In this week’s Market Alert, we explain why the big banks are flashing warning signs, what rising interest rates could mean for your retirement savings, and whether all of this could lead to a big, bad bear market. We can’t predict what the market will do, but we can plan for it. Watch this week’s video to learn why we believe having an Invest and Protect strategy is so important, especially when you’re nearing or already in retirement.

• We have a ton to talk about because the inflation numbers came in, and they were horrible. Horrible, okay? 

• And then the big banks gave us some really bad news. So other than that, everything’s great! 

• Inflation rose to 3.7%, and the Fed’s job is to get it down to 2%. 

• Well, they’re stinking at it! How long have they been trying to get inflation down to 2%? 

• Now, you could argue that energy prices are artificially inflated because of what’s happening in the Strait of Hormuz, and when that goes away, inflation could come down. 

• If you take out energy and food, inflation is only 2.6%. So we’re about six-tenths of a percent away from the Fed’s goal. 

• And that’s the dilemma for the Fed. Do they raise interest rates because headline inflation is high, even though energy prices could come back down? 

• If they overreact, they could do harm to the economy for no reason, because this could be a temporary situation. At least, we hope it is. 

• Right now, the market is pricing in a 90% chance the Fed will raise interest rates in December. 

• Our view is they should sit on their hands and wait until this energy thing goes away. 

• If they raise interest rates, it hurts the average consumer, and we’re already seeing warning signs from the big banks. 

• JPMorgan, Goldman Sachs, Wells Fargo, and Citigroup all reported fantastic earnings. Oh my gosh, they’re making more money than they’ve ever made! 

• But if you go one level down, Wells Fargo and Citigroup are setting aside more money to cover credit card loans they expect to go bad. 

• We’ve talked about this before: the K-shaped economy. The affluent people and stock market investors are doing great, but the average consumer is going in the other direction. 

• And if the Fed raises interest rates, they’re hurting those people, not the affluent investors. So to me, leave it alone! 

• Stop hurting the people who are already suffering because of these high energy prices. 

• Now let’s talk about these AI companies. Their stocks got hit when the inflation numbers came out, and why is that? 

• Everybody’s betting on their future profits, but these companies are borrowing enormous amounts of money to build all this AI infrastructure. 

• If the cost of that money goes up, their future profits could go down, and suddenly those stocks don’t look quite as attractive. 

• Investors start asking, “Why should I take a chance on these companies when I could invest in Treasuries or other stocks where the profits are more reliable?” 

• And as people start doing that calculus, we could see these technology stocks, which represent 30% to 40% of the entire stock market, get sold off. 

• If that happens, we could have a big, bad bear market. 

• So will all of this result in a big, bad bear market? You know, time will tell, as I like to say. 

• The important thing is that we have our Invest and Protect process in place should things turn out that way. 

• If somebody suddenly wakes up and says, “The emperor has no clothes on,” and these AI companies aren’t worth what people think they’re worth, their stocks could go down significantly. 

• And if those stocks go down, they could take the whole stock market down with them, just like what happened in the year 2000. 

• But here’s another problem: because interest rates are trending upward, we probably won’t get much help from the bond market. 

• Normally, we think of bonds as diversification against stocks. If stocks go down, bonds go up, right? 

• Well, when stocks are falling because interest rates are rising, bonds can fall for the same reason. So now they’re both going down at the same time! 

• And that’s exactly why we’ve made changes to our bond portfolio. We want to make sure we’ve shored up that side of things as well. 

• Our Investment Committee went into detail about those changes in last night’s webinar, and if you missed it, we’re going to make the recording available. 

Transcript:

Hello, everyone, and welcome to our weekly market alert video for today,
which is October 16, 2025. And as usual, I hope this video finds you healthy,
wealthy, and wise. And as always, I want to thank you so much for watching. It
is just incredible to me that you guys tune in every week. You look forward to it
even.

We had a fantastic event in, uh, in Houston and, uh, the clients there all said,
“You know, we watch every f- every Friday. We look forward to the… when
you post it.” So that’s great. So thank you for watching. And, uh, for all you
squipper out there, I hope that you are enjoying your second childhood without
parental supervision.

Here in Texas, we are in an endless summer. I mean, it was 90 degrees
yesterday. Oh my gosh, is this ever gonna end? But, uh, hopefully, some of you
are in some, uh, cooler climes, enjoying, uh, maybe some fall, uh, as it starts,
and so thank you for being here. We have a, a ton to talk about. Uh, the inflation
numbers came in and they were horrible.

Horrible. Okay? So we’re gonna talk about what that all means. Uh, and then of
course, how that’s gonna impact our stock portfolio and our bond portfolio,
’cause that’s really what we care about, is the impact of this stuff. And then the
big banks gave us some really bad news. So other than that, everything’s great.
Okay? So, so we’re gonna have more fun than a human being should be allowed
to have when talking about terrible news. Uh, but it’s all good because in the
end, we have our invest and protect process to e- e- enact should things turn
really south and so, uh, that’s all good.

Um, before we get going, uh, you know-
Some of you are actually interested in this, so I’m gonna keep the theme going.
Uh, my wife, as you guys know, has brought two gigantic cats into our
household. They’re called Maine Coons. So right now, one of them is four
months old, the other one’s six months old, and they’re already, like, this big,
okay? And my wife has decided that she, it, wants to break the rule that we have
that no cats or any animals, no dogs either, are allowed in our bedroom at night,
okay?

They’re all out. They- we lock them up somewhere. I wanna be able to sleep.
She convinced me to, as she put it, have these two lovebugs in our bed last
night. So if I look sleep-deprived right now , it’s because the stupid lovebu- You
know what they do? They c- they, they sit on your face while you’re trying to
sleep, and they start purring.

I don’t know how my wife sleeps through that, but I am incapable of sleeping
through a cat that is laying on my face and purring at the same time. Uh, you cat
people are a different breed of human being. I’m, I’m sorry. I don’t know how to
handle that. So we’re going back to no cats, no lovebugs. I don’t care how lovey-
dovey they are.

I want my sleep. So anyhow, uh, so the inflation numbers came in yesterday,
and they were bad, okay? So inflation rose to 3.7%. And of course, the Federal
Reserve’s job is to get inflation down to 2%. Well, they’re stinking at it. Think
about it. How long is it that they’ve been trying to get inflation down to 2%?
And how long have we, uh, when’s the last time we were 2%? I think it was,
like, Bill Clinton. So they are really, really not doing their job And the other
thing that is y- you could say, you know, there’s an argument that says, yeah,
but that number includes energy, right? And right now, because of the stuff
that’s going on in, uh, with, uh, the Strait of Hormuz, that energy prices are
artificially inflated, and the moment that goes away and prices of energy comes
down, that that’ll take care of the, uh, you know, the, the CPI number, the, the
headline 3.7 number.

Well, if you take energy and you take food out, two things we don’t need, um,
and you look at what the inflation on that has been, it’s only 2.6%. So you could
say that they’re about six-tenths of a percent away from achieving their goal. So
that’s the dilemma that the Federal Reserve has, right? Do we raise interest rates
because the headline number is so high, but maybe it’s being pushed up by these
high energy prices which could go away?

And if we overreact to that, then we may be doing harm to the economy for no
reason, because that is a temporary, we hope, situation. So that’s the backdrop of
what happened. And, uh, so what’s happening now is that the market is pricing
in a 90% chance that the Fed will raise interest rates in December, not this
month, okay?

‘Cause they have one more meeting this month before the one in December. So
the, the, the thought right now is the Fed is just not gonna do anything in
October, but then in December, they, they, they will. M- uh, our view, they
should sit on their hands and wait until this energy thing goes away. Because
here’s the problem that they’re creating, okay?

If they raise interest rates, it hurts the average consumer. So let me tell you what
the big banks are telling us, and then what the comp- the competition for these
dollars are and, and interest rates being higher. So the big banks came out, and,
uh, JP Morgan, Goldman Sachs, Wells Fargo, Citigroup, they all reported
fantastic earnings.

Oh, my gosh, they’re making more money than they’ve ever made. But if you go
one level down and you look at credit cards, the companies that have credit
cards, like Wells Fargo and Citigroup, they both set aside more money to cover
loans that they expect to go bad Okay? So basically what it means is we have,
we’ve talked about this before, the K-shaped economy, right?

So it kinda looks like this. So you’ve got these people in the higher end, the
stock market investors, the, the more affluent people, they’re doing this, but the
average consumer is doing that. And if they raise interest rates, they’re hurting
these people. They’re not hurting those people. So to me, leave it alone.

Stop hurting the people that are, you know, being, uh, that are suffering because
of these high prices of, of energy. And so, a- and, and so now let’s talk about the
third component of this, which is all these AI companies, right? Their stocks got
hit when we saw, when inflation came. I mean, a big drop there. Why?

Because those guys, everybody’s betting on their future profits, right? They’re
not making money now, so basically it’s a bet on their future profits. But if their
pro- And, and if you say their profits are based on a certain cost of money,
right? They’re gonna- they’re all borrowing money to make this stuff, and that
hopefully will turn into profits.

So if those profits are based on a lot, to a great degree, the cost of money, and
the cost of money goes up, those profits are gonna go down. And then you have
the thing where you’re comparing, should I even invest in those companies
when I’m betting on these profits that are now less valuable, when I could invest
over here, maybe in Treasuries or in other kinds of stocks that are not as risky,
not as high-flying, that their profits are more reliable?

So as people start to do that calculus, we could see these, uh, uh, these
technology stocks, which represent, you know, 30, 40% of the entire stock
market get sold off. And if that happens, we could have a big, bad bear market.
So we have all kinds of things that are just, uh, flowing back and forth and all of
that.

So will this all result in a big, bad bear market? You know, time will tell, as I
like to say. Uh, the important thing that I know is that we have our invest and
protect process in place should it turn out to be that, right? If these technology
stocks, suddenly somebody wakes up and says, “You know, the, the emperor
has no clothes on,” and that these companies are not worth what they’re worth,
and these profits are not gonna come where we think they will, then all of a
sudden those stocks could go down significantly.

And if they do, they could take the whole stock market down with them. And if
that happens, and we have like what happened in, uh, you know, in the year
2000 when the technology stocks tanked, if that were to happen, we could have
a, a significant big, bad bear. And the problem also is that because interest rates
are trending upward, we, we probably will not get help from the bond market,
right?

Because normally what we think is we got bonds to, to, uh, diversify against the
stocks. If the stocks go down, bonds go up, you know, and vice versa. Well, in
the environment where stocks are going down because interest rates are going
up, bonds are going down because interest rates are going up. So they’re both
going down at the same time, which is why we made the changes that we did in
our bond portfolio.

And if you didn’t get to watch the, uh, webinar on our, uh- Uh, that our
investment, uh, committee put on, uh, last night, then, uh, we are gonna have
that available. We’re gonna send it out if you- uh, and make sure you get to
watch it. But we went into some detail as to how we changed our bond portfolio
so as to compensate, or I should say adapt, to the fact that these kinds of
dynamics could happen, where we have a big, bad bear in the stock market,
invest and protect should help us with that, but the bond side, we need to make
sure we’ve shored that up as well.

And we went into some detail on how we’ve shortened the duration of our bond
portfolio. What I mean by that is, we, we’ve, we’ve, uh, the, the bond make-up,
the make-up of our bond portfolio now is shorter duration bonds, right? So it
means they mature faster. If they mature faster, when interest rates go up,
they’ve already matured, and now we can reinvest them at that higher interest
rate, and we can take advantage of that.

If you have longer term bonds, you can’t do that, right? So that’s why we’ve
shortened the duration of our bond portfolio to adapt to it. So a lot of stuff going
on, not the least of which is that I am sleep-deprived. So, so one of the cats, you
know what his favorite thing to do to me is? He, he, like, thinks…
I don’t know what he thinks I am, but he’s, like, digging on me. He comes over,
and he starts digging on my chest. Have you ever seen a cat do that? It’s like
these cats are neurotic. There’s something wrong with these cats, Alex, I’m
telling you. Uh, anyway, there it is. I, I, I actually probably should put makeup
on so that you can’t see the dark circles under my eyes from my lack of sleep.

So anyway, I hope this video finds you healthy, wealthy, and wise. And you
know, as always, this is not intended to make you worry. This is only intended
to make you aware, okay? And if you are aware, you know what’s going on, but
don’t think that you need to do something. That’s our job. Our job is to worry
about this, to take care of it for you so that you don’t have to.

That’s what we wanna do for you. So that’s where we are. Um, that’s all I got for
you. So I hope this video found you healthy, wealthy, and wise, and we’ll talk
soon. Retirement Planners of America. RPOA.

Economic indicators and stock market performance cannot be predicted. Opinions expressed regarding the economy and the stock market belong solely to employees of RPOA on behalf of Retirement Planners of America and may not accurately portray actual future performance of the economy or stock market outcomes. Opinions expressed in this video is intended to be for informational purposes only and is not intended to be used as investment advice for individuals who are not clients of Retirement Planners of America. All content provided is the opinion of employees of RPOA Advisors, Inc. (d/b/a Retirement Planners of America ) (“Retirement Planners of America”, “RPOA”). ©Copyright 2026