Last Wednesday, September 30, AAII President John Bajkowski, Vice President and AAII Journal Editor, Charles Rotblut, CFA, and financial analyst Sam Levine, CFA, CMT, sat down for the third episode of AAII Market Update.
The timing was good: JOLTS had come out the day before, and the final Q2 GDP estimate and August PCE inflation data landed that same morning. Here’s a look at what they covered.
The market beneath the headlines
John opened with a point that likely matched what many investors saw on their statements. September looked strong on the surface, but most stocks actually fell. The equal-weighted S&P 500 was down, as were small caps and dividend stocks, while technology carried the indexes. Sam noted the tech sector ETF was up about 6% for the month. As John put it, “Don’t feel bad if your portfolio was down a little bit this month, because the typical stock was down a little bit this month.”
Jobs, growth and inflation
Charles described the JOLTS report as a continuation of a “low-hire, low-fire” labor market: if you have a job, you’re likely in good shape, but if you’re looking for one, it’s a tough environment. Q2 GDP was revised up to 2.2%, with consumer spending up 3.8%, which led Sam to ask a question that came up repeatedly during the stream: how exactly are people funding all that spending? The team kept returning to the idea of a K-shaped economy, where higher earners keep spending and investing while others feel more strain.
PCE inflation came in at 3.4%, still well above the Fed’s 2% target, though slightly better than expected. John summed up the overall picture: labor is cooling but not breaking, growth is stronger than expected, and the consumer is still spending, just saving less.
Housing, dividends and the “dating vs. marriage” rule
With mortgage rates at levels “we haven’t seen in many, many moons,” the conversation turned to housing. Charles noted that most homebuilders have fallen out of the VMQ strategy with momentum grades of D, while John pointed out how much a new household ripples through the economy, from furniture to flooring. Charles also shared what he watches for when judging dividend safety, including rising debt, suspended buybacks and management suddenly talking about cash preservation. His rule of thumb: “Buybacks are like dating and dividends are like marriage.”
The big question
Near the end, John asked whether strong earnings, resilient growth and AI enthusiasm can keep supporting stocks as bond yields rise. Charles called the AI build-out a major tailwind for the economy, though he flagged off-balance-sheet debt as something that “could go bump in the night.” Sam was more upbeat: “I think that the AI story is not played out yet.”
A few lighter moments
It wasn’t all data. John relied on his trusty magic eight ball, which he assured viewers is “airlocked” and safe from foreign hackers. Sam shared insights from his morning dog park crew, and viewers jumped in with their own observations, from the cost of running a farm combine on diesel to a lively debate about rents and housing.
Sam’s closing outlook captured the tone of the whole hour: “The monsters stay under the bed, at least for the time being… There’s a lot to be terrified [of], but the data just doesn’t support any reason for panic.”
Watch the full conversation
There was a lot more in the full hour, including viewer Q&A on AI spending, earnings revisions and whether the S&P 500 can keep setting records. You can watch the replay here: https://youtube.com/live/nMGW8Fsc6Ag
About the AAII Market Update
The AAII Market Update is a free livestream series offering live market analysis for individual investors. Each episode breaks down the events that actually move your portfolio, from Federal Reserve decisions and inflation data to the monthly jobs report and major earnings releases, with clear explanations of what happened, why it matters and what to watch next. We go live when key reports and earnings are released, and questions are always welcome in the live chat. AAII has been educating individual investors since 1978. Learn more at www.aaii.com.
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This recap is for educational purposes only and is not investment advice. AAII does not recommend individual securities or strategies.