Third Quarter 2024 Market Commentary and Current Economic Update

Note: Listen to our latest Kitchen Table Podcast Episode where Dave and Nick Discuss this in detail.

Stocks continued to surge higher during the third quarter, with every index we watch posting positive returns. The Federal Reserve finally pivoted to lowering interest rates in September. Overall, inflation has continued to cool, falling to 2.6% in August. While the labor market is weaker than earlier in the year, unemployment remains relatively low. Despite political campaign rhetoric, none of the usual recessionary indicators are currently showing signs of an imminent slowdown.

Summary:

• Stocks across the globe have been on a tear over the last 12 months.
• Looking to stabilize a slowing labor market and with inflation closer to its 2% target, the Fed eased monetary policy by 50 bps in September.
• You may have heard, there is an election coming in November…

 Glass half-full:

• Inflation (CPI) fell to 2.6% in August, providing the Fed cover to decrease the Fed Funds rate.
• Recessionary indicators are not flashing red.
• Parts of the yield curve have un-inverted (e.g. normalized to upward sloping), meaning bond investors are being compensated for term risk.

 Glass half-empty:

• The Fed’s concerns have shifted from inflation to the labor market. Unemployment rose slightly to 4.2% in August.
• Geopolitics and the upcoming US election have some investors’ nerves frayed.
• Will China’s stimulus package happen, and will it be enough to boost consumer confidence and bolster their property market?

For the details and a full explanation of what happened in the third quarter and where the economy sits now, you can read East Bay’s full Quarterly Investment Commentary HERE or watch Mario’s recorded presentation.

Watch the corresponding Podcast episode on our YouTube Channel.