Recorded on September 17, 2025.
In this market update, Jack, Mike, and Doug assess the Fed’s first rate cut in three years, the weakening labor market, persistent inflation, and the challenges of housing affordability, while outlining disciplined portfolio strategies to navigate stretched valuations and shifting economic conditions
Key Takeaways
- Jack Ablin, Founding Partner and Chief Investment Strategist, and Mike Silverman, Chief Investment Officer, in conversation with Doug Regan, Co-Chairman and Founding Partner, for an in-depth look at the forces shaping today’s markets.
- Fed’s Proactive Cut: The Federal Reserve lowered rates by 25 bps, its first cut in three years. Powell framed it as a “risk management” move, while Jack Ablin emphasized it was proactive, reflecting the Fed’s effort to support employment while still facing persistent inflation.
- Labor Market Strains: Job gains are running well below average, with construction particularly weak and labor force participation slipping. Recent graduates face rising unemployment as AI absorbs entry-level roles. Education and healthcare remain growth sectors, but largely on the back of government spending.
- Inflation & Consumer Spending: Services costs—especially childcare—are pushing inflation higher. Retail spending remains solid, but heavily driven by wealthier households benefitting from strong equity markets and housing wealth. This divergence highlights the uneven impact of inflation across income levels.
- Housing Affordability Challenge: Affordability for first-time buyers is at its worst since the late 1980s, with homeownership at age 35 far lower than prior generations. Limited new supply and wide mortgage spreads suggest the “nation of renters” dynamic is unlikely to reverse quickly.
- Markets & Positioning: Credit conditions remain easy for large corporations, though smaller businesses face tighter constraints. Equity valuations are stretched, making outcomes highly dependent on whether the Fed engineers a soft landing. Mike Silverman advised rebalancing—harvesting gains, modestly increasing bond exposure, and maintaining focus on high-quality companies with strong cash flow and dividends.
