All-Time Highs, But Cracks Emerging: What’s Next for Markets? | Rise UP!
Summary
Market Outlook: Despite markets reaching all-time highs, there are underlying economic concerns, with the market relying on potential Fed rate cuts to address economic weaknesses.
Inflation Insights: Inflation remains persistent, with recent CPI data indicating firmer price pressures, particularly in services, suggesting potential long-term inflation risks.
Investment Strategies: In light of potential inflation and economic volatility, investors are advised to consider inflation-resistant assets such as TIPS, commodities, and real estate, while maintaining a diversified portfolio.
Interest Rates and Housing: A Fed rate cut could further boost housing demand, with mortgage rates already at an 11-month low, potentially increasing real estate's appeal as an investment.
Financial Planning: With many parents financially supporting adult children, it's crucial to balance current support with long-term retirement security, potentially utilizing gifting strategies and ensuring a solid financial plan.
Fed Policy and Economic Data: Upcoming Fed decisions and economic reports, including retail sales and housing starts, will be pivotal in shaping market expectations and the Fed's approach to balancing growth and inflation.
Sector Opportunities: Investors are cautioned against chasing high-flying sectors like AI, with suggestions to explore undervalued areas such as healthcare and international equities for potential opportunities.
Transcript
So, it feels like we're in more of a mixed bag, even though the market doesn't seem to care. Um, and as I mentioned earlier, maybe the market is, you know, depending on the Fed lowering rates to help cure what is happening under the surface in the economy. Um, but with the markets priced for perfection in a less than perfect environment, that's what keeps us somewhat cautious. [Applause] [Music] Welcome to Rise Up, where we take a look at this week's biggest stories out there and break them down so you can understand what's happening to make better decisions on growing and protecting your portfolio. With everything going on in the market, it can be very confusing. But our mission here at RiseUp is to make sure you you meet with the very best wealth management experts. They have the best conversations and people who are working directly with clients, helping them through each and every day making important financial decisions. If you would like some extra help even during this session, please go to wealthon.com and get a free portfolio review from one of our onepoint advisors who are only there to work in your best interests. My name is Terry Coulsson and I'm a managing partner here at RiseGrowth. I'm a certified financial planner and my co-host today, Joe Duran, is unable to make it with us, but we have some excellent advisors with us. First and foremost, John Betlo, who's a partner and a wealth advisor at OnePoint BFG Wealth Partners. Welcome, John. Happy to be here as always. It's good to have you. and our another another blast from the past who's joining us, Alexis Miller, director of investment research and alternative investments at OnePoint BFG. Welcome back, Alexis. Thanks, Terry. Happy to be here. All right. Well, let's get started. I think it's always important to talk about how the markets are doing right now. All three major indices had intraday all-time highs at the close of Thursday. S&P ended up 085% at 6587 while the Nasdaq finished up 72% at 22043. The Dow Jones also average closed up 600 points at 1.36 at 46108. So all good news, Alexis, what do you think's going on in the market today? Sure. So as you mentioned, you know, markets hit another all-time high intraday today. Um, as you know, investors digested the latest consumer inflation reading and jobless claims report. Um, and while the CPI number was actually a tad higher than expected on, you know, a month-over-month basis, um, the reading was still somewhat in line with expectations on an annual basis. Um, but it was really the jobless claims report that seemed to steal the show. Um, all to say that, you know, it seems like investors are taking this reading and that we're seeing really a green light. uh for the Fed to lower rates next week. Um and lower rates are generally supportive of stock prices and obviously help lower borrowing costs um which can be supportive of growth. So it does seem to be that the market believes the Fed will lower rates um and maybe that that even will help be a cure for weakening economy. That's right. So, it's looking a little bit more optimistic. And last week when we were on together, we talked about the upcoming reports, the PPI and the CPI. Lots of acronyms today. On Wednesday, the PPI came out for August. It showed an unexpected decline of 0.1% month overmonth. And the median forecast for PPI was an increase of 0.3%. On the other hand, CPI came out on Thursday, just today, showing an increase of 0.4% month overmonth. This comes in slightly above the projection for a 0.3% increase. So, you know, some of this is looking very positive. Some maybe we want it a little bit higher, but what does this divergence tell you, Alexis, about where inflation pressures really are coming from right now? Sure. So I think you know the bottom line remains the same that inflation has been sticky and remains sticky around you know 3%. Um and the recent print that we saw from CPI is also a confirmation that there is some firmer price pressures coming in. Um there has been persistence in service price gains and now we're starting to see a little bit of a lift in goods prices. Um, so I think on the good side, maybe that's more tariff related and that could be a shorter term effect. Um, but that there is probably some longer term risk around the the wage sensitive services. That's right. And you know, we don't know if it's short-term or long term, but if it were long term, John, if that's where the direction is going, how should our viewers think about building more resilience into their financial plans? So, it's a good question, Terry. I would say that if inflation's going to be a little bit more long-term, we should maybe look for some um inflation uh sensitive fixed income to be responsive. Um rates should get cut which is generally supportive of broad equity markets and that would be um you know beneficial to those who can stomach any interim volatility. Um but but the consumer has remained strong throughout and that has been um you know sort of you know inherent to this uh rise in the you know market over the past several years since uh the COVID correction. That's right. And we could certainly look in you know from a portfolio standpoint for our viewers. You know if you don't have an advisor today you might want to have one and you can go to wealthon.com and get a free portfolio review. But the these are some of the times to think about inflation resistant assets, possibly tips, treasury inflation, protected securities, commodities, gold, precious metals, even potentially real estate. So those are some options to think about, but you want to have a financial plan. You want to know what your risk tolerance is, as John said, because you don't want to have all this volatility if you cannot stomach it. and you want to know what your long-term plan is and how much you will actually need when you retire. So that's really what we might think about. But Alexis, you know, if we if we think about data on inflation and and jobs, what does it mean for the markets, which has been shrugging off, you know, relatively weak job numbers, and what does this mean for the Fed, which really relies heavily on job numbers for policy decisions? Sure. So what's interesting um is that to some extent it seems like the bad news is being digested as good news for the market. Um and when you extrapolate some of the recent data, it does seem like there are more cracks in the economy and some softening and that the impact of tariffs are starting to show up, although maybe more gradual than feared. Um Jaimeie Diamond from JP Morgan was out this week stating that in fact he does believe the economy is softening. Um so it feels like we're in more of a mixed bag even though the market doesn't seem to care. Um and as I mentioned earlier, maybe the market is, you know, depending on the Fed lowering rates to help cure what is happening under the surface in the economy. Um but with the markets priced for perfection in a less than perfect environment, that's what keeps us somewhat cautious. Um, and we do think that there could be some volatility ahead. Um, as the data will have to matter at some point. And as far as the Fed, you know, they'll likely lower rates in response to, you know, the weaker jobs numbers that we've been seeing. Um, but really the inflation stats could limit the amount and the extent of the cuts that we see, you know, in the near future after after next week. Yeah. So, we may see one cut next week, but may not get the additional two planned for the year. John, were you gonna add something? Yeah, I was just going to say, you know, to to Alexis's point, um it's really it's a lesson that it's never been more important to be properly diversified and have the right asset allocation mix for what you're planning for. Right? Our uh chief investment officer, Peter Bookfar, always says valuations don't matter until they do. And at these frothy levels in the equity markets, uh, there certainly will be a correction at some point. I wish we had a crystal ball as to when that would be. Um, who knows? It might be in Q4. It might be in 2026, but it might not be, you know, for some time. discipline rebalancing and being diverse across the equity spectrum, fixed income and alternatives is what we at one point has found to work especially well in less certain times. Yeah, that's right. Always have an advisor to rebalance, understand your risk tolerance, and make sure that you you're set up for the long term on your investing. We talk about that a lot in this session each week. But I don't know if our viewers remember last week we talked a little bit about rates and where they were going. We also mentioned mortgage rates. So our last story on new mortgage demand in the US rates for 30-year mortgages, which is the most popular home loan in the US, have fallen to an 11month low, dropping to 6.49% last week. Rates have fallen 60 basis points since January, and mortgage demand, we're starting to see it increase to the highest level in three years. Applications to refinance rose 12%, 34% higher now than it was a year ago. And in applications for a mortgage to purchase a new home rose 7%, which is 23% higher than it was even a year ago. So, you know, Alexis, if the Fed does cut rates next week, how much more momentum could that add to housing demand? And does this impact real estate as a potential investment theme? Sure. So, you know, a Fed rate cut could provide some incremental support for housing demand. Um, but just as a reminder, mortgage rates are influenced by the longer term, you know, yields. Um and we did see a positive signal today where those you know the 15-year the 30-year reach the lowest level in just over a year's time. Um and we are starting to see some data that point to a pickup in mortgage application. So um even if affordability does improve slightly, I think that there's still some other factors in at play um with tight inventory and and higher home prices that could remain constraints in the market. Um and from an investment perspective, we like real estate, especially as an inflation hedge, which you mentioned earlier. Um but valuations in that space, you know, remain important and also focusing on areas and regions where there is not over supply. That's right. And and John, I know you're working with clients each and every day. um if their mortgage costs continue to ease further with a potential Fed cut, does that change how you give advice to families to plan for insurance coverage or state strategies tied to housing debt? So, generally, no. I mean, it's difficult to react um sort of on a real small basis to, you know, debt levels like that. Very few people we meet have too much insurance. Um, you know, today is September 11th. We think back to the families who lost loved ones where we here at our office paid over 50 insurance claims that day and every one of those families needed all of their coverage that they had. So, that's something that we believe in in firmly. Um, and as you know, uh, tied to the housing debt, you know, I think what we tell people is use these opportunities to save a little bit more, right? save toward your 529 account for college education, you know, save into your retirement plan um for those uh you know, rainy days to come. Exactly. And um I'm so glad that you're helping so many families make these important decisions around mortgages because this is an important topic for families. So, let's get into our our next big topic, which has to do with financial planning as we may be supporting adult children, right? So, I'll just use myself as as an example. I have three adult children, 28, 23, and 21. And they're all at various levels in their careers, and one's still in college. But my oldest is definitely looking to purchase a home. And I help him think this through with his emergency savings account, you know, his 401k, his financial plan. Luckily, his mother's a financial planner. I'm not sure he thinks he's lucky on that, but we we have these conversations a lot. And you know, there is an everinccreasing reality for many families with adult children, even if if they are currently working, that these children might need support in their young adulthood for college loans paybacks or mortgages or just everything. And according recently to a savings.com report released, parents financially supporting their children reached a three-year high. Half of parents provide regular financial assistance. Nearly 50% of parents have sacrificed their own financial security to help their adult children. And working parents who support their adult children have contributed two times more each month than they do to their retirement funds. Right? So because they're altruistic and they're giving it to their kids, they may be missing their full contribution to their retirement uh payments or funds. So it's more common place due to young adults facing increasing housing costs, student debt, stagnant wedges, and job insecurity. So John, I know this one is real. I know you also have two uh at least one adult child, if not you have one almost there, right? Just turned 18. Yeah, just call that adult. Yeah. Yeah. Yeah. Yeah. So, they're starting to think about these things. And so, you know, I'd love for you to think tell us how you think about this, but we also have Janet in Michigan who said, uh, we've given our kids a lot of financial help with college, buying a home and so on. How should that affect the way we think about our estate plan and should we be shifting more towards gifting strategies instead of waiting until later? So, it's a great question from Janet. You know, everyone's situation is a little bit different. If college is paid for and they've helped paying paid for a home, you know, a lot of people now who have the means are thinking just that. They would maybe rather make some gifts presently, see their adult children and even grandchildren benefit from those gifts while they're alive rather than wait until they pass away and inherit money, you know, when those grown children are in their 60s. But each person's situation is a little bit different. The one thing I would always caution is making sure that that older generation's plan is solid and intact. The analogy we like to use is when you're on an airplane and they make the emergency announcement to put your mask on first before helping the person next to you, right? We want to make sure that our that the older generation's mask is on first, that their retirement plan is in good order before they start giving everything away. Um, so I guess I would say work closely with a an advisor, preferably a certified financial planner, and um, you know, really articulate what's important to you and then sitting down with that person and an estate planning attorney, you can achieve a lot. That's excellent advice. You know, I I think a lot about my kids, too. And, you know, the the way I try to help offer support is, you know, maybe it's it's a temporary support, right? Like a noter loan, for example. if they have something that comes up or maybe I cover very specific expenses um that may come up like maybe their cable bill or their cell phone bill or something, but I help out but it's within reason and it's very specific. It's just not a blank check per se. Um, also, you know, cost sharing, maybe I help with, you know, 50% of the rent or something like that, but something that you you map out, you have a discussion and you provide that proactive conversation versus reacting if something helps. And that's why a financial plan is so important so you understand how much you can spend, how much you need to save, and if you want to share any of that through charitable giving or anything else. But having those three categories very clear is important. So, let's talk a little bit about Randy from Colorado. And Alexis, this one is for you. Randy said, "I've been helping my kids with things like rent and student loans, and I'm worried that it's cutting into what I set aside for retirement. Are there investment strategies that can help me balance supporting them now without sacrificing my own security?" Sure. That's a great question and definitely one we're hearing more more often today. Um, and I think similar to what John alluded to earlier, you know, we always like to focus on the plan. Um, and that really all decisions, including investment decisions are based off of that plan, what the goals are, and what the liquidity needs are. Um, and I think it's important, you know, while wanting to help your children and you make sure that they're they're okay, um, it's important to ensure that your own liquidity and your retirement needs are addressed first and fully um, before committing to those additional resources. But if you are in a position to do so and you have excess, you know, cash that can become investable or can be shared um, you know, with other family members, setting up vehicles like 529 plans in anticipation of college expenses or even UTMA accounts for minors um where you can contribute, you know, small amounts, but at least you're building that nest egg um to help prepare for your kids' futures. So I think all part of the plan and the plan needs to come first before making those decisions. But something that we also think that is very important and try to practice with all of our clients is also having those conversations with the next generation and when those you know children become adults and are starting to participate in the real world. um and helping explain to them um and make you know help guide them to make better financial positions so that they also can protect themselves and save for themselves and maybe be less reliant on their on their parents and the older generations. That was really excellent. And I just want to remind everyone um there's an annual gift tax exclusion for any of you. We talked about grandparents last week. any parents, you can actually give up to $19,000 to each person each year without needing to file a gift tax return. So, if that's in your future, if you have that type of liquidity, you know, that might be helpful to people in considering what to give and how much to give. Uh, John, we have our last question from Anna in Florida, and she writes, "My husband and I are still fairly young parents, but honestly, we're worried about what the future will look like for our kids. It feels like we might need to support them more than our parents did for us. How can we build that possibility into our financial plan now without putting our own retirement at risk?" Well, that's really the trick, right? The catch 22 is how do we take care of ourselves and the next generation. So I think it's through a combination of a couple things. Being disciplined savers and investors yourself, leading by example, and educating your children on the importance of being responsible spenders, having a budget, um, and educating them early. to Alexis's point, um, if you're working with a financial planner, um, encourage those young adults, like Alexis suggested earlier, to enter into the conversation. Um, but you can really be best position to help that younger generation by helping yourself first. That's right. Well, great. I I hope for our viewers, for those of you who are thinking about not only your future, but your children's future, this these couple tips have been helpful. if not, you know, please write in and we'll continue to help with this really important decision that I don't think is going to go away in the next couple years or so on because of the this generation's ability to find a job right now is somewhat hindered overall. So now let's go to our next three stories to watch for next week and the biggest one is the FOMC September meeting. Alexis, what are you expecting to hear? Yeah. So, there's a very high likelihood that uh we'll get that 25 basis point uh rate cut, but I think the Fed's forward guidance will be critical in helping shape what is to come next um and the market expectations around that. And given the in uh persistent inflation that we've been talking about on today's show, um I would anticipate the same sort of cautious wait and see approach that we've heard on previous meetings. um which will probably limit the Fed's flexibility to respond maybe more aggressively to some of the economic growth slowing that we're seeing and we'll probably take a more measured approach um just as we have to balance you know the inflation numbers and and all of the data points that remain very important to um you know their goals and objectives. Yep. And just as a reminder that that FOMC meeting is September 16th and 17th next week and so we will definitely have an update for you on next week's show. Um but then next week we'll have a US retail sales report on Tuesday. You know retail sales, John, how do you think the consumer strength impact will impact this? And then what advice do you provide to your clients? So I I think we'll expect to see much of the same, right? The consumer remains strong with respect to the strength, excuse me, the impact on advice for clients. Stick to the plan, right? Whether the um numbers meet or fall short or exceed expectations, it shouldn't derail you from sticking to your plan. It's important to have good short-term reserves in the way of emergency fund. Um, systematic investments, excuse me, systematic saving plan into your investments. Um, a discipline rebalancing approach as the markets react to this information. Right. We want to be selling equities when they're high, uh, buying them when they're low, and remaining disciplined throughout these um, girrations in the market. That's right. You know, I was reading today that if you excluded food and drink, non-store retail sales were up 8% year-over-year. So, the consumer has remained strong overall. And then finally, we have US housing starts on Wednesday. Alexis, how do you connect these two data points, housing starts and retail sales, to the broader inflation pressure, especially when the markets are already anticipating Fed cuts? Yeah. So both are definitely important to the broader inflation story and as you mentioned with the markets already pricing in Fed cuts I think the risk is if the data points come in stronger than expected that could potentially challenge the whole easing narrative that is currently at play. Um on the other hand you know weak numbers would probably reinforce the case for more cuts in the future. Um, so the reports I would say are less about the immediate inflation changes and more about how they shape the Fed's confidence um, in balancing growth and then price stability. That's really helpful around price stability. And I know many of our viewers would prefer, you know, price stability or going down necessarily where we are today. So, anything else, John or Alexis, that we missed that you want to add in for our viewers today? Not for me. This has been great. I think again um paying attention to the news but not getting distracted by the noise and really remaining on uh the right path with your plan is the best advice that we can give. Making sure liquidity needs are met. Um your defensive sort of insurancebased parts of your financial plan are sound um and socking money away for a for a rainy day. Yeah, I think the only thing that that I would add is with, you know, the markets near all-time highs and valuations are very expensive, I would say that there are still areas of the market that are more attractive from a valuation perspective. And if you're looking to invest, just being very cautious and diligent about where you're deploying money. um now is probably not the time to be chasing, you know, the AI trade and piling into the areas that seem to be the most vulnerable um for a correction or a pullback. Um but looking at areas that still are undervalued like the health care sector, which is at historic lows and makes up the lowest percentage of the S&P and is also more of a defensive sector that could bode well um in this type of environment that we're in or the international equity. So, I think just being cautious and mindful of where you're putting new cash to work, um, especially, you know, with where the the markets are today from a valuation perspective, you know, that's excellent advice, Alexis. And I just want to remind all of our readers or viewers, sorry, readers and viewers, um, both I both apply. U, but I want you to see, go to wealthy.com, do a portfolio review. You know, this show right now is really learning what's happening over the next couple weeks, but we're not experiencing the big moves like we were very earlier in the year, but keep watching because we're anticipating a lot of changes in the marketplace over the next couple months. And so, I just invite you back, do a do a portfolio review, send us your questions because this might seem like a positive outlook, but anything can change as as you know, as we've seen thus far this year. So, thank you so much for joining us. Send us your questions, send us your comments, subscribe, please, but I just want to thank both John and Alexis for their expertise, for their advice, and for their calm demeanor because that's how they help their clients each and every day achieve their financial goals. Thanks, John. Thanks, Alexis. Thanks, Terry. Thanks for having us. Have a great week, everyone. We'll see you next week.
All-Time Highs, But Cracks Emerging: What’s Next for Markets? | Rise UP!
Summary
Transcript
So, it feels like we're in more of a mixed bag, even though the market doesn't seem to care. Um, and as I mentioned earlier, maybe the market is, you know, depending on the Fed lowering rates to help cure what is happening under the surface in the economy. Um, but with the markets priced for perfection in a less than perfect environment, that's what keeps us somewhat cautious. [Applause] [Music] Welcome to Rise Up, where we take a look at this week's biggest stories out there and break them down so you can understand what's happening to make better decisions on growing and protecting your portfolio. With everything going on in the market, it can be very confusing. But our mission here at RiseUp is to make sure you you meet with the very best wealth management experts. They have the best conversations and people who are working directly with clients, helping them through each and every day making important financial decisions. If you would like some extra help even during this session, please go to wealthon.com and get a free portfolio review from one of our onepoint advisors who are only there to work in your best interests. My name is Terry Coulsson and I'm a managing partner here at RiseGrowth. I'm a certified financial planner and my co-host today, Joe Duran, is unable to make it with us, but we have some excellent advisors with us. First and foremost, John Betlo, who's a partner and a wealth advisor at OnePoint BFG Wealth Partners. Welcome, John. Happy to be here as always. It's good to have you. and our another another blast from the past who's joining us, Alexis Miller, director of investment research and alternative investments at OnePoint BFG. Welcome back, Alexis. Thanks, Terry. Happy to be here. All right. Well, let's get started. I think it's always important to talk about how the markets are doing right now. All three major indices had intraday all-time highs at the close of Thursday. S&P ended up 085% at 6587 while the Nasdaq finished up 72% at 22043. The Dow Jones also average closed up 600 points at 1.36 at 46108. So all good news, Alexis, what do you think's going on in the market today? Sure. So as you mentioned, you know, markets hit another all-time high intraday today. Um, as you know, investors digested the latest consumer inflation reading and jobless claims report. Um, and while the CPI number was actually a tad higher than expected on, you know, a month-over-month basis, um, the reading was still somewhat in line with expectations on an annual basis. Um, but it was really the jobless claims report that seemed to steal the show. Um, all to say that, you know, it seems like investors are taking this reading and that we're seeing really a green light. uh for the Fed to lower rates next week. Um and lower rates are generally supportive of stock prices and obviously help lower borrowing costs um which can be supportive of growth. So it does seem to be that the market believes the Fed will lower rates um and maybe that that even will help be a cure for weakening economy. That's right. So, it's looking a little bit more optimistic. And last week when we were on together, we talked about the upcoming reports, the PPI and the CPI. Lots of acronyms today. On Wednesday, the PPI came out for August. It showed an unexpected decline of 0.1% month overmonth. And the median forecast for PPI was an increase of 0.3%. On the other hand, CPI came out on Thursday, just today, showing an increase of 0.4% month overmonth. This comes in slightly above the projection for a 0.3% increase. So, you know, some of this is looking very positive. Some maybe we want it a little bit higher, but what does this divergence tell you, Alexis, about where inflation pressures really are coming from right now? Sure. So I think you know the bottom line remains the same that inflation has been sticky and remains sticky around you know 3%. Um and the recent print that we saw from CPI is also a confirmation that there is some firmer price pressures coming in. Um there has been persistence in service price gains and now we're starting to see a little bit of a lift in goods prices. Um, so I think on the good side, maybe that's more tariff related and that could be a shorter term effect. Um, but that there is probably some longer term risk around the the wage sensitive services. That's right. And you know, we don't know if it's short-term or long term, but if it were long term, John, if that's where the direction is going, how should our viewers think about building more resilience into their financial plans? So, it's a good question, Terry. I would say that if inflation's going to be a little bit more long-term, we should maybe look for some um inflation uh sensitive fixed income to be responsive. Um rates should get cut which is generally supportive of broad equity markets and that would be um you know beneficial to those who can stomach any interim volatility. Um but but the consumer has remained strong throughout and that has been um you know sort of you know inherent to this uh rise in the you know market over the past several years since uh the COVID correction. That's right. And we could certainly look in you know from a portfolio standpoint for our viewers. You know if you don't have an advisor today you might want to have one and you can go to wealthon.com and get a free portfolio review. But the these are some of the times to think about inflation resistant assets, possibly tips, treasury inflation, protected securities, commodities, gold, precious metals, even potentially real estate. So those are some options to think about, but you want to have a financial plan. You want to know what your risk tolerance is, as John said, because you don't want to have all this volatility if you cannot stomach it. and you want to know what your long-term plan is and how much you will actually need when you retire. So that's really what we might think about. But Alexis, you know, if we if we think about data on inflation and and jobs, what does it mean for the markets, which has been shrugging off, you know, relatively weak job numbers, and what does this mean for the Fed, which really relies heavily on job numbers for policy decisions? Sure. So what's interesting um is that to some extent it seems like the bad news is being digested as good news for the market. Um and when you extrapolate some of the recent data, it does seem like there are more cracks in the economy and some softening and that the impact of tariffs are starting to show up, although maybe more gradual than feared. Um Jaimeie Diamond from JP Morgan was out this week stating that in fact he does believe the economy is softening. Um so it feels like we're in more of a mixed bag even though the market doesn't seem to care. Um and as I mentioned earlier, maybe the market is, you know, depending on the Fed lowering rates to help cure what is happening under the surface in the economy. Um but with the markets priced for perfection in a less than perfect environment, that's what keeps us somewhat cautious. Um, and we do think that there could be some volatility ahead. Um, as the data will have to matter at some point. And as far as the Fed, you know, they'll likely lower rates in response to, you know, the weaker jobs numbers that we've been seeing. Um, but really the inflation stats could limit the amount and the extent of the cuts that we see, you know, in the near future after after next week. Yeah. So, we may see one cut next week, but may not get the additional two planned for the year. John, were you gonna add something? Yeah, I was just going to say, you know, to to Alexis's point, um it's really it's a lesson that it's never been more important to be properly diversified and have the right asset allocation mix for what you're planning for. Right? Our uh chief investment officer, Peter Bookfar, always says valuations don't matter until they do. And at these frothy levels in the equity markets, uh, there certainly will be a correction at some point. I wish we had a crystal ball as to when that would be. Um, who knows? It might be in Q4. It might be in 2026, but it might not be, you know, for some time. discipline rebalancing and being diverse across the equity spectrum, fixed income and alternatives is what we at one point has found to work especially well in less certain times. Yeah, that's right. Always have an advisor to rebalance, understand your risk tolerance, and make sure that you you're set up for the long term on your investing. We talk about that a lot in this session each week. But I don't know if our viewers remember last week we talked a little bit about rates and where they were going. We also mentioned mortgage rates. So our last story on new mortgage demand in the US rates for 30-year mortgages, which is the most popular home loan in the US, have fallen to an 11month low, dropping to 6.49% last week. Rates have fallen 60 basis points since January, and mortgage demand, we're starting to see it increase to the highest level in three years. Applications to refinance rose 12%, 34% higher now than it was a year ago. And in applications for a mortgage to purchase a new home rose 7%, which is 23% higher than it was even a year ago. So, you know, Alexis, if the Fed does cut rates next week, how much more momentum could that add to housing demand? And does this impact real estate as a potential investment theme? Sure. So, you know, a Fed rate cut could provide some incremental support for housing demand. Um, but just as a reminder, mortgage rates are influenced by the longer term, you know, yields. Um and we did see a positive signal today where those you know the 15-year the 30-year reach the lowest level in just over a year's time. Um and we are starting to see some data that point to a pickup in mortgage application. So um even if affordability does improve slightly, I think that there's still some other factors in at play um with tight inventory and and higher home prices that could remain constraints in the market. Um and from an investment perspective, we like real estate, especially as an inflation hedge, which you mentioned earlier. Um but valuations in that space, you know, remain important and also focusing on areas and regions where there is not over supply. That's right. And and John, I know you're working with clients each and every day. um if their mortgage costs continue to ease further with a potential Fed cut, does that change how you give advice to families to plan for insurance coverage or state strategies tied to housing debt? So, generally, no. I mean, it's difficult to react um sort of on a real small basis to, you know, debt levels like that. Very few people we meet have too much insurance. Um, you know, today is September 11th. We think back to the families who lost loved ones where we here at our office paid over 50 insurance claims that day and every one of those families needed all of their coverage that they had. So, that's something that we believe in in firmly. Um, and as you know, uh, tied to the housing debt, you know, I think what we tell people is use these opportunities to save a little bit more, right? save toward your 529 account for college education, you know, save into your retirement plan um for those uh you know, rainy days to come. Exactly. And um I'm so glad that you're helping so many families make these important decisions around mortgages because this is an important topic for families. So, let's get into our our next big topic, which has to do with financial planning as we may be supporting adult children, right? So, I'll just use myself as as an example. I have three adult children, 28, 23, and 21. And they're all at various levels in their careers, and one's still in college. But my oldest is definitely looking to purchase a home. And I help him think this through with his emergency savings account, you know, his 401k, his financial plan. Luckily, his mother's a financial planner. I'm not sure he thinks he's lucky on that, but we we have these conversations a lot. And you know, there is an everinccreasing reality for many families with adult children, even if if they are currently working, that these children might need support in their young adulthood for college loans paybacks or mortgages or just everything. And according recently to a savings.com report released, parents financially supporting their children reached a three-year high. Half of parents provide regular financial assistance. Nearly 50% of parents have sacrificed their own financial security to help their adult children. And working parents who support their adult children have contributed two times more each month than they do to their retirement funds. Right? So because they're altruistic and they're giving it to their kids, they may be missing their full contribution to their retirement uh payments or funds. So it's more common place due to young adults facing increasing housing costs, student debt, stagnant wedges, and job insecurity. So John, I know this one is real. I know you also have two uh at least one adult child, if not you have one almost there, right? Just turned 18. Yeah, just call that adult. Yeah. Yeah. Yeah. Yeah. So, they're starting to think about these things. And so, you know, I'd love for you to think tell us how you think about this, but we also have Janet in Michigan who said, uh, we've given our kids a lot of financial help with college, buying a home and so on. How should that affect the way we think about our estate plan and should we be shifting more towards gifting strategies instead of waiting until later? So, it's a great question from Janet. You know, everyone's situation is a little bit different. If college is paid for and they've helped paying paid for a home, you know, a lot of people now who have the means are thinking just that. They would maybe rather make some gifts presently, see their adult children and even grandchildren benefit from those gifts while they're alive rather than wait until they pass away and inherit money, you know, when those grown children are in their 60s. But each person's situation is a little bit different. The one thing I would always caution is making sure that that older generation's plan is solid and intact. The analogy we like to use is when you're on an airplane and they make the emergency announcement to put your mask on first before helping the person next to you, right? We want to make sure that our that the older generation's mask is on first, that their retirement plan is in good order before they start giving everything away. Um, so I guess I would say work closely with a an advisor, preferably a certified financial planner, and um, you know, really articulate what's important to you and then sitting down with that person and an estate planning attorney, you can achieve a lot. That's excellent advice. You know, I I think a lot about my kids, too. And, you know, the the way I try to help offer support is, you know, maybe it's it's a temporary support, right? Like a noter loan, for example. if they have something that comes up or maybe I cover very specific expenses um that may come up like maybe their cable bill or their cell phone bill or something, but I help out but it's within reason and it's very specific. It's just not a blank check per se. Um, also, you know, cost sharing, maybe I help with, you know, 50% of the rent or something like that, but something that you you map out, you have a discussion and you provide that proactive conversation versus reacting if something helps. And that's why a financial plan is so important so you understand how much you can spend, how much you need to save, and if you want to share any of that through charitable giving or anything else. But having those three categories very clear is important. So, let's talk a little bit about Randy from Colorado. And Alexis, this one is for you. Randy said, "I've been helping my kids with things like rent and student loans, and I'm worried that it's cutting into what I set aside for retirement. Are there investment strategies that can help me balance supporting them now without sacrificing my own security?" Sure. That's a great question and definitely one we're hearing more more often today. Um, and I think similar to what John alluded to earlier, you know, we always like to focus on the plan. Um, and that really all decisions, including investment decisions are based off of that plan, what the goals are, and what the liquidity needs are. Um, and I think it's important, you know, while wanting to help your children and you make sure that they're they're okay, um, it's important to ensure that your own liquidity and your retirement needs are addressed first and fully um, before committing to those additional resources. But if you are in a position to do so and you have excess, you know, cash that can become investable or can be shared um, you know, with other family members, setting up vehicles like 529 plans in anticipation of college expenses or even UTMA accounts for minors um where you can contribute, you know, small amounts, but at least you're building that nest egg um to help prepare for your kids' futures. So I think all part of the plan and the plan needs to come first before making those decisions. But something that we also think that is very important and try to practice with all of our clients is also having those conversations with the next generation and when those you know children become adults and are starting to participate in the real world. um and helping explain to them um and make you know help guide them to make better financial positions so that they also can protect themselves and save for themselves and maybe be less reliant on their on their parents and the older generations. That was really excellent. And I just want to remind everyone um there's an annual gift tax exclusion for any of you. We talked about grandparents last week. any parents, you can actually give up to $19,000 to each person each year without needing to file a gift tax return. So, if that's in your future, if you have that type of liquidity, you know, that might be helpful to people in considering what to give and how much to give. Uh, John, we have our last question from Anna in Florida, and she writes, "My husband and I are still fairly young parents, but honestly, we're worried about what the future will look like for our kids. It feels like we might need to support them more than our parents did for us. How can we build that possibility into our financial plan now without putting our own retirement at risk?" Well, that's really the trick, right? The catch 22 is how do we take care of ourselves and the next generation. So I think it's through a combination of a couple things. Being disciplined savers and investors yourself, leading by example, and educating your children on the importance of being responsible spenders, having a budget, um, and educating them early. to Alexis's point, um, if you're working with a financial planner, um, encourage those young adults, like Alexis suggested earlier, to enter into the conversation. Um, but you can really be best position to help that younger generation by helping yourself first. That's right. Well, great. I I hope for our viewers, for those of you who are thinking about not only your future, but your children's future, this these couple tips have been helpful. if not, you know, please write in and we'll continue to help with this really important decision that I don't think is going to go away in the next couple years or so on because of the this generation's ability to find a job right now is somewhat hindered overall. So now let's go to our next three stories to watch for next week and the biggest one is the FOMC September meeting. Alexis, what are you expecting to hear? Yeah. So, there's a very high likelihood that uh we'll get that 25 basis point uh rate cut, but I think the Fed's forward guidance will be critical in helping shape what is to come next um and the market expectations around that. And given the in uh persistent inflation that we've been talking about on today's show, um I would anticipate the same sort of cautious wait and see approach that we've heard on previous meetings. um which will probably limit the Fed's flexibility to respond maybe more aggressively to some of the economic growth slowing that we're seeing and we'll probably take a more measured approach um just as we have to balance you know the inflation numbers and and all of the data points that remain very important to um you know their goals and objectives. Yep. And just as a reminder that that FOMC meeting is September 16th and 17th next week and so we will definitely have an update for you on next week's show. Um but then next week we'll have a US retail sales report on Tuesday. You know retail sales, John, how do you think the consumer strength impact will impact this? And then what advice do you provide to your clients? So I I think we'll expect to see much of the same, right? The consumer remains strong with respect to the strength, excuse me, the impact on advice for clients. Stick to the plan, right? Whether the um numbers meet or fall short or exceed expectations, it shouldn't derail you from sticking to your plan. It's important to have good short-term reserves in the way of emergency fund. Um, systematic investments, excuse me, systematic saving plan into your investments. Um, a discipline rebalancing approach as the markets react to this information. Right. We want to be selling equities when they're high, uh, buying them when they're low, and remaining disciplined throughout these um, girrations in the market. That's right. You know, I was reading today that if you excluded food and drink, non-store retail sales were up 8% year-over-year. So, the consumer has remained strong overall. And then finally, we have US housing starts on Wednesday. Alexis, how do you connect these two data points, housing starts and retail sales, to the broader inflation pressure, especially when the markets are already anticipating Fed cuts? Yeah. So both are definitely important to the broader inflation story and as you mentioned with the markets already pricing in Fed cuts I think the risk is if the data points come in stronger than expected that could potentially challenge the whole easing narrative that is currently at play. Um on the other hand you know weak numbers would probably reinforce the case for more cuts in the future. Um, so the reports I would say are less about the immediate inflation changes and more about how they shape the Fed's confidence um, in balancing growth and then price stability. That's really helpful around price stability. And I know many of our viewers would prefer, you know, price stability or going down necessarily where we are today. So, anything else, John or Alexis, that we missed that you want to add in for our viewers today? Not for me. This has been great. I think again um paying attention to the news but not getting distracted by the noise and really remaining on uh the right path with your plan is the best advice that we can give. Making sure liquidity needs are met. Um your defensive sort of insurancebased parts of your financial plan are sound um and socking money away for a for a rainy day. Yeah, I think the only thing that that I would add is with, you know, the markets near all-time highs and valuations are very expensive, I would say that there are still areas of the market that are more attractive from a valuation perspective. And if you're looking to invest, just being very cautious and diligent about where you're deploying money. um now is probably not the time to be chasing, you know, the AI trade and piling into the areas that seem to be the most vulnerable um for a correction or a pullback. Um but looking at areas that still are undervalued like the health care sector, which is at historic lows and makes up the lowest percentage of the S&P and is also more of a defensive sector that could bode well um in this type of environment that we're in or the international equity. So, I think just being cautious and mindful of where you're putting new cash to work, um, especially, you know, with where the the markets are today from a valuation perspective, you know, that's excellent advice, Alexis. And I just want to remind all of our readers or viewers, sorry, readers and viewers, um, both I both apply. U, but I want you to see, go to wealthy.com, do a portfolio review. You know, this show right now is really learning what's happening over the next couple weeks, but we're not experiencing the big moves like we were very earlier in the year, but keep watching because we're anticipating a lot of changes in the marketplace over the next couple months. And so, I just invite you back, do a do a portfolio review, send us your questions because this might seem like a positive outlook, but anything can change as as you know, as we've seen thus far this year. So, thank you so much for joining us. Send us your questions, send us your comments, subscribe, please, but I just want to thank both John and Alexis for their expertise, for their advice, and for their calm demeanor because that's how they help their clients each and every day achieve their financial goals. Thanks, John. Thanks, Alexis. Thanks, Terry. Thanks for having us. Have a great week, everyone. We'll see you next week.