CAISSA analyzes global events monthly, assessing their potential influence on our client’s wealth plan. We are diligently having strategic discussions with our portfolio managers, ensuring that our position remains informed and aligned with current market dynamics.

Below, you will find CAISSA’s perspective on these global events.

The Fed Lowers Interest Rates

The Federal Reserve lowered its target interest rate by 0.50% at its September meeting. 

CAISSA Perspective:  After months of anticipation, the Federal Reserve finally lowered interest rates. The FOMC chose to cut rates by a more aggressive 0.50% rather than the conservative 0.25%, which was a possibility. Only one voting member of the FOMC chose to dissent, citing a concern that a 0.5% cut may send the wrong message to markets that inflation is no longer a threat. The market took the rate cut in stride as equity markets pushed to all-time highs. While we are optimistic about rate cuts, we were slightly concerned a 50-basis point cut could scare investors into believing a recession was looming. Additional rate cuts are expected to come in November and December, and we believe the pace of rate cuts may begin to slow towards 0.25%. 

Port Workers Union Goes on Strike

Dockworkers went on strike in critical U.S. East and Gulf Coast ports.

CAISSA Perspective:  The International Longshoremen’s Association sent 50,000 dockworkers on strike in critical U.S. East and Gulf ports. Demanding significant wage increases and protections against automation, the port shutdown threatened to significantly impact the economy. A tentative agreement was quickly reached, alleviating the risk for the time being. Just as the COVID-19 pandemic opened businesses’ eyes to their reliance on the global supply chain and led to significant on- & nearshoring efforts, we believe this strike may have continued to reinforce that. Companies that also utilized West Coast ports for their shipping needs were in a much better position to potentially weather the storm if this strike had dragged on than those solely reliant on East and Gulf Coasts.   

Middle East Tensions Ramp Up

Iran launches large-scale attack on Israel after Hamas and Hezbollah leaders are killed. 

CAISSA Perspective:  Iran launched a large-scale attack on Israel, firing almost 200 missiles in response to the recent killings of Hezbollah and Hamas leaders in Beirut and Lebanon. This amplified tensions and significantly increased the risks of escalation. The majority of the missiles were intercepted, and for now, things remain relatively contained and U.S. Involvement has been minimal. Israel is expected to respond, and Global oil prices have risen sharply as investors fear an Israeli response could target key shipping ports in Iran. 

China Stocks Soar Amid Massive Stimulus

Chinese stocks experience an explosive move higher after large stimulus is announced. 

CAISSA Perspective: China recently unleashed a significant round of economic stimulus. This is something they have often done in the past to boost the economy, so we are usually skeptical if the stimulus will create sustainable growth. However, this time around they have taken additional steps to address the slumping real estate market, which we believe to be a meaningful shift in policy. By easing restrictions on property purchases and helping struggling developers, they are directly trying to solve one of their largest headwinds. We believe this is extremely constructive for our long-term view on China, though a looming U.S. Presidential Election may meaningfully shift the outlook for China.