Cliff’s Notes - October 2024

Federal Reserve Rate Cuts and Economic Impact

In September, the Federal Reserve cut its overnight “Fed Funds” rate by 0.50%, surprising markets that had expected a 0.25% reduction. This move lowered the rate to 4.75%-5.00%. With yields like the 2-year Treasury currently around 4.0%, further cuts are expected, with projections showing the Fed Funds rate falling below 3.0% by the end of 2026.

Inflation and Labor Market Trends

Inflation continues to decline, moving toward the Fed’s 2% target. The economy remains resilient with a low unemployment rate, though it is slightly higher than last year. We’re closely monitoring the labor market as some leading indicators suggest potential issues, but there has been no significant rise in job losses yet.

Stock Market Valuations and Fiscal Policy

While the Fed’s easing of monetary policy has reduced some pressure on financial markets, current stock market valuations remain a challenge for long-term returns. Large U.S. budget deficits contribute to a stimulative fiscal policy, but they also add to the growing national debt, posing long-term risks to economic activity.

Geopolitical Risks and Election Uncertainty

Geopolitical tensions are escalating, with the ongoing conflict in the Middle East and war in Europe continuing to cause concern. The upcoming U.S. elections are not expected to provide immediate relief to these issues, nor to the nation’s growing debt problem.

Investment Outlook and Strategic Considerations

The last 15 years have delivered above-average returns in public markets. However, this trend may reverse, and the next 15 years could see average or below-average returns. Investors should consider broadening their approach by exploring alternative investments and private markets to help enhance returns and reduce volatility.

Cornerstone Wealth Group’s Commitment

During uncertain times, a disciplined investment philosophy is more important than ever. Cornerstone Wealth Group remains committed to delivering competitive long-term returns while managing risk through our structured investment process.

Join Our Upcoming Webinar

We invite you to join our Fourth Quarter Webinar on October 24th at 4:00 PM ET. We’ll be discussing our outlook for the economy and financial markets heading into 2025. If you’re unable to attend, a replay will be available on our website afterward.

Thank you for reading,
Cliff Hodge, CFA
Chief Investment Officer

Disclosures:

This material provided by Cornerstone Wealth Group is for informational purposes only. It is not intended to serve as personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment. Any securities mentioned are not recommendations to buy or sell. For account-specific information, contact Cornerstone Wealth Group directly. Opinions in this commentary are subject to change without notice due to market conditions. Data provided is believed to be accurate but is not guaranteed.

Investment advisory services offered through Cornerstone Wealth Group, LLC dba Cornerstone Wealth, an SEC-registered investment adviser. Custody and brokerage services are provided by Fidelity Brokerage Services LLC, Member NYSE/SIPC, and Charles Schwab & Co., Inc., Member FINRA/SIPC.