Market Overview - Stocks experienced further downside on Thursday, continuing a pullback after reaching record closing highs earlier in the week. The Nasdaq fell by 113.16 points (0.5%) to 22,384.70, the S&P 500 declined by 33.25 points (0.5%) to 6,604.72, and the Dow dropped by 173.96 points (0.4%) to 45,947.32 [1] Economic Indicators - The Labor Department reported a decrease in initial jobless claims, falling to 218,000, down by 14,000 from the previous week's revised level of 232,000, contrary to economists' expectations of an increase to 235,000 [3] - Jobless claims have now pulled back from a nearly four-year high, reaching the lowest level since July 19th when they hit 217,000. Additionally, there was an unexpected surge in durable goods orders for August and stronger-than-expected GDP growth in the second quarter [4] Sector Performance - Airline stocks saw a significant decline, with the NYSE Arca Airline Index dropping by 2.9% to its lowest closing level in over a month. Pharmaceutical stocks also faced weakness, as indicated by a 2.0% slump in the NYSE Arca Pharmaceutical Index, which ended at a one-month closing low [6] - Biotechnology, healthcare, and computer hardware stocks experienced considerable weakness, while gold stocks performed well amid an increase in gold prices [7] Interest Rate Outlook - The Federal Reserve's September dot plot suggested potential rate cuts in the upcoming meetings in late October and December, although the likelihood of consecutive cuts remains uncertain [5] - The bond market showed continued weakness following positive U.S. economic data, with the yield on the benchmark ten-year note rising by 2.5 basis points to 4.172% [9]

Joining me now is the Wall Street Journal's chief economics correspondent, Nick Timmeros. It's great to have you back. Nice to see you.>> Thanks for having me, Scott. >> Seems like Mr. . Griffin is aligned with many on on the Fed right now.Maybe you'll get one. But there seems to be caution expressed by many of the Fed speakers we've heard this week, including today Austin Goulby said, quote, "I'm just a little uneasy with too much frontloading until we're sure that inflation is is coming down." >> Yeah, th ...

Let's get more on that burst of positive economic news out this morning. Refllies inflation adjusted GDP for the second quarter came in at a healthy 3.8%. That was stronger than the 3.3% figure that was previously reported.And meanwhile, in a sign of strength for the labor market, initial jobless claims edged lower to 218,000 and July existing home sales, which just crossed ticked higher to just over 4 million. So, how does the US economy keep chugging along amid what seems like a drum beat of dire predicti ...

Front and center this hour, the state of the AI trade. Many of the biggest names down again today. Has it left this market vulnerable to a larger pullback.We will discuss that with the investment committee. Joining me for the hour today, Josh Brown, Joe Cheranova, Bill Baroo, and Jim Leenthal. So, we've said stocks are down again, which they are across the board.Not by a large amount obviously, but nonetheless, uh the consistency of today's move uh is one that we're watching. Rates are an issue, and they re ...

All right. Uh let's uh let's move on to the broader markets. The S&P 500 is pacing for what would be at least if it maintained what it's doing right now, a third straight day of declining.Still, although we're very close to record levels, joining us with his outlook is Michael Caneritz. He's Piper Sandler's chief investment strategist. Nice to have you here, Michael.Thanks. Uh you write um that you expect improving EPS breath to take over after three years of PE expansion. Can you explain what that means an ...

Economic Overview - The US economy grew at a revised annualized rate of 3.8% in the second quarter, marking the fastest growth in nearly two years [2][9][12] - Jobless claims fell to 218,000, down from an expected 233,000, indicating a stronger labor market [11][12] Trade and Tariffs - The Trump administration is considering additional tariffs on imports, including robotics and medical devices, which could increase costs for consumers and manufacturers [3][6] - A recent tariff reduction from 25% to 15% on EU cars and parts is expected to ease concerns in the European car sector [23][24] Company News - Starbucks announced a billion-dollar restructuring plan, which includes cutting 900 jobs and closing unprofitable stores [3][31] - CoreWeave expanded its partnership with OpenAI, increasing the total contract value to approximately $22.4 billion for AI model training [32] - CarMax shares dropped 18% after reporting a surprise decline in comparable sales, attributed to consumers rushing to buy vehicles before tariffs were imposed [33] Market Trends - The tech sector is experiencing a pullback, with concerns about a potential tech bubble as major companies engage in multi-billion dollar deals [35][36] - Analysts suggest a barbell strategy for investment, balancing high-growth tech stocks with more defensive, lower-volatility stocks [41][44]

Economic Indicators - The US Q2 GDP was revised upward to +3.8% (quarter-over-quarter annualized), exceeding expectations of no change at +3.3% [2] - Q2 personal consumption was also revised upward to +2.5%, stronger than the anticipated +1.7% [2] - The Q2 core PCE price index was unexpectedly revised upward to +2.6%, surpassing expectations of no change at +2.5% [2] Labor Market - Weekly initial unemployment claims fell by -14,000 to a 2-month low of 218,000, indicating a stronger labor market than the expected increase to 233,000 [3] - Kansas City Fed President Jeff Schmid noted that the labor market remains largely in balance despite signs of cooling [4] Capital Spending - August core capital goods new orders (excluding defense and aircraft) rose by +0.6% month-over-month, stronger than expectations of no change [3] Federal Reserve Policy - Comments from Kansas City Fed President Jeff Schmid suggest that the Fed may not need to lower interest rates soon, maintaining a "slightly restrictive" policy stance to combat high inflation [4] - Markets are pricing in an 84% chance of a -25 basis point rate cut at the next FOMC meeting on October 28-29 [4] Currency Market - The dollar index (DXY) increased by +0.43% to a 3-week high, driven by hawkish US economic reports and liquidity demand due to stock market weakness [1] - The EUR/USD pair decreased by -0.44% to a 2-week low, influenced by the dollar's strength and central bank divergence, with the ECB seen as nearing the end of its rate-cut cycle [5]

Core Viewpoint - The Federal Reserve may not need to lower interest rates again soon, as inflation remains high and the labor market is still balanced despite some cooling [1][2]. Interest Rate Decisions - The recent 25-basis point cut in the policy rate was viewed as a reasonable risk-management strategy, with the current policy stance considered only "slightly restrictive" [2]. - Fed officials are divided on the number of additional rate cuts needed this year, with projections indicating a median expectation of two more quarter-point cuts, while many anticipate one or no cuts [3]. Labor Market and Inflation - A cooling labor market could help reduce price pressures, but recent data suggests an increased risk of a more sustained or abrupt economic slowdown [3]. - The Kansas City Fed chief emphasizes a data-dependent approach for future policy adjustments, closely monitoring inflation and labor market data [4]. Central Bank Independence - The importance of the Federal Reserve's independence from political interests is highlighted, as it is crucial for effective monetary policy and sound supervision and regulation [5]. - Independent supervisors can focus on long-term financial stability and respond agilely to instability, fostering public trust in the banking system [5].

Core Insights - The recent rate cut by the Federal Reserve may lead to lower yields on bonds, prompting investors to seek alternative income sources [1][2] - Midstream Master Limited Partnerships (MLPs) and corporations are highlighted as attractive options due to their higher yields compared to traditional fixed income benchmarks [1][3] Rate Cuts and Impact on Bonds - The Federal Reserve has reduced rates by 25 basis points and may consider further cuts, which could negatively affect income-focused investors, particularly those nearing retirement [2] Midstream MLPs and Yields - Midstream MLPs and C-Corps provide appealing income and diversification benefits, with the Alerian MLP Infrastructure Index (AMZI) offering a 7.8% indicative yield as of September 23, compared to a ten-year average yield of 8.2% [3][4] - AMZI's yield surpasses the Bloomberg USAgg Index's yield of 4.3% and the Bloomberg US Corporate High Yield Index's yield of 6.6% [4] Diversification and Correlation - MLPs can enhance income portfolios while offering diversification, as evidenced by AMZI's low ten-year correlation of 0.1 with the Agg [4] - The Alerian Midstream Energy Select Index (AMEI) provides a 5.3% yield, with a ten-year average yield of 6.1%, consisting of approximately 75% U.S. and Canadian midstream corporations and 25% MLPs [4] Comparison with Other Income Investments - Both AMZI and AMEI yield more than other equity income investments, such as REITs at 4.0% and the S&P 500 Utilities Index at 2.8% [5] - MLPs or midstream investments typically represent a 3-5% allocation in an income portfolio, which can significantly enhance overall portfolio yields [5]

Economic Data Overview - Recent economic data has shown favorable trends, with GDP revised to 3.8% for the second quarter and personal consumption expenditures increasing from 1.6% to 2.5% [2] - Durable goods orders exceeded expectations, rising by 2.9% instead of the anticipated decline of 0.5%, while core capital goods also increased by 6% [2] Job Market Insights - Jobless claims have improved, dropping to 218,000, which is a positive trend compared to previous weeks where claims were above 260,000 [3] Government Spending and Economic Growth - Despite a decrease in government spending, real final sales to private domestic purchasers increased by 3.2%, and real gross output rose by 1.2% [4] - The economy is showing resilience and growth even as government involvement diminishes [4] Federal Reserve Commentary - There is a wide range of opinions among Federal Reserve speakers regarding the economy and interest rates, with some advocating for lower Fed funds rates [7][8] - Recent comments from Fed Chair Jerome Powell have contributed to market volatility, suggesting that the market may be reacting to perceived high valuations [9] Market Reactions - The market's decline, despite strong economic data, may be attributed to profit-taking and reactions to Fed comments [9]