10/13/23 Market Moment

By Randy Williams Gurian on October 16, 2023

I love the fall colors and the changing of the season. October is my absolute favorite month, for a lot of different reasons. When I was a young boy, my parents would take our family into Seattle to their favorite Chinese restaurant to celebrate my birthday with my cousin Stu. The owner of this particular restaurant was friends with my uncle, so when we arrived, they rolled out the red carpet and the food was always excellent. I realize I covered this tidbit last year, but for the newbies, in the bar of this establishment, every October they would have the World Series on the TV. I caught glimpses of the games, which cultivated my eventual passion for all things baseball … especially, as all of you well know, the Mariners. What, you might ask, does this have to do with the markets?

October is always a challenging month for the U.S. equity markets, but it can also be a turning point. This October, I am convinced the equity and fixed-income markets will rebound from the latest downturn. Earnings reports should show reasonable profit for growth and inflation. While still above the Fed’s 2% target, it’s moving in the right direction. (Recall, their goal is for inflation to reach 2% by 2025.) Last I checked, 2025 is still 15 months away. A lot can happen in over a year’s time, especially to inflation and the markets. I am convinced both AI and technology are deflationary tools, and Mr. Market significantly underestimates their long-term influence on prices. I also believe interest rates are sufficiently high enough to slow our economy, and interest rates will moderate within the next year. Slower inflation and lower interest rates are the tonic needed for both the bond and equity markets to rally. I still contend we are in the early innings of a new bull market.

On to baseball. I yearn for a World Series in Seattle, and yet I am not convinced our current ownership will take the risks required to field a competitive team. I look at the Texas Rangers. They spent like a drunken sailor on both pitching and hitters, and it worked. They are one series away from winning the American League pennant, and they beat two really good teams—the Tampa Bay Rays and the Baltimore Orioles—to get to this point. Meanwhile, the M’s came up one win short of making the playoffs this year, and boy, does that still sting for this diehard fan. If we lived in Texas, we’d be guaranteed a team in the World Series. Must be nice. But, too big of a trade for me to relocate. Instead, I’ll hang out in Seattle and keep my fingers crossed for next year.