In Your Money This Week, Q3 earnings season has started with mixed results. Some banks disappointed, chip demand still looks incredibly strong, and one thing worth watching is the slowdown in investment banking activity, even as credit quality and the consumer continue to look pretty good.
Inflation also came in hotter than expected. It’s not just an oil story anymore. Core inflation and services were up too, and AI-related spending may be starting to push up prices in areas like steel and other inputs. That makes it harder for me to see how the Fed cuts rates from here.
The market reaction was interesting. Bond yields initially spiked and then fell back, while stocks weakened. With yields now more attractive, investors may finally be looking at bonds as a real alternative again and thinking about rebalancing some stock gains into fixed income.
We also did a public service announcement on indexed annuities. Sales are at record highs, but the combination of high fees, changing terms and unrealistic illustrations is exactly why I think investors should be skeptical. If you want less stock market risk, there are simpler ways to build a conservative portfolio using liquid, lower-cost investments and high-quality bonds.
Finally, we answered a listener question about how to invest in the age of AI. The main point is that most investors already have a lot more AI exposure than they realize. You don’t need to eliminate it, but you should know how much you own and diversify around it through other U.S. stocks, small caps, international markets and high-quality fixed income.
We wrapped up with a loaded college football weekend and a quick preview of the NBA season.
Andrew and I get into this and more in this week’s Your Money This Week video followed by my Weekly Reads.
Weekly Reads
AI-conscious asset allocation: Portfolio construction in a capital investment boom by JP Morgan
This is the JP Morgan white paper Andrew and I discuss at some length at the episode’s 14:00 mark.
A Catalyst for the AI Break by GMO
The AI boom could be pressured by a surge of new equity supply from lockup expirations, major AI IPOs, and additional share issuance by hyperscalers. With much of today’s market tied to passive or benchmark-constrained strategies, there may not be enough flexible capital to absorb that supply without pushing prices lower. Even if markets absorb it initially, the new capital would fund more AI capacity, increasing the risk that supply eventually outruns demand and returns disappoint.
What the Midterm Elections Will Mean for Markets by Morningstar
AI data-center expansion and affordability are emerging as major election issues, but analysts expect the broader AI buildout to continue regardless of which party controls Congress, with differences more likely to show up in regulation, oversight, and sector-level winners and losers. A Democratic sweep could pressure financials and industrials while benefiting areas such as consumer staples and alternative energy, whereas continued Republican control could favor banks, industrials, defense, managed care, and data-center real estate. For investors, the key takeaway is not to position a portfolio around a single election outcome, but to maintain diversification so different holdings can benefit under different political scenarios.
We’re officially at 4 years of historically low resale turnover by ResiClub
U.S. existing-home sales have remained near historic lows for four years as high mortgage rates and the cost of giving up older, cheaper mortgages keep many homeowners from moving. New-home sales have held up better, largely because builders—especially in softer Sun Belt markets—have used mortgage-rate buydowns, closing incentives, and price cuts to support demand. In markets where inventory has risen sharply, particularly parts of Texas, Florida, Colorado, and the Pacific Northwest, existing-home sellers may increasingly need to lower prices or otherwise adjust expectations to complete a sale.
Donating Appreciated Company Stock to a Donor-Advised Fund: A Year-End Tax Strategy for Tech Professionals by Savant Wealth
If you already plan to give to charity, donating long-term appreciated company stock directly to a donor-advised fund can be more tax-efficient than selling the shares first because you may avoid recognizing the embedded capital gain and may qualify for a charitable deduction based on fair market value. This can be especially useful for investors with concentrated, low-basis stock positions, since the same gift can support charitable goals while reducing single-stock risk. The main practical consideration is timing: in-kind transfers can take days or weeks, so year-end gifts should be started well before December 31.
