Adaptive Markets Hypothesis and Market Outlook

Adaptive Markets Hypothesis acknowledges dynamic markets which Isaac fully subscribes to. Some background to its implications, coupled with varied approaches to the market, provide context that drives Isaac’s market outlook, views and opinions.

Disclaimer

This market outlook is not to be misconstrued as a recommendation to act whatsoever. There is a moral hazard in protecting people from the consequences of their actions. Kindly take responsibility for your own actions because nobody is holding a knife against you and making you do something against your wishes.

Attribution

Material has been extracted from all over including Bloomberg, Reuters, TradingView and other financial websites. The choice selection of information has been assembled in Mosiac fashion.

Things to Watch for This Week

The most recent information on home prices in the United States will be released this week, along with new and pending home sales for August. On Thursday, Federal Reserve Chair Jerome Powell will conduct a town hall-style meeting with educators, and the Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation gauge, will be released on Friday. Companies reporting earnings next week include Costco, Micron Technology, Accenture, Nike, CarMax, and Carnival Cruise Line.

Mortgage rates have reached their highest level in over two decades as a result of the Fed's rate hikes, pricing many purchasers out of the market. This, along with a lack of inventory, has resulted in the most unaffordable market in nearly 40 years, with about 80% of Americans believing that now is not a good time to buy a home.

The Bureau of Economic Analysis (BEA) will release the August Personal Consumption Expenditures Price Index—the Fed's favored inflation gauge—on Friday.

Prices are expected to have risen 0.5% last month, up from 0.2% in July. They are estimated to have risen 3.5% year on year, up from 3.2% in July. Core prices, which exclude volatile food and energy expenses, are expected to rise 0.2% month on month and 3.9% year on year.

The PCE Price Index is the Fed's preferred inflation indicator since it more closely matches real spending decisions by consumers than the Consumer Price Index (CPI). As part of its dual mandate of price stability and full employment, the Fed targets a 2% annual rate of PCE inflation.

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