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Navigating Economic Uncertainty: Insights from the September Fed Meeting

Market Movers: The Opening Bell

September 18, 2025

Video Transcript

You know, it's, it is such an unusual situation.

Um, ordinarily when the labor market is weak inflation is low, and when the labor market is really strong, that's when you gotta be careful about inflation.

So we have a situation where we have two-sided risk and that means there's no risk free path and so it's quite a difficult, uh, situation for policymakers.

The Federal Reserve cut interest rates by 25 basis points at the conclusion of its September meeting.

Feter sticking inflation and worrying labor market data presents two-sided economic risks as we watch the market open.

Joining me at the New York Stock Exchange is David Bush, CIO at Trace and Wealth.

David, great to have you here.

Thank you so much for joining me.

Thank you.

I appreciate.

Well, there's a lot of anticipation going into the September Fed meeting.

We got that widely expected 25 basis point rate cut.

But of course the details from the presser as well as the summary of economic projections, what are the implications and what does it mean for the markets?

Yes, it was, it was kind of an interesting meeting and actually post Fed, you know, interview.

So essentially, you know, the Fed is on a balancing, right?

Labor markets as well as inflation.

Now we've seen inflation come down from its all-time highs, or not all-time highs, but recent highs, and but we've also started to see some softening in the labor market with the big revision.

So the Fed's trying to Manage both of both of those variables, but they did say this was a risk management cut, which I thought was telling.

Yeah, I'm glad you mentioned that because I was going to ask you about that term.

What does that actually mean?

Yeah, with their dual mandate right now you have inflation that's persistent and it's not coming down nearly as fast as they had hoped, but at the same time with the labor market softening, they have to balance both of those, you know, inflation as well as labor, so.

I think this was a signal to say, you know, let's let's lower rates.

Help the labor market stabilize.

Meanwhile, their summary of economic projections which you mentioned shows a forecasted growth in GDP and inflation and a little, you know, rise, a slight rise in unemployment.

Yeah, and as we look ahead to next week, we know we will be getting the revision in GDP figures as well as PCE.

And as we head into the month of October, we'll be keeping an eye on those non-farm payrolls figures.

But when it comes to the bigger picture here, what are the implications as we reach your end?

Yeah, for investors specifically, the way that I would position my portfolio or what I'm advising is, you know, on the fixed income side, be at that 3 to 5 year part of the curve.

Lean into quality names, I corporates, but also add a position to tips.

Treasury inflation protected securities to help manage some of that inflation volatility that's likely to come over the next year.

In terms of the equity markets, you know, obviously tech has been a big winner over the last several years, but now the market is broadening.

So with a positively sloping curve, we would see financials, consumer discretionary, and materials do well in small caps.

You know, because lower rates benefit, it's a tailwind for small caps.

Yeah, and while we're on the topic of small caps and fixed income, I do want to shift our focus on to what we saw last year in September in terms of the bond market and the reaction to the Fed beginning its rate cutting cycle at the end of 2024.

But what are you seeing right now when it comes to both the short and long end of the market here in the US?

Yeah, on the, on the short end, we'll see that the front end of the yo curve, you know, rotate down, so we'll have a positively slipping curve where I can see some risk is those who are buying longer dated bonds, you know, call it outside of 10 years because that inflation volatility can pick up and cause those prices to change pretty rapidly.

Yeah, and risk means opportunity for the market.

So what sectors are you paying attention to right now?

Why?

Yeah, I mean, obviously tech, you know, tech is the wave of the future, so we're going to continue to be invested in tech, but also, you know, I would, I would shift into some value, dividend payers, and the reason is it's more of a defensive play.

Yeah, and before I let you go, you mentioned value.

So what area of the market are you talking about when you're mentioning value, because we are seeing both elevated levels for growth as well as value, but quite a stark difference when we're talking about mega versus small.

Yeah, so I look at companies that have a $10 billion market cap and above that pay, you know, cyclically proven businesses that pay dividends and you know, these are companies that have stood the test of time.

Yeah, I think dividend is a key word here.

So thank you so much for joining me today, David.

I appreciate your insights on your perspective.

Thank you, Remy.

Thank you.

“This was a risk management cut, which I thought was telling.” – 01:14

David Busch, Chief Investment Officer at Trajan Wealth, joins Remy Blaire at the New York Stock Exchange to discuss the current economic landscape and the implications of the Federal Reserve’s recent actions.

The segment opens with Remy highlighting the unusual economic situation where weak labor markets coincide with persistent inflation, a scenario that presents significant challenges for policymakers. David explains that the Federal Reserve’s decision to cut interest rates by 25 basis points during its September meeting is a response to the dual risks of inflation and labor market stability. He describes this rate cut as a “risk management cut,” aimed at balancing these two critical economic factors.

As the conversation progresses, Remy and David delve into the implications of the Fed’s decision for the market. David emphasizes the importance of monitoring upcoming economic indicators, such as GDP revisions and nonfarm payroll figures, which will provide further insight into the economic trajectory. He advises investors to position their portfolios strategically, recommending a focus on the three to five-year segment of the fixed income market, quality names, and Treasury Inflation Protected Securities (TIPS) to manage potential inflation volatility.

The discussion shifts to the equity markets, where David notes that while technology stocks have been strong performers, there is a growing opportunity in sectors like financials, consumer discretionary, and materials. He points out that lower interest rates create a favorable environment for small-cap stocks, which could benefit from this economic backdrop.

Remy and David also explore the current dynamics of the bond market, with David cautioning that while the front end of the yield curve may rotate down, there are risks associated with longer-dated bonds due to potential inflation volatility.

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