Babies, Rate Cuts and Elections… Oh My!: Market Commentary from Cabana’s CEO – November 1, 2024 

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We are back after a one-month hiatus following the birth of Mason Benjamin Searcy, the beautiful baby boy of Georgia Searcy, our CMO and head of all things communication. By the way… he is also my grandson. Did I mention he was beautiful? 

So, what’s been going on in the markets? We have seen interest rates climb throughout October as hotter-than-expected inflation and a resilient economy has caused investors to question the path of rate cuts by the Federal Reserve. Markets are pricing in the near certainty of another 25 basis point cut next week, but after that things look uncertain. Interest rates are also being pressured by bets that Trump wins the White House. Wall Street views his policies as inflationary, primarily due to the impacts proposed tariffs will have on prices. All in all, bonds and other interest-rate-sensitive assets just can’t catch a break. We are now three years into what may be the worst sustained bond market in history. I am also hearing more and more talk about how the ballooning deficit is causing the bond market to begin to quiver. Talk about adding insult to injury. 

Stocks seem to be able to hang in there despite all else that’s going on. Volatility remains elevated as evidenced by the 1-2% swings we are seeing. The first half of October saw indices march higher, and the second half saw them give those gains back. 

Then there is the little thing next Tuesday that is worthy of attention. Our never-ending race for the Presidency will be decided. Or will it be? Sometimes it seems like the last one still isn’t decided. It is well established that markets like certainty and I am not sure we get much of that anymore. Maybe that will improve and the next week should give us a preview. 

Finally, let us acknowledge that the collective wisdom of millions and millions of investors causes all of what I just wrote to be “priced in”. Nobody outsmarts the stock or bond market (at least not for long or legally). So, we do what we can do, which is have a plan and stick to it. I don’t think anyone should take on more risk than they can stomach. It matters not how quick and how much you make if you give it all back… or worse yet, quit altogether due to emotional pain. It’s the long game that matters in investing. 

At Cabana, we remain in our Bullish Scene. 

Disclaimers

January 17, 2024

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. This material may only be distributed in its original format and may not be altered or reproduced without the prior written consent of CabanaThe opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.  

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All indices and categories are unmanaged and an individual cannot invest directly in an index or category. Index returns do not include fees or expenses. Benchmark indices will likely materially differ from Cabana’s portfolio strategies. Detailed information as to how the returns are calculated can be obtained online from the following link: https://thecabanagroup.com/disclaimers/performance-reporting-methodology/. 

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The Nasdaq Composite Index is a market-weight capitalization index that covers more than 3,000 stocks listed on the Nasdaq Stock Market. What is the Nasdaq Composite, and What Companies are in It? | Nasdaq