Investors are still excited about equities, says Norton of Empower

• Retail investors maintain enthusiasm for equities, as seen in retirement accounts and DIY investing, but clients still express consternation regarding AI, inflation, and the economy's trajectory.
• The July core CPI print was subdued, which likely eases pressure on the Federal Reserve for a rate hike in September, offering a measure of relief to the market.
• The bond market is characterized by relatively constrained inflation expectations (break-evens) but rising real yields, driven by term premium, uncertainty in future rate paths, and fiscal concerns, necessitating judicious credit exposure.
• Cash provides valuable optionality for investors, particularly retirees, allowing for liquidity and the ability to capitalize on market opportunities during downturns or manage unexpected expenses.

Marta Norton discusses the US July Core CPI data, noting that subdued inflation eases pressure on the Federal Reserve for a September rate hike, providing some market relief. While retail investors remain enthusiastic about equities, underlying concerns about the economy, inflation, and fiscal issues persist. She emphasizes the complex dynamics in the bond market and the strategic value of holding cash for optionality.