The economy and market are strong, but seeing signs of slowing, says Neuberger's Holly Newman Kroft

Market Overview - The stock market is at record highs, with the 10-year yield down to 4% and gold prices up 40% year-to-date [1] - The bond market indicates expectations of a Federal Reserve rate cut, reflecting a shift in focus from inflation to a weakening labor market and slowing economy [2][3] Economic Indicators - Retail sales have significantly exceeded expectations, coming in three times higher than consensus, indicating strong consumer spending [5] - Earnings growth for companies has outperformed expectations, with actual growth at 12% compared to an anticipated 5% [5] - The MAG 7 companies are expected to spend $500 billion on capital expenditures over the next two years, which may stimulate the market, particularly for tech stocks [6][7] Labor Market Insights - There are signs of a weakening labor market, with more job seekers than available positions, and job additions significantly lower than a year ago [8] - The unemployment rate is currently at 4.6%, which is historically low but on the rise, prompting attention from the Federal Reserve [9] Market Dynamics - The S&P 500 has been driven by a concentrated group of seven securities, which have seen a cumulative market increase of 70% over the past two and a half years [10][11] - Small-cap stocks have recently outperformed the S&P 500, with the Russell 2000 beating it by three times in August [13] Geopolitical Considerations - Ongoing trade talks with China present uncertainties, with tariffs currently at 10% expected to rise to around 18% once pauses end [12]