Market Update

Before I get into the subject of this email, I want to apologize and retract an expression in my last email. I shouldn't have said the market was a bore. September was a puzzle of reversals and conflicting signals. Bottom line: poor choice of words.

Here is a quick recap of September:

In early September, valuations in stocks aligned with their relationship to bond yields. Halfway through the month, things changed. External forces, listed below, slowly crept up on our progress and escalated to the point that there was too much pressure on our investments.

Let's list them for a quick read:

Consumer shrinkflation (you pay more for less)

Labor Inflation caused by poor policy

Logistic gridlock

Synchronized Central Bank taper (EU, USA, Japan, UK)

China slowdown

Before you shake your head and crawl into despair, I want to remind you that the market has a history of rallying when things appear darkest. We have experienced several unexpected rallies since these emails began three years ago.

Soapbox moment.

If headlines were removed from investor concerns, this market would absolutely roar. It is oversold, underappreciated, and under-invested; everyone is tweaked because of what they have to deal with on a day to day basis.

I am seeing a rebound in transports, a key driver of commerce. Financials have held up beautifully in September, a major metric of lending growth and bank health. Lastly, we tested key technical supports in technology, consumer stocks and industrials.

These metrics are absolutely critical to showing support if the market is to move higher, which could be broad and dynamic going into year-end.

The bottom line is that I am positive, which means you should be, too.

Prologue:

I want to end with a laugh that includes politics. It was a conversation with my friend, Kay, about the budget and debt standoff. She has different views than I do politically, but we respect each other's opinions.

Kay: “What would it take to resolve the debt stalemate in Washington?” Chris: “ Adults, Kay, we just need adults.”

Result: giggles and laughs.

Chris

Christopher R. Lakian