Notes on the Week Ahead

This discussion dives into the recent turbulence of oil prices, likening them to a roller coaster. The conversation explores the impact of falling oil prices on inflation and the recent CPI slip below 3%. Insights include the gap between EIA forecasts and futures markets, and the reasons behind OPEC+ raising output amidst a production glut. The hosts also dissect sanctions on Russian oil and their limited effectiveness. Ultimately, they ponder how lingering low oil prices could reshape inflation and Fed policy.

David Kelly dives into the complexities of long-term investing against the backdrop of rising federal debt. He highlights the distractions investors face from political noise and offers insights on high U.S. large-cap valuations. The discussion emphasizes the significance of debt-to-GDP ratios and potential risks that could exacerbate debt growth, including recessions and policy changes. Kelly argues for diversification into alternatives and international stocks to mitigate the effects of federal debt on investment portfolios.

The government shutdown has surprisingly left markets unfazed, with the S&P500 reaching record highs. Rising stock valuations raise concerns about potential risks if economic fundamentals deteriorate. The shutdown is causing furloughs and potential layoffs among contract workers, disrupting essential economic data releases. Additionally, evidence of a softening economy looms, impacting growth forecasts for Q4. Investors are urged to consider diversification and risk reduction strategies during this uncertain period.

The discussion reflects on a memorable lunch in 2009 where a bet was placed concerning market recovery. It explores the evolution from the financial crisis low to the bull market and highlights how market values have surpassed GDP growth since the mid-1980s. The conversation dives into earnings, valuation risks, potential market shocks, and provides advice on tax-efficient diversification. The final thoughts encourage a strategic shift from U.S. megacap stocks to include international equities and alternative investments.

This discussion dives into the complexities of predicting the Federal Reserve's interest rate moves amidst inflation and unemployment pressures. Listeners learn about the cautious strategies investors should consider, as market expectations shift. The conversation also unpacks key economic indicators like GDP growth and inflation rates, highlighting the importance of adapting investment approaches in response to these forecasts and the ever-evolving political landscape.

Markets reacted dramatically to a disappointing jobs report, spiking initially before retreating. The discussion delves into how potential Federal Reserve rate cuts could influence consumer spending and household income. It also highlights the complexities of mortgage rates and fixed-rate debt, which can dampen the positive effects of lower rates. Additionally, the psychological effects of interest rate changes on borrowing behaviors are examined, along with the potential benefits of diversifying investments into foreign assets.

American summers, much more so than in the rest of the world, are defined by two bookends: Memorial Day and Labor Day. As a result, the first week in September is always a time to review and plan. This is particularly important for investors this year since, facing a barrage of unsettling political and economic news, on one side, and very solid investment returns, on the other, it’s tempting to ignore fundamentals altogether and leave investments on auto-pilot.

On August 7th, with little fanfare, the IRS announced that, as part of its phased implementation of the OBBBA, it would not be adjusting W2 or 1099 forms for the current calendar year but would provide guidance and new forms, in due course, for calendar 2026. This seemingly innocuous statement confirms that we will see in an even larger crop of personal income tax refunds early in 2026 than was anticipated when the OBBBA was passed. These higher income tax refunds should work much like a new round of stimulus checks, adding to consumer demand and inflation pressures early next year.

Modern life is a whirlwind of distractions that obscure our understanding of the economy. The discussion highlights how today's financial landscape demands a new focus, particularly regarding the money supply. It delves into the historical shifts in monetary policy and their economic implications. There’s also a look at how innovations like electronic payments have transformed monetary transactions, significantly affecting economic forecasting. Overall, it’s a striking examination of the distractions that can lead us astray in investment strategies.

Get ready for a possible rise in inflation! Tariffs may send prices up, but low energy costs and declining shelter inflation could temper the heat. The dollar's weakness and labor shortages add to the inflation puzzle, while fiscal stimulus looms ahead of the mid-terms. Plus, the discussion dives into how interest rates and CPI trends might shape the economy. Investors are urged to diversify as these factors may impact asset prices.