First American's Fleming: Lower rates threaten to return the economy to 'normal'

Christine Benz, director of personal finance and retirement planning for Morningstar Inc., returns to the show — earlier this week she discussed her book "How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement" — to talk about how inflation, rate cuts and other current events are impacting retirement planning and asset allocation decisions. She notes that after two great years for the stock market, investors often struggle to make portfolios more appropriately conservative for their age. John Cole Scott, president of Closed-End Fund Advisors and chairman of the Active Investment Company Alliance, discusses four funds to consider for what he sees ahead in the fourth quarter, and Kevin Simpson, co-founder/chief investment officer at Capital Wealth Planning, makes his debut in the Market Call, talking about great business models generation big free cash flow, and then protecting the portfolio using covered calls.

Phillip Wool, head of research at Rayliant Global Advisors, makes a strong case for investing in emerging markets — as well as for sticking with investments in China despite geopolitical risk there — noting that valuations are particularly compelling compared to a domestic stock market that is flirting with record highs. While Wool does not expect the U.S. economy to go through a hard landing, he notes that the domestic market is "pricing in a lot of good news right now," and in times when the Federal Reserve is easing into a soft landing, it typically leads to overperformance from emerging markets and international investments, which means investors are entering a time when diversification geographically should pay off.  Also on the show, Todd Rosenbluth, head of research at VettaFi, looks to a new small-cap fund that uses a covered-call strategy to protect against volatility and downside risk as his "ETF of the Week," Anthony Pompliano discusses "How to Live an Extraordinary Life," his book of 65 letters he has written to his young children, that put money, success and more into perspective amid the busy lives and hectic times all of us face today. Thad Davis, president and chief executive officer at Aureus Asset Management, talks high-quality compounders in the Money Life Market Call.

Kevin Mahn, president and chief investment officer at Hennion & Walsh, expects continued bouts of volatility for the market for the rest of the year, spurred by uncertainty around the election and the Federal Reserve's moves, but he noted that when the central bank historically has cut rates when the stock market is near all-time highs, the market moved sharply up in the following 12 months. As a result, he is increasingly optimistic about the next two years, though he says investors may want to lean into areas of the market that have lagged behind in the market's recent run. Pollster Margie Omero discusses a recent AARP study of women voters above the age of 50 — the largest bloc of swing voters in the upcoming election — in which nearly two-thirds of respondents say the current economy isn’t working for them, and that they feel less financially secure than they expected to at this age. Plus, in the Market Call, David Miller of the Catalyst Mutual Funds discusses using insider buying and selling as a signal of a stock's strength or weakness.

Amar Reganti, fixed income strategist at the Hartford Funds, says that the Federal Reserve normally starts cutting rates only when something has gone wrong, but there doesn't seem to be any portion of the U.S. economy that is so over-leveraged that it craters as/when a rate-hike cycle ends. If nothing surfaces, Reganti says this may be the generational anomaly where the central bank actually achieves a soft landing, conditions where the softening economy may go through a recession but without getting really ugly. Michael Kahn, senior market analyst at Lowry Research Corp., says that the market's technicals are all looking good, a sign that investors should keep riding this trend rather than worrying about backing away from it just because the market is in record-high territory. Christine Benz, director of personal finance and retirement planning at Morningstar Inc., discusses her new book, "How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement," and Craig Sarembock, wealth adviser at Bartlett Wealth Management, talks growing stocks trading at reasonable prices in the Market Call.

Longtime personal finance journalist Jonathan Clements — the editor at Humble Dollar, and former columnist at the Wall Street Journal — discusses how his outlook and feelings about money have mostly been reinforced since he was diagnosed in May with terminal lung cancer, and how he his focusing his time, money and energy now to make the most of his time and help his family make the most of his life savings. Clements says he is not bitter about spending a lifetime amassing retirement money for a retirement he won't get to experience, and discusses how even the best estate planning may be insufficient when it comes to helping the family move forward. Steve Sosnick, chief strategist at Interactive Brokers, says that the yield curve has uninverted with recent rate cuts, but the danger sign it was flashing remains bright because recessions never happened until the curve normalized. He questions whether the economy will be strong enough to justify double-digit earnings expectations for equities, which could lead to lower — and possibly more volatile — returns for stocks. Plus, Kyle Guske, investment analyst at New Constructs revisits three past Danger Zone picks, and kicks them out of the club, noting that conditions have changed to where the companies — while still not attractive enough to be considered buys — have changed enough that they no longer  meet the Danger Zone standard for potential trouble ahead.

Nate Thooft, chief investment officer and senior portfolio manager at Manulife Investment Management says he's not "banging the table to be significantly overweight" in the technology issues that have carried the stock market back to record high levels. He says investors should be looking at areas besides U.S. tech stocks — shifting into small-cap stocks, health-care companies, real estate investment trusts and more — to keep moving forward at a time when he sees real signs that the economy is slowing.  Alex Coffey, senior trading strategist at Charles Schwab, is less worried about the market's ability to keep pushing forward led by the big names, noting that "We're at all-time highs for a reason," and saying the Standard and Poor's 500 index could reach 6,000 before the year is done. Miguel Laranjeiro, investment director at abrdn, sees rate cuts making muncipal bonds more attractive, which he says will trigger "the beginning of a robust in-flow cycle into the muni space." In the Market Call, Scott Rosenthal, portfolio manager for Hotchkis & Wiley Capital Management, discusses worldwide value investing.

Mark Fleming, chief economist at First American Financial Corp., says the big news on Wednesday was not that the Federal Reserve started a rate-cutting cycle, but that it appears that there could be additional, aggressive rate cuts that could take an additional 1.5 percentage points off rates over the next 15 months. That rate cutting, Fleming says, reduces the risk  of a deep recession, and the strength of the labor market also limits the possibility of a big decline. As a result, a year from now he expects to see a "lower mortgage rate, lower cost-of-credit rate environment -- with a relatively healthy economy, if not running at trend -- and low inflation," which he says would be a return to "normal." Todd Rosenbluth, head of research at VettaFi, looks at a fund saddled with keywords -- the WisdomTree International Hedged Quality Dividend Growth Fund -- and tells us which of those traits are so important now that the fund deserves to be ETF of the Week. Plus, in the Market Call, Dave Sekera, chief U.S. market strategist at Morningstar, talks fair-value investing and gives his take on how stocks will respond to the rate-cut environment.

Greg McBride, chief financial analyst at Bankrate.com, expects the Federal Reserve to cut interest rate three times before the year ends — starting with a first cut being announced today — and says the central bank will drop rates by one full percentage point by the time 2025 rolls around. He talks about how and where consumers and investors will first feel the impact of the cuts, and how to make the most of the looming changes. Bart de Bruijn, founder of EstateX, talks about tokenized real estate investing, an emerging concept that allows investors to effectively buy shares in properties, which they can then trade on a public exchange. Chip Lupo discusses WalletHub's latest iPhone survey, which showed — among a raft of counter-intuitive issues — that 90 percent of Americans think Apple's signature device is overpriced, but which two in five Americans would go into credit card debt to purchase anyway. Plus, Vince Lorusso, chief executive officer and portfolio manager for the Clough ETFs, discusses "valuation investing" in the Market Call.

Warren Pierson, co-chief investment officer at the Baird Funds, says that he expects the economy to keep chugging along, avoiding a deep recession as it enters a rate-cut cycle that initially trigger a rally but investors will not want to extend the duration of their holdings too long. Pierson notes that no matter who wins the White House in November, he expects tax hikes in order for the federal government to attack deficit problems, and he says the bond market — particularly the municipal bond market — is already anticipating that move, and is attractive as a pre-emptive move now. Robert Farrington, founder of The College Investor helps Chuck answer a listener's question about college-savings plans and how to set money aside creatively and flexibly in case the children don't take the traditional college path when their time comes. In the Market Call, Bernie Horn, manager of the Polaris Global Value fund, talks about where in the world he is finding solid values now.

Joe Quinlan, head of market strategy for Merrill and Private Bank, Bank of America, says that he expects the stock market to show better breadth in 2025, with other stocks picking up slack for the Magnificent Seven stocks, which he thinks will keep growing but at much slower rates. He notes that "the U.S. economy continues to defy expectations," and as long as that continues — and he is optimistic that it will, unabated by whatever happens in the presidential election — he will keep advising investors to buy the dips, favoring high-quality dividend payers. David Trainer, president of New Constructs, puts Sunrun back in the Danger Zone, noting that the stock has outperformed as a short since it was first singled out in 2022, but that a recent bounce-back has simply set it up for the next fall as the company runs out of money. Jerry Parker of Chesapeake Capital Corp. — one of the original Turtle Traders, a ground-breaking group of commodity traders from the 1980s — talks trend-focused investing in the Market Call, and Chuck answers a listener's question about why shares in Trump Media and Communication stock were halted on Friday, and whether the move might have had political motivations.