either confirm orchallenge the idea.
That the economy is justslowing, not slipping into a
recession.
Given this mix of US and globalrisks, how should investors
position themselves?
(10:06):
Definitely diversifystrategically within US
equities, there will be sectorwinners, especially in
everything ai.
I am a big believer in theprivate markets right now.
Credit infrastructure and equityare all compelling diversifiers
in my mind, and internationalequities.
Don't forget about them.
They do look stronger than theyhave in decades.
(10:28):
With healthier growth andcheaper valuations, US bonds
finally provide yield anddownside protection if growth
weakens further.
The era of just buying an indexis definitely fading and active
management matters.
Again, before we wrap up, whatshould Investors watch this
week?
The August inflation numbers arekey producer on Wednesday and
(10:50):
consumer on Thursday.
A softer number would cementexpectations for a September
cut.
Again, Oracle and Adobe earningswill be important for Gage and
enterprise AI and softwarespending and global politics.
From France's government turmoilto Japan's leadership vacuum
will keep investors cautious.
(11:11):
Scott, let me give you the finalword.
What's your big takeaway forinvestors listening today?
For investors, the key isbalance.
The US economy is slowing butnot stalling.
The fed is leaning towardseasing, but inflation risks
limit how far they can go.
Markets will stay volatile asdata shifts week to week for
(11:33):
investors, that means stayingdiversified, leaning into high
quality assets and keeping along-term focus.
Chasing headlines is tempting,but discipline will matter most
in the months ahead.
Well, thank you, Scott, fortaking the time to share your
thoughts.
Thank you to our audience fortuning in.
And remember to please submityour questions via email to
(11:54):
general@paramountassoc.com.
For now, stay informed.
Stay ahead and join us next timefor more key updates shaping the
global economy.
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