We still expect a year-end rally to carry the S&P 500 up another 4% or 5%, towards 6600.
Last Tuesday night in California/Wednesday morning in the MiddleEast, we were interviewed live regading our investment outlook on Asharq Business اقتصاد الشرق with Bloomberg Morning Show with anchors Israa Ibrahim and Fahed al Zahrani. Special thanks to producer Sarah Al Shawi.
“Despite the definitions: Cautious optimism at Wall Street and Rally by the end of the year—Amid a state of anticipation in the US markets, Michael Ashley Schulman, head of investment at Running Point Capital, said that stocks are close to record levels in light of declining risk. He explained that the entry of the summer naturally imposes seasonal fluctuations, but believes that the indicators of the American economy reflect a bottom that protects the market. EXPECTING POSITIVE GROWTH TO CONTINUE DESPITE BANK WARNINGS“
OUR TAKE
We have been telling our family office clients that with stocks near all-time highs, we’ve entered the choppy🌊late summer period of August/September where people take holiday, derisk, temporarily close or hedge their books, and expect market swings. We still expect a year-end rally to carry the S&P 500 up another 4% or 5%, towards 6600. S&P forward earnings per share remain robust, reaching a new high as of July, even in the face of tariff headwinds💨
Nonetheless, the IPO market seems to be drooling with anticipation following the hot performance of FIGMA, CoreWeave, Circle, Venture Global, SailPoint📈 New deals, funds, and structured financings are getting completed. Wages continue to grow. Economic growth should still be positive. Productivity is strong. Some major banks are “warning” about a pull back, but I think they are hoping for a pull back more than warning about one!
Interestingly, increased recession odds are in part offset by growing expectations of Fed rate cuts. According to the CME FedWatch tool, the probability of a rate cut in September has surged to over 80%📊 That shift in expectations is cushioning some of the blow. I too remain data dependent, but have my doubts regarding a rate cut next month. Labor force growth has been flat, possibly due to tight immigration policies; but faster productivity growth could compensate, especially with real GDP up an annualized 3% in Q2.
New deals, funds, and structured financings are getting completed. Wages continue to grow. Economic growth should still be positive. Productivity is strong.
🗣️When we speak with clients, we hold to our view of no rate cuts (or at most one) for 2025—the caveat is that if we are wrong, assets will rally even more.
Tariffs, ironically for President Trump, could complicate the Fed’s job by increasing short-term prices, particularly for durable goods🛳 That’s a reason to be cautious about how much easing we should expect. As I’ve said all year, I don’t see why the Fed would cut. What people want is often not what they get.
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Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-25-202
