Category: Newsletter

Markets closed the third quarter grappling with two competing forces: Jerome Powell’s warning that equities are “fairly highly valued,” and the uncertainty of a government shutdown that began over the weekend. The shutdown halts most economic data releases from the Bureau of Labor Statistics, including this week’s jobs report, leaving investors without the usual anchors. Historically, markets have looked through shutdowns as political theater, and so far, that has been the case this time.

Jerome Powell’s statement this past week, that U.S. stocks appear “fairly highly valued,” wasn’t as dramatic as Alan Greenspan’s 1996 “irrational exuberance” speech, but the market heard the echo. Both comments speak to a central tension in monetary policy: the Fed may not explicitly target asset prices, but valuations matter when they begin to feed back into financial stability. Investors often dismiss these warnings, citing years of Fed liquidity support and low interest rates. Greenspan’s caution came four years before the dot-com bubble burst

The Federal Reserve delivered its first rate cut of 2025 on Wednesday, lowering the target range for the federal funds rate by 25 basis points to 4.00%–4.25%. The move had been well-telegraphed, yet it still represents a notable pivot in policy focus. For much of the past two years, inflation had been the Fed’s primary concern, but this time the statement emphasized that “downside risks to employment have risen,” a shift toward the labor side of the mandate.

This past week delivered a trio of market-moving economic releases, CPI, PPI, and the annual employment revisions, that collectively shaped investor expectations heading into next week's FOMC meeting.

The August employment report painted a clear picture of a cooling U.S. economy. Employers added just 22,000 jobs, far below consensus expectations, signaling that hiring momentum has slowed. Even more troubling, June was revised to show a loss of 13,000 jobs, the first monthly contraction since 2020. Meanwhile, unemployment rose to 4.3%, its highest level in nearly four years.

August turned out to be anything but typical for investors. Historically, the month is plagued by seasonal weakness, thinner liquidity, and heightened volatility as traders position ahead of September and Q3 earnings. Over the last 30 years, August has delivered some of the poorest monthly returns on average for the S&P 500. Yet in 2025, the index defied that history, grinding higher through the month and setting new intraday records above 6,500 before finishing at 6,452. The result was a modest gain for the month, but more importantly, it marked another milestone in an already extended rally

After the market slid lower all week, testing the 20-DMA on Thursday, Jerome Powell’s speech at Jackson Hole turned sentiment on a dime. The S&P 500 returned to record highs, and the Dow surged 900 points.

U.S. equities notched fresh milestones midweek before fading into Friday’s close. The July CPI print (headline +0.2% m/m, +2.7% y/y; core +0.3% m/m, +3.1% y/y) kept the “September cut” narrative intact. Following those reports, the S&P 500 and Nasdaq set new closing highs on Wednesday.

The weekly Bull Bear Report covers what happened in the markets, what investors should be paying attention, and how to navigate the week ahead.