Just 2 weeks from now...the Fed will show their hand at the September 18th meeting. Of great interest will be statements about the future pace of cuts.
The faster cuts roll out...the better it is for the economy...the better it is for stock prices.
Thus, not surprising for investors to take their foot off the gas pedal to start September awaiting this decision. This has the S&P 500 (SPY) peeling back from the recent highs.
Today we will discuss more about expectations from the Fed as well as a review of economic conditions to help us put our trading plan together.
Market Outlook
As for rate cuts, that party begins on September 18th barring some miracle as all signs point to this happening. Even Powell has been a bit more transparent than usual recently saying “the time has come for policy to adjust”.
The main curiosity about this September meeting is whether it will come with a 25 or 50 basis point cut. Right now bond investors are tilted more towards 25 points...but I think 50 is a shade more likely.
Looking out to the end of the year, investors are currently projecting that rates will be about 100 basis points lower, which is a pretty aggressive retreat from current levels. If true, then it is not hard to see GDP rolling up closer to 3% by year end of 2025. With that earnings growth should be closer to an appealing 10% rate versus the anemic pace of growth the past couple years.
It is because of how lower rates is a catalyst for the economy that I can not stomach any investment headline of late talking about increased fear of recession. That is utter non-sense.
First, because current GDPNow estimates point to +2.1% GDP growth in the current quarter. Second, because any further softening would prompt the Fed to cut rates even faster which would increase odds of a future economic pickup.
Any way you slice this info it points to a bullish outcome for stocks. Just not the gung-ho bullish market environment that marked the first 2 years of this cycle that started in October 2022.
The year ahead is likely more of a neutral year for the overall market with the main indices not moving much at all. This means the average stock will be about breakeven.
We are not interested in owning average stocks...and certainly not poor stocks...our goal is to line our portfolio with as many stellar stocks as possible.
Shining a light on the best stocks is the POWR Ratings analysis of 118 factors for over 5,300 stocks. Only the top 5% end up as A rated. And that is why they have enjoyed a +28.56% average annual return going back to 1999.
My personal favorite POWR Ratings stocks are shared in the section below...
What To Do Next?
Discover my current portfolio of 11 stocks packed to the brim with the outperforming benefits found in our exclusive POWR Ratings model. (Nearly 4X better than the S&P 500 going back to 1999).
All of these hand selected picks are all based on my 44 years of investing experience seeing bull markets...bear markets...and everything between.
And right now this portfolio is beating the stuffing out of the market.
If you are curious to learn more, and want to see my 11 timely stock recommendations, then please click the link below to get started now.
Steve Reitmeister’s Trading Plan & Top 11 Stocks >
Wishing you a world of investment success!
SPY shares were trading at $549.61 per share on Thursday afternoon, down $1.34 (-0.24%). Year-to-date, SPY has gained 16.37%, versus a % rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.
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