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The Next Few Weeks May be Rocky Ahead of the September Fed Meeting: Market Commentary from Cabana’s CEO – September 5, 2024 

1 month ago

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August ended with a great rally off the lows seen at the beginning of the month. Incredibly, all the major indices finished in the black after starting the month down more than 5% in just a few trading days. Bonds also rallied as yields fell in anticipation of the Federal Reserve’s meeting beginning on September 16, and the likelihood of a first rate cut.  

All that said, September has started out with pronounced selling and the Nasdaq falling back below its 50-day moving average. Some of this is to be expected after the last two weeks of gains and the fact that September is historically the worst month of the year for stocks – add in the Fed meeting and you have the recipe for a weak market over the next few weeks. The tech-focused Nasdaq is underperforming other sectors as money continues to leave overbought AI stocks and find a home elsewhere, including bonds. To me, this short-term volatility is a small price to pay to get a more balanced market heading into the fourth quarter.  

Unemployment numbers continue to be the most watched data by investors. We just got the lowest job openings in more than three years. This supports a Fed rate cut of 50bps. The bond market is currently divided almost equally on a 25bps cut vs. a 50bps cut. We have a couple more reports to digest between now and then, but I personally think the fed would be smart to cut 50bps and signal they are willing to get in front of any whiff of recession. I think the market would love to see this as well, so add that to the list of reasons for stocks to be weak going into the meeting. It would be hard to justify a bigger cut if stocks were near all-time highs.  

So, my message here is sit tight, the next few weeks may be rocky.  

At Cabana, we remain in a “bullish scene” and are allocated accordingly. 

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 Cabana. The 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/. 

Morningstar’s Moderate Target Risk index  follows a moderate equity risk preference and is based on well-established asset allocation methodology from Ibbotson Associates, a Morningstar company.  

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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