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

Market Trends & Fed Policy - The bond market indicates expectations of Federal Reserve (Fed) rate cuts due to a potentially weakening labor market and slowing economy [2] - Equity market rallies despite bond yields decreasing, driven by anticipation of Fed rate cuts rather than recession fears [3] - Market anticipates a 25 basis point rate cut from the Fed [4] Economic Indicators - Retail sales significantly exceeded consensus, growing three times higher, indicating strong consumer spending [5] - Corporate earnings surpassed expectations, coming in at 12% compared to expectations slightly under 5% [5] - Signs of a weakening labor market are emerging, with more people seeking jobs than available positions [8] - Unemployment rate, while historically low at 46%, is showing signs of increase, warranting Fed attention [8] Company Performance & Investment - MAG 7 companies are expected to spend $500 billion in capital expenditures (capex) over the next two years, acting as a stimulus, particularly for tech stocks [6] - MAG 7 stocks have increased by 50% since April lows [7] - The S&P is significantly driven by a bundle of seven securities, creating potential overexposure risk in client portfolios [10] - The Russell 2000 outperformed the S&P by three times in August [13] Geopolitical & Trade Risks - Trade talks with China and geopolitical risks introduce uncertainties [11] - Tariffs are currently at 10% but could rise to around 18% after pauses end [12]