Week In Review

Notwithstanding some mixed economic results, the equity markets showed continued endurance and advanced higher for a fifth consecutive week. A review of the FOMC minutes from the epic September meeting that began a cutting cycle for the first time since the global pandemic also pointed to some reservations amongst voting members regarding the magnitude of the rate reduction. Those members may feel vindicated. Besides a subsequent blockbuster payroll number, the headline Consumer Price Index came in slightly higher than consensus expectations, up +2.4% from a year ago. Taken together, the data-driven Federal Reserve may not be as aggressive with future interest rate moves. Fortunately, the Producer Price Index provided some much-needed ballast to investor sentiment and a rising 10-year Treasury note yield, increasing +1.8% from a year ago and aiding the disinflationary narrative. The week ended with JP Morgan kicking off the earnings season and setting a positive tone, exceeding Q3 estimates and raising full-year 2024 guidance. The stock closed higher and so did the S&P 500, adding +1.1%.

This Week

The financial markets have a medley of economic updates to consider. Perhaps the most important number for gauging the current health of the consumer and the prospects for a soft landing will be the release of U.S. retail sales for the month of September, with a median forecast of +0.3%. The Q3 earnings season resumes with 41 S&P 500 companies reporting. 3

Portfolio Themes

As noted last week, the CBOE Volatility Index (“VIX”) is trending higher and both trailing and forward-looking P/E ratios for the S&P 500 suggest stocks may be overvalued. Juxtapose that assertion with the historical performance of bonds after the first Fed rate cut and you have a case for choosing a more defensive model portfolio. Simplicity provides access to bond portfolios that may deliver income and potential capital appreciation.

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Data: Unless otherwise noted, data for charts, graphs, and tables is sourced from YCharts. Portfolio Themes chart sourced from J.P. Morgan Asset Management. 1Style box returns use various Russell indices tied to specific areas of the market cap (vertical) and style (horizontal) spectrums.

2 Index Statistics: P/E TTM – Calculated by dividing an investment’s price by the trailing 12-month earnings per share value. Yield – Expected dividend-per-share divided by current share price. Table statistics are updated monthly. MSCI indices represent broad global and international equity markets. Indices are represented by iShares ETF proxies (IVW, IVV, IVE, ACWI, and ACWX). Past performance does not guarantee future results.

3www.lipperalpha.refinitiv.com. Weekly commentary and investment advisory services are provided by Simplicity Wealth, LLC a SEC Registered Investment Adviser. Registration does not imply a certain level of skill or training. The information provided is for informational purposes only and does not constitute any form of advice or recommendation. The information contained within has been obtained from various sources and is believed to be accurate at the time of publication .