We had it all over the past two weeks- Earnings, Fed decision, and Trade. The status quo generally prevailed, supporting the continued uptrend, albeit with some technical divergences beneath the surface that signal a pause in the momentum may be overdue.
For long-term investors, managing cash is increasingly difficult as short-term interest rates fall. Although cash seems safe, holding too much can undermine long-term financial goals. Right now, there’s a record $7.3 trillion sitting in money market funds, reflecting a shift toward cash as investors wait out market uncertainty.
As we begin the final quarter of the year, investors are facing conflicting signals. The S&P 500 reached new all-time highs in the third quarter as markets continued to be supported by strong corporate earnings and enthusiasm for artificial intelligence. At the same time, the labor market has weakened considerably since the beginning of the summer, raising concerns over the underlying economy and the financial health of consumers. Despite this, GDP growth has been strong, and inflation has largely stayed in check.
The investing adage “don’t fight the Fed,” coined in the 1970s, remains highly relevant today. It reflects a core principle: the Federal Reserve’s monetary policy decisions can significantly influence markets and the economy, and investors should pay attention. However, it’s just as important to maintain perspective; what matters most is the broader trajectory of interest rates, not any one policy meeting.
“Life affords no greater responsibility, no greater privilege, than the raising of the next generation.” This quote from former U.S. Surgeon General C. Everett Koop highlights a powerful truth: for many, the ultimate goal isn't just financial security—it's leaving a meaningful legacy. Over the next two decades, an estimated $84 trillion will pass from the Silent Generation and Baby Boomers to their heirs, in what's been dubbed the Great Wealth Transfer. But this shift is about more than money. It’s already transforming how families think about financial planning, charitable giving, and legacy-building.
Let's briefly walk through recent economic developments—specifically around the labor market, stock market performance, and inflation—and what they might mean for the Federal Reserve and broader economy.