Stock Talk - When Doves Come to Town: Stock Market Update, Friday Aug 29, 2025

Episode Date: August 29, 2025

Will the stock market keep soaring toward 7,300–7,400, even with higher rates, global tensions, and Fed uncertainty? I'm going to break down what Jerome Powell’s dovish comments really mean, why the S&P 500 is hitting record highs, and what decades of market history reveal about Fed pauses and rate cuts. Drawing on almost 35 years of managing money, I show how today’s cycle mirrors the dot-com era, why liquidity drives markets more than headlines, and why bearish arguments often miss the bigger picture. If you want a data-driven, historical perspective on what could be next for stocks, you won’t want to miss this.   About Chris Perras, CFA®, CLU®, ChFC®, Chief Investment Officer: As CIO, Chris is the lead investment strategist and director of research at Oak Harvest Financial Group. Chris develops the firm's core market outlook, putting his decades of experience and expertise to work for our clients. He hosts Oak Harvest's podcast, "Stock Talk," available on the website with new episodes each week. He completed his undergraduate studies at Georgia Tech, and went on to obtain an MBA from the Harvard Business School. Driven by a desire to maximize his knowledge and skill set, he acquired financial planning and investment management qualifications, becoming a Chartered Life Underwriter (CLU®), a Chartered Financial Consultant (ChFC®), and a Chartered Financial Analyst (CFA®).   Stock Talk is a weekly vlog/podcast dedicated to discussing the Oak Harvest Financial Group Investment Team's perspective on what's happening in the market. Hosted by Chief Investment Officer Chris Perras, each episode brings you our views on stocks, the market, and the economy — with a little education thrown in for good measure. Listen each week and help stay connected to your money!   Do you need a retirement plan that goes beyond allocating funds to truly fit your needs? We can help you create a retirement life plan customized for your retirement vision and legacy. Call us at 877-896-0040 or fill out this form for a free consultation: https://click2retire.com/lets-connect   Important disclosures: Content of Oak Harvest podcasts expresses the views of the speaker and is for informational purposes only. Oak Harvest believes that any data, articles, or information cited are reliable at the time of creation, but does not warrant any information contained herein to be correct, complete, accurate, or timely. References to third-party analysts should not be seen as an endorsement of their views or recommendations, and you should do your own research before investing. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast constitutes personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Any specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss, and past performance is not indicative of future results.

Okay, investors, wrote a little ditty to When Love Comes to Town by You Two. And it's called When Doves Come to Town, that's the doomsdayers bane. When Doves come to town, shorts go down in flames. Maybe they're wrong to think that stocks can't go down, but they did what they did before Doves came to town. Investors, the Federal Reserve had paused interest rates for 10 months. The President has enacted the highest tariffs in American history, tariffs which are taxes, the highest in over 100 years. Fed's balance sheet has shrunk by $2.7 trillion. The war in Ukraine rages on for the fourth year,

and still, the S&P 500 sits at new all-time highs around 64-66, as this was written. Equal-ated S&P 500, that's the RSP, just broke out to new all-time highs, and Brett exploded higher on Friday, August 22nd, as the Federal Reserve Chairman Jerome Powell brought out the big guns, dropped quite-doveish speech, first most traders' positioning, focusing on labor markets, weakness over tariff-induced inflation, and made it rain stock gains and short covering on a liquid Friday afternoon in August. Investors, I've been managing money for almost 35 years.

And the bearish arguments almost always sound so much smarter and well-thought-out than bullish ones. Sometimes they're hard to resist, but most of the time, they're all well-put-together coherent and data-driven noise in a sea of expanding economy and expanding earnings and inherently hard to pull off when one of the first rules traders and professional monies managers learned is don't fight the Fed, which nowadays is a bit narrow saying in my book and should be modified to say don't fight liquidity. That is, don't fight the money train, don't fight money wave wherever it's coming from, whether it's our Federal Reserve, whether it's accelerated federal government spending, whether it's lower regulation, lower taxes,

and higher employment trends which lead to higher and consistent 401k flows on payday into an increasingly passive flow, price agnostic, index-driven market. The saying goes that patience is a virtue. Well, when it comes to Fed rate cuts historically, that's been the case more often than not. Both of the next data sets come from Ryan D. T.trecht, chief market technician at the Carson Group, whose summaries are a must-read for data-driven investors and stock market cycle historians. Here's the data on Fed pauses between five months and a year. The data says that stocks were higher 10 out of 11 times a year later, on average 12.9%

with a median return of 14.5%. This data includes the 2001.com bust as well as the 9-11 terrorist attack, both of which were cuts in an attempt to change the momentum of a recession. Seven out of 11 times, the S&P 500 was up more than 10%. Looking at that data with a finer microscope, it looks like, the gains are very much weighted towards months three through 12. With the first three months after the Fed cut being a bit of a wash, with both big potential losses offset by decent gains.

What this says, it says, based on history, much of market's initial gains due to the Fed cutting rates this coming September, if they do it, will be discounted by the market before the meeting. Investors, if so, don't expect a parabolic move post-Fed September meeting, but rather a likely digestion of year-to-date gains as a choppy market, at least into November or early December, when they chase for performance in the Santa Claus rally usually begins. For a number of years, the O'Carvis Financial Group team has tried to dispel investors' fear of buying stocks at all-time highs, as historically returns have been quite positive for future time periods.

Historically, all-time highs in the stock market are not bearish in quite an ongoing positive feature in bull markets, both cyclical or secular. More data from the Carson Group showing that when the Fed cuts rates, stocks near all-time highs, stocks were higher a year later, 23 out of 23 times. We don't know if the Fed will cut this September. And there is zero predictive information in Fed Fund's futures beyond five to seven days in front of the meeting. But Powell's Friday Jackson Hole speech opened the door from about halfway to almost fully open with a doorstop. on it to keep it from closing. These two data sets from the Carson Group would

triangulate to an S&P 500 target of between 7300 and 7,400 using average gains sometimes in 2026 after a slower early fourth quarter of 2025. I'm gonna go back once again to the dot-com AI cycle overlay we've been mapping out since the V bottom in April to see if this projection the 7300 to 7400 would make sense based on that history. Take a look at the updated overlay of the S&P 500 chart then and now. How remarkable is this? We're still mirroring the same pattern back during the dot com, almost to the day and week in the S&P 500. Investors now take a look at the overlay of my other favorite history repeating chart, the Sox Semiconductor Index, pretty crazy to think about.

The names have changed, the weights have changed, and it was a generation ago. But we continue to mirror the period in investment. I still think it's likely that the August 1st print was the low for the second half of 2025. And while we should pull back lower during the early fourth quarter, it's more likely that the first half of 2006 will bring higher stock markets than most investors think. Volatility has been in a downtrend, both realized and actual stock volatility and bond market volatility are trending lower. This has historically been a great thing for uptrends and stocks over months and over quarters. Lower bond volatility is a key factor in leverage players buying more assets as treasury bonds are considered the lowest risk collateral in the financial markets.

Higher nominal interest rates are not guaranteed to hurt stocks. If they were, explained 6,400 plus on the S&P 500 with interest rates 200 basis points higher than four or five years ago. We're at new all-time highs, up almost 10% year to date and the Fed has paused. All those bare calls for market collapses as the Fed paused or reduced. its balance sheet, and we're near 6466 all-time highs. Investors, we're in a bull market. Short-term volatility is collapsed, and that's without the Fed cutting rates. Realized volatility is around seven to eight. The cost of forward hedging is very high relative to actual volatility. To me, that says wall of worry. You might not believe history is repeating, but someone does, or the overall market does. What could possibly cause a parabolic move up next year? Next year,

In 2006, to end the bull market, my friends ask me this every week. I don't know. All I can do is guess. Here are my guesses. Trump gets his dovish Fed chair in April, May of next year, which is about six-state months out. AI investment remains strong and tech earnings and revenue continue to beat expectations by a big margin.

The accelerated depreciation tax incentive gets more tail in and drives spending on equipment and people make 2026 earnings way too low. China starts opening up and again trying to stimulate its economy that's stalled and lagging. I don't know. Those are my guesses high on the list and reasons I make out into mid-2020s for major new all-time highs coming. And yes, a triangulation leads to 73 to 7,400 before this bull market is over. As we saw on Friday when breadth exploded higher on Powell's speech with small caps leading, expect breadth to widen materially if and when the Fed cuts rates.

The Russell 2000 loves unforced Fed rate cuts because so many of those companies have loads of debt and don't make money on an earnings basis. That's what happened when doves come to town, or for those who you like Prince more than Bebe King and you too when doves fly. Be prepared in advance of fourth quarter of 2025 to hear about the chase for performance into year end before it takes place. Regardless of the path for the economy and financial markets in the next. few months, investment team at Oak Carvis will be here, crewing the ship and adjusting our

models where we can. Until next week, from my Eric and myself and the rest of the gang here, have a blessed week and know that the Oak Harvest team is doing what we can to plan for you and your family's future, regardless of what stage you're at in your career or in your retirement. All content contained with an Oak Harvest podcast expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created, but any cited data, indicators, statistics, or other sources are not guaranteed. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast should

be considered as personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss and past performance is not indicative of future results.