September 2024 Update: Cycles

This will be the 11th Presidential election we’ve guided clients through since Penny Bond founded the firm in 1982. We have weathered many shifting political landscapes over the decades, but we believe the current trends in voter demographics and engagement are noteworthy.

In 1980 the political landscape was different, things were much more centrist and less polarized. There were still two parties, but they often met in the middle on many issues. There were more swing voters and swing seats in the House. What impact did this have? Things got done! Votes tended to be more bipartisan, and bills were passed and signed into law. Change happened!

Today’s political climate? The polarization and gridlock can be incredibly frustrating, not just for lawmakers but for everyday citizens who feel the impact of inaction. It’s also disheartening when political differences seep into personal relationships, but perhaps this period of division will inspire more dialogue and a push for change in the future. The hope for a more united political environment is something many share, especially as new generations bring their perspectives into the mix.

The emergence of Millennials and Gen Z as significant voting blocs is reshaping the political landscape, bringing with them different priorities and perspectives. This generational shift could be key in fostering new discussions and possibly bridging the current divide. In 2020, Millennials and Gen Z were 37% of the electorate, and it was the first time in 30 years that Baby Boomers were not the largest voting contingent.

It seems that everything has a cycle in one way or another. We reach a breaking point, and people start to look for ways to do things differently. It’s interesting to think about how these trends might shape future elections and potentially foster more collaboration across party lines.

Speaking of cycles, it’s happening . . . the highly anticipated Fed rate-cutting cycle has begun. The 50-basis point (bps) cut last week may have signaled that the Fed is looking to move quicker toward the desired neutral rate than was previously assumed. This led to initial volatility in the equity markets while the yield curve steepened as investors repriced the odds of an economic soft landing.  Fixed-income markets moved to price in approximately 70 bps of further cuts still to come this year between the November and December meetings.

Now, what exactly does all that mean for you and your portfolio? For investors, it’s a great moment to reassess cash positions and consider reallocating funds from safer vehicles like CDs and money markets into more growth and income-oriented investments. According to T. Rowe Price, there is almost $6 trillion in US money market funds.  As interest rates begin to move lower, it may make sense to reposition some of this money into investments that could perform well in a falling interest rate environment.  Please reach out to us if you have outside assets in cash, CDs and money market accounts that you would like reviewed.  Now could be a great time to make sure your overall portfolio is allocated appropriately to help you achieve your long-term financial goals.

The political and interest rate environments are constantly changing, what doesn’t change is our commitment to help our clients stay focused on their long-term goals.  We hope you enjoy the beautiful Fall weather.

The Bond&Devick Team