Market Pulse

Markets ended the month of August with more solid gains. The Dow led the way with a gain of 3.2%, while the S&P 500 rose 1.9% and Nasdaq advanced 1.6%. The green arrows pushed the stock market to all-time highs with the S&P 500 achieving five record closes in August, and the Nasdaq achieving four. Meanwhile, the Dow closed at a record twice this past month, finally surpassing the previous highs it set in 2024.

The market’s impressive summer rally has been supported by a resilient consumer, solid corporate earnings, and very optimistic outlooks for AI related businesses.  While we hope the markets positive trend will remain our friend, the path forward may not be as smooth as the last several months. 

To start, the latest jobs report was dismal, showing only 22,000 new jobs created compared to an estimate for 80,000.  The same report confirmed that the unemployment rate increased from 4.25% to 4.32%, adding to concerns about economic growth and consumer sentiment… which according to the University of Michigan’s consumer sentiment index declined from 61.7 to 58.2 in August.

September also happens to be the weakest month of the year for stocks.  Over the past 75 years, the S&P 500 has delivered an average return of around -0.7% for the month.  But history isn’t the only factor raising doubts about the markets’ next move.  Tariff concerns remain high as inflation remains at stubborn levels, job growth is obviously slowing, and everyone is expecting the Federal Reserve to not only lower rates during their September meeting but also a second time before year end.

It’s a tricky market to interpret because slowing job growth is likely to impact consumer spending, which then impacts economic growth. However, if we don’t have slowing jobs and economic growth, the Fed would be less likely to cut rates, which is what many people want so that mortgage and auto loan rates come down. It can leave investors wondering if bad news on jobs is actually good news, or if bad news is bad news.

Our sense is that it is important to position portfolios for dual outcomes. Markets could take a breather here in Sept / Oct and even turn negative if a new budget bill isn’t passed by congress by the end of the month… and / or get ugly or compounded if Tariff’s are reversed in November. However, there have also been significant investment commitments from leading corporations and foreign countries to the US that are just beginning to trickle in.  The One Big Beautiful Bill Act surely has its short-comings, but deregulation and tax relief measures should be a tailwind to the economy.  Lastly, it may appear that AI is hurting employment and thus raising alarm bells about a possible recession.  Yet, when you consider the huge rise in profits from AI applications in the coming years, it’s possible that GDP and corporate profits could soar even as unemployment moves higher… creating a disconnect from current economic models and viewpoints to a new trend worth watching.

Therefore, our goal is to maintain investments poised to capture more upside from tech and AI, while also rotating into some less favored areas of the market that are more defensive and provide consistent, and even growing dividends. In particular, international equities thanks to a declining dollar and attractive valuations as well as banks and homebuilders.

 

Book Review: The Lion Tracker’s Guide To Life by Boyd Varty

A friend had mentioned this book to me a couple years ago and then during a recent conversation nudged me again to take the time to read the book.  So I did and walked away with some valuable thoughts and ideas, including a few gems we can apply to our own personal lives and situations. 

Tracking was the first story our species ever told. And when you follow an animal’s trail you are linked to every person who has ever read the earth, every ancient culture that has walked the trail.  Tracking is a birthright for every person, a memory of how to converse with nature.

Inside you is the wild part of you that knows what your gift, purpose, and mission are. That part of you is wild and elusive. It cannot be captured, as it is always evolving.  To live on its trail, you must become a tracker. 

Most of us are looking but not seeing…  Nature doesn’t see status or wealth or social position.  It cares only about presence, ones ability to read the signs, navigate the terrain, and translate the language of the wilderness.  Nature is the great equalizer.

People don’t know how to be invested in a discovery rather than an outcome.

Don’t try to be someone, rather find that thing that is so engaging that it makes you forget yourself.

As paradoxical as it sounds, going down a path and not finding a track is part of finding the track… the path of not here is part of the path of here. 

Maybe for the first time in human history, modern society, the dominant culture, has become the thing that isolates us.  If you could track your way out of the burdens of modern life and create an existence that is much more an expression of who you are, then your life could become a living mythology.  One that could inspire others.

As a river runs its course it wordlessly creates life. In the villages, women draw water in large buckets and young boys fish for bream and barbell. Inside the reserve, the river offers water on hot days for giraffes; it provides reeds and nest sites for thousands of birds. It invites huge trees to its richly soiled banks, and it asks for nothing as it gives life out of its very river-ness. All around us nature quietly teaches us about abundance and generosity.

Step off the highway of modern life and go quietly onto your own track.  Go to a new trail where you can hear the whisper of your wild self in the echoes of the forest.  Find the trail of something wild and dangerous and worthy of your fear and joy and focus.  Live deeply on your own inner guidance. 

Remember to prepare for the call. Know the call when it comes by the fact that not doing it would feel profoundly wrong.  Open yourself to the unknown and develop your track awareness. 

I hope these short excerpts and tidbits provided you with a moment to stop and reflect.  To maybe step off the busy treadmill of life and begin to reconnect with an important part of you. Or maybe the time to consider your life’s track and the legacy or riverbank of life that you are creating for your family and community.