CWS Market Review – September 16, 2025

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This week is Fed Week. We finally made to the big interest rate decision. The Federal Reserve started its two-day meeting today, and tomorrow afternoon, the Fed is widely expected to cut interest rates by 0.25%. This will be the first rate cut this year.

We’ll learn more details tomorrow, but it looks like this will only be the start of interest rate cuts. Traders expect two more cuts this year, and a fourth cut within six months. The Fed’s policy statement will be released tomorrow at 2 p.m. ET. That will be followed shortly after by a press conference from Federal Reserve chairman Jerome Powell.

Frankly, I think the Fed was behind the curve on this. We’ve already seen some deteriorating economic data. One year’s worth of jobs data was revised lower. While the unemployment rate is still low, it’s at a four-year high. The initial jobless claims also came in high. Historically, once the jobs data starts to move a little, it soon moves a lot.

Coincidentally, the Fed got a new board member today. Yesterday, the Senate voted to confirm Stephen Miran as a member of the Federal Reserve Board. The vote was 48 to 47. He was sworn in earlier today. President Trump has been very critical of the Fed, but he’ll get his wish for at least one rate cut. In May, the president will be able to nominate his own Fed chairman.

The stock market has been incredibly strong in recent weeks. If there are any problems with the labor market, it’s not showing up in share prices. Before the market’s modest drop today, the S&P 500 closed higher ten times in the last 14 sessions. The market has led a charmed life since the April 8 low. Not only has the market climbed steadily, but it’s done so very smoothly. The S&P 500 hasn’t had a daily drop of more than 0.7% in 31 trading days.

This gets us to the central paradox of this market. The overall market has been steady and calm, yet within the market, the Low Volatility stocks have done the worst, while the High Beta stocks have gobbled up all the profits.

I’ve talked a lot about this trend over the past several weeks, but it’s only grown more pronounced.

Here’s a small chart that explains a lot. This is the S&P 500 High Beta ETF (SPHB) along with the S&P 500 Low Vol ETF (SPLV). Since early April, the Low Vol stocks are down slightly (-1.64%) while the High Beta stocks are up nearly 50%.

During the short-lived bear market we had earlier this year, low volatility stocks did much better than the overall market. The High Beta sector has stormed back. I generally shy away from predicting market tops or bottoms, but I feel confident in saying that the High Beta outperformance will not continue indefinitely. Stein’s Law: “If a trend cannot continue, it will stop.”

This morning, we got the retail sales report, and it was a decent one. I don’t want to overstate the strength of the report but it’s good to see signs of a resilient consumer in the face of weaker jobs data. Oftentimes, economic data is contradictory. This is only the initial report. We’ll get a more detailed report in about two weeks.

Here’s what the report had to say. For August, retail sales rose by 0.6%. That’s the highest since June. Expectations were for 0.2%.

The month’s strength was fairly widespread, with sales rising at nine of the 13 categories the Census Bureau tracks. Retailers may have reaped the benefit of a strong back-to-school season. Sales at nonstore retailers—a proxy for e-commerce—jumped 2% in August from July, while clothing and accessories sales increased 1%, and sales at sporting goods and hobby stores gained 0.8%.

Miscellaneous store retailers, furniture stores, general merchandise stores, and health and personal care stores all notched monthly declines, but still grew year over year.

If we exclude autos, then retail sales were up 0.7% last month. That’s also the best since June. If we strip out autos and gasoline, then retail sales were again up by 0.7%. The retail sales number for June was also revised slightly higher. The original report came in at 0.5%. That was revised up to 0.6%.

We also got the report on import prices. Month over month import prices rose by 0.3%. Wall Street had been expecting a drop of 0.2%. Over the last year, import prices are unchanged. Over the last year, export prices are up by 3.4%.

Stock Focus: Colgate-Palmolive

As an investor, I’ve learned that one of the best places to find great opportunities is in the regular and the ordinary. Too often, investors think that being a great investor involves finding the “next great” company that’s going to discover and market some revolutionary breakthrough.

I have nothing against that concept except that it’s very hard to do. Let’s remember how often the winner is not the company that was first. Instead, it’s the company that was best able to exploit what others have done.

On the other hand, we have the non-revolutionary companies. This week’s featured stock is Colgate-Palmolive (CL), which is about as non-revolutionary as they come.

I know what you’re thinking. Colgate? You’re talking about investing in toothpaste?

Well, yes, but Colgate is a whole lot more than toothpaste. Today’s Colgate-Palmolive is a household products powerhouse. In just about every home in America, you can probably find something made by Colgate.

Colgate employs more than 34,000 people in dozens of countries all over the world. Last year, Colgate registered sales of more than $20 billion. On average, people buy over $55 million worth of Colgate’s products every day.

Here’s another fact you may not know. Since 1990, shares of Colgate are up more than 5,600%. Colgate has been a massive winner for investors. Shares of Colgate-Palmolive have far outpaced the rest of the stock market. What’s more is that the company has increased its dividend every year for the last 62 years.

Here’s how the stock has done since 1990. For context, the blue line is the S&P 500.

Not bad for a toothpaste company!

Of course, Colgate is a lot more than toothpaste. There’s also Palmolive dishwashing soap. Colgate also makes Irish Spring. They own a good part of Tom’s of Maine, Ajax and Speed Stick. Colgate also makes Skin Bracer, Fresh Start and Cold Power. Colgate owns dozens of well-known brand names. (You can see a list of their brands here.)

The current quarterly dividend is 52 cents per share, and I expect Colgate will keep their dividend-hiking streak alive. On August 1, the company reported Q3 earnings of 92 cents per share which beat the Street by three cents per share.

Colgate is a classic defensive play. The consensus on Wall Street now expects CL to earn $3.94 per share in 2026. I think that’s very doable. The stock has not performed well lately, and I think it’s a decent buy right now. The stock is going for about 20 times next year’s earnings. That’s a bit high but I think it’s reasonable for a long-term position. Also, the dividend yield works out to a little over 2.5%.

Wall Street Was Bombed 105 Years ago Today

One hundred and five years ago today, at one minute past noon, a bomb exploded in Wall Street which killed 38 people and seriously wounded 143. Windows were shattered up to a half-mile away.

A horse-drawn wagon loaded with dynamite had been parked in front of the headquarters of J.P. Morgan. The dynamite was packed with 500 pounds of cast-iron slugs.

For the first time ever, trading was halted on the floor of the New York Stock Exchange because of violence. The previous day, anarchists Sacco and Vanzetti had been indicted for bank robbery and murder. At the time, it was the deadliest terrorist attack on U.S. soil.

No one knows who carried out the attack, but it was assumed to have been orchestrated by an Italian anarchist group. They had carried out a series of bombings in June 1919.

Damage from the blast is still visible on 23 Wall Street. J.P. Morgan refused to have it repaired. This is a picture I took of the damage. The perpetrators were never caught.

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

P.S. This Sunday our ETF, the AdvisorShares Focused Equity Fund (CWS), will celebrate its ninth birthday. I want to thank everyone for your support. Every year, hundreds of funds close up shop but ours is as strong as ever. You can get more info on the fund here.

Posted by on September 16th, 2025 at 7:14 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.