 data, which has risen less than forecasted, and mentions that the U.S. government is now in its 24th day of shutdown. She notes the Senate's failure to advance a GOP-backed measure aimed at paying federal employees, military members, and contractors who have continued to work without pay.){kind=link}
“We’re actually, I think, in a little bit of a stickier situation the longer this shutdown goes in terms of figuring out what is the trajectory for inflation here.” – 01:50
Remy Blaire welcomes Brian Jacobsen, the Chief Economist at Annex Wealth Management, to discuss the current state of the U.S. economy and financial markets. The episode opens with a positive note as Wall Street is reported to be opening higher, with major stock averages up by at least half a percentage point. Remy highlights the recent Consumer Price Index (CPI) data, which has risen less than forecasted, and mentions that the U.S. government is now in its 24th day of shutdown. She notes the Senate’s failure to advance a GOP-backed measure aimed at paying federal employees, military members, and contractors who have continued to work without pay.
Brian shares his insights on the inflation report, indicating that core inflation has increased less than anticipated, which reinforces expectations that the Federal Reserve will cut the Fed funds rate by 25 basis points in their upcoming meeting on October 28th to 29th. However, he raises concerns about the implications of the ongoing government shutdown on future inflation data, as the Bureau of Labor Statistics is unable to collect data for October.
The conversation shifts to corporate America, where Remy points out that recent earnings reports have provided a mixed picture of industry performance. Brian discusses the reassuring loan quality reported by major banks, despite some isolated concerns regarding specific cases. He contrasts the performance of companies like Tesla and General Motors, noting that while Tesla has seen an increase in sales, its costs have risen significantly, particularly following the elimination of electric vehicle credits. In contrast, Procter & Gamble’s earnings report reveals that the company has successfully pushed prices higher, which may lead to additional pressure on consumers as the holiday season approaches.
Remy then brings up the upcoming meeting between President Trump and China’s leader Xi Jinping, which Brian describes as critical for U.S.-China trade relations. He expresses cautious optimism about the potential outcomes, suggesting that the tariffs scheduled to increase on November 1st may not reach the worst-case scenario and could instead be set at a more manageable level.
As the segment progresses, Brian emphasizes the importance of monitoring equities, yields, and precious metals as the end of October approaches. He expresses concerns about potential froth in certain market areas and advises investors to focus on growth at a reasonable price rather than growth at any price. Brian predicts some volatility in the markets, suggesting that the S&P 500 may end the year close to its current levels, with a potential entry point around 6,500 in 2026.