Weekly Outlook
Good morning and a very happy Monday ☕️🌧️
Coming to the end of a month long business trip around and across the US. It’s been a great trip, great people, and a chance to step away from the screens for a bit and enjoy the experience.
Now it's back to reality.
The market has pulled back, there's a lot happening beneath the surface, and it's worth taking a step back to look at the bigger picture before we start talking charts and setups.
Don't Lose Sight of the End Goal
At the end of the day, none of us are doing this just to stare at stock prices all day.
We're investing, trading, and building portfolios to create options for ourselves.
Financial freedom isn't about having the biggest account balance. It's about having control over your time, reducing stress, and creating opportunities for yourself and the people around you.
It's easy to get caught up in daily market moves and portfolio fluctuations, but don't forget to enjoy the life you're working so hard to build. Take a moment to appreciate how far you've come and trust the process.
Geopolitics, Oil, and the Macro Picture:
From a macro perspective, geopolitical tensions in the Middle East continue to create uncertainty, particularly in energy markets.
We're seeing ongoing supply chain challenges, airspace disruptions, and shifts in global trade routes. As a result, oil has pushed back above $94 per barrel and continues to trend higher, making a series of higher highs and higher lows.
The reality is simple: when oil moves from the mid $50 range toward $100+, inflation becomes much harder to control.
Energy costs eventually find their way into almost every corner of the economy, and that's something both the market and the Fed need to pay attention to.
Key Data to Watch This Week:
This week's economic calendar is packed with reports that could have a meaningful impact on market direction.
JOLTS Job Openings:
One metric I'm watching closely is the ratio of unemployed workers to available jobs.
If that number falls below 1.0, it would suggest the labour market is beginning to cool, which would support the case for the Fed to remain on pause or eventually consider cuts.
If it stays elevated around 1.1 to 1.2 while inflation remains stubborn, markets will likely begin pricing in additional tightening.
PCE Inflation Data:
This remains the Fed's preferred inflation measure and could be one of the most important reports of the week.
The market wants evidence that inflation is moving in the right direction. If that progress stalls, expect volatility.
ADP & Non-Farm Payrolls:
Friday's jobs report will be another major catalyst. Current expectations are centred around unemployment holding near 4.2%.
As always, it's less about the headline number and more about what it says regarding the overall health of the labour market.
Rates Still Matter:
One thing investors continue to underestimate is how long restrictive monetary policy can stay in place.
Historically, Fed tightening cycles rarely stop after a single move. Most have lasted considerably longer and required markets to absorb multiple rounds of higher rates.
I'm not suggesting we're heading back to a 1970s style inflation environment, but if inflation proves sticky, it's not unreasonable to think policy rates could move another 125 to 150 basis points higher before this cycle is over.
At the same time, fixed income is becoming increasingly competitive.
10-Year Treasury Yield: above 5.2%
30-Year Treasury Yield: above 5.5%
When investors can earn over 5% in government bonds with significantly less risk, equities need to work harder to justify current valuations.
With the S&P 500 earnings yield sitting around 4.5%, the equity risk premium remains under pressure.
Either earnings need to grow meaningfully from here, valuations need to compress, or some combination of both.
What History Tells Us:
Looking at past market cycles, non-recessionary bear markets tend to see pullbacks in the 20% to 23% range over roughly six to seven months before the longer-term uptrend resumes.
Recessionary bear markets are a different story altogether, typically lasting longer and producing much deeper drawdowns.
As we move through Q4, seasonality is also worth keeping in mind.
Election cycles have historically created volatility through September and October.
Once uncertainty clears, markets have often delivered stronger performance in the months that follow.
History doesn't predict the future, but it does provide useful context.
Bottom Line:
Major indices are pulling back from recent highs, and a lot of the leadership names like Nvidia and Tesla are simply digesting significant moves.
This isn't a time to get emotional.
Focus on managing cash flow, remain patient with new entries, and continue allocating capital with a plan rather than reacting to headlines.
Stay disciplined, manage risk, and keep playing the long game.
We'll see what the data gives us this week and adjust accordingly.
Happy investing 🫶🏽
