Economy
Inflation data for the month of September was released Friday morning after being delayed a couple weeks. The report showed that while inflation remains above where the Fed would like it to be, we're not reaccelerating, and month-over-month change was slightly less than forecast. (Interestingly, the inflation report was only released due to its use in calculating the cost-of-living adjustment, or COLA, for Social Security. After the report was released, Social Security announced a 2.8% COLA for 2026.) Everyone experiences inflation uniquely, and it can vary across geographic locations, but one of the important categories of spending, shelter costs, have moderated over the last year. This latest data clears the path for the Fed to announce the second rate cut of this mini-cycle next week. Beyond that, and it's increasingly difficult to forecast with the government shutdown impacting economic data releases, the markets are pricing in a third rate cut at the December 10 Fed meeting. I'd hate to be the guy who has the job of forecasting interest rates into next year as we'll see new members join the voting committee on the Fed, a new Fed Chair appointed, and it's anyone's guess as to how the global trade story will play out.
Markets
The S&P 500 rose 1.92% this week, notching back-to-back winning weeks and closing at a new all-time high. Despite concerns about tariffs not only impacting inflation (to say the impacts up to now have been tame would be a fair statement) but corporations' bottom lines as they eat (at least in part) some of the higher costs, companies are reporting better-than-expected profits for the third quarter. To use a baseball analogy, we're somewhere in the late second or early third inning of earnings season, but the action will pick up in a big way next week with Microsoft, Meta, Amazon, Apple and Alphabet all reporting. For all the concerns of trade wars, cockroaches, the government shutdown, and various other October tricks, the market seams to only be getting treats.
What We're Reading
- Social Security Announces 2026 COLA- CNN
- The Hilarious World of Estate Planning- Paul Ollinger
Have a great weekend.
Dogwood Wealth Management