HPWG Podcast October 2026: Rates, Oil, Breadth, and Inflation

JENNA:

Welcome to the October edition of the Hoffman Private Wealth Group Podcast. I’m Jenna Makras, Wealth Advisor, and I’m joined by Todd Hoffman, our Founding Partner and Portfolio Manager. As we enter the final quarter of the year, we’re looking at four connected issues: interest rates, oil, inflation, and what’s happening beneath the surface of the stock market. Todd, what stands out to you?

TODD:

Thanks, Jenna. The biggest change is that higher interest rates and energy costs are putting more pressure on the market. At the same time, the major indexes don’t fully reflect the volatility investors are seeing in individual stocks. There are still good business opportunities, but we need to be selective and deliberate about risk.

JENNA:

Last month we discussed whether the Fed might raise rates. What happened, and why does this matter? 

TODD:

On September 16, the Fed raised its target range by a quarter of a percentage point, from 3.75% to 4% and the vote was unanimous. In their statement, the Fed described economic activity as expanding at a solid pace and that inflation remains elevated. Now the question is will the Fed continue to raise rates again in October, and later this year.

SLIDE 2

Looking at this slide, the most useful takeaway of this chart is simply the change in direction. This chart shows the Fed’s previous projected path in Blue. It also shows what the markets are predicting through the futures markets in yellow.

With rates moving higher borrowing costs will increase the cost of home mortgages, credit cards and other lifestyle expenses. It also increases the cost for businesses to operate and negatively impacts their profitability. For smaller companies that rely on their credit lines for operations this can also be a headwind. 

SLIDE 3 

Let’s look at how higher rates have impacted Mortgages from just a year ago. In September just a year ago 30-year mortgages averaged around 6.3%, now last week they were already above 7%. This will have a dramatic impact both on buyers who need to finance and people who now might not be able to sell because they don’t want to give up lower interest mortgages. 

I believe the reason we have seen such a strong reaction in the market to such a small increase is because we have a new Fed Chief at the helm and people are unsure how far he will go to slow inflation. The futures markets indicate there will be a series of interest rate increases like 2022, and it may cause the same challenges to the markets then, that is until the Fed reversed course in 2023, bringing the markets back. This real question is how serious will inflation become and what will the Fed to tame inflation and this question can’t be answered without seeing what happens in Iran and with Oil.

JENNA:

So, are you saying these concerns have already impacted the markets, is this right? 

TODD:

Absolutely, the equity markets have a sizeable pullback in the third quarter, and the bond market has had a significant price correction also, in fact I would say over-correction, particularly in longer maturity fixed income. This is why we been diligent in moving all our taxable and tax advantaged Municipal fixed income investments to short and intermediate term maturities. Fortunately, even while making these changes to reduce risks we have managed to keep our income at attractive levels. 

JENNA:

So, do you think the Fed will increase again in October?

TODD:

It is too early to tell; we will need to watch are the next set of employment reports and what happens in IRAN with Oil. 

SLIDE 4 

If we look at this slide you can see how volatile Oil has been. Remember Oil impacts everything from trucking our food, shipping our products, and the price of services and travel.

JENNA:

How has the price of Oil impacted the different sectors within the S&P? 

TODD:

SLIDE 5

This slide shows how with the changes in the price of Oil how the different Sectors have done. The Energy sector has moved the most, with the average price of stocks in the energy sector up 40%, followed by technology up over 35%. All the other sectors have been held back and are up only between 3 and 9.7 % and the Financial, Communication, Consumer Services, Consumer Discretionary and Utilities Sectors are all negative for the year. Investors who did not allocate to Energy and Technology are probably experiencing negative returns this year. 

JENNA:

So, with Energy and Technology outperforming the other sectors by so much, are you still focusing on these Sectors today?

TODD:

We had a significant allocation to energy earlier in the year, but we’ve since taken profits and reduced that exposure. At current levels, I believe the remaining upside is limited, while the downside risk is significant. If shipping through the Strait of Hormuz normalizes, oil prices—and energy stocks—likely will experience a sharp and quick decline as the market removes the premium tied to supply disruptions.

We remain overweight Technology, but even being up 35%, it is much lower than it was in the first half of the year. We feel at the current price the Technology sector has been derisked, and if their earnings continue, which we expect will happen, this is where the sustainable long-term gains will be made over the next 12 and 24 months. 

JENNA:

You mentioned at the beginning of the Podcast that Indices like the Standard and Poor’s 500 are outperforming many of the stocks this year. Is this the case? 

TODD:

SLIDE 8

It has certainly been a stock picker’s market. As this next slide shows, 172 companies in the S&P 500 are up, while 327 are down for the year. Only 13 stocks are making new highs, compared with 44 currently making new lows. Only 45% are above their 200-day moving average, and just 25% are above their 50-day moving average. In essence, we have seen a substantial correction in the market for many companies despite the indices being up. 

We believe this environment underscores the importance of how we select stocks, active portfolio management, and stop-loss discipline. While our models are below their highs from earlier this year, all have outperformed well relative to their respective benchmarks this year. We’re pleased with that performance, and we remain focused on managing risk and identifying opportunities.

JENNA:

So, you mentioned earnings season is about to start again, and you think this will be good for the markets, is that right? 

TODD:

The economy is still strong and with earnings coming up in the next few weeks we should get enough good news to stop treading water again and get the market moving up. The next hurdle will be the political drama and negative headlines in front of the Midterm elections. My best guess is once we get past the Midterms if there has not been a resolution in Iran, things will heat up again. I cannot imagine Trump will stand idly by once the midterm elections are over and let IRAN dictate a spiraling stock market with high oil prices. He also cannot let Iran have a path for nuclear weapons after everything that has gone on this year. If the situation isn’t resolved by the midterms through diplomatic negotiations, I think it will be all guns blazing until we end this thing. If this happens, I believe the markets will have a huge year-end rally cheering to get this bad situation behind us.

JENNA:

Is there a message you want listeners to take away from this Podcast?

TODD:

Even in this environment, we bring disciplined investment strategies which make a difference. What also separates us is how we play both offense and defense.

On offense, we’re constantly looking for companies with strong growth prospects and growing earnings, and Fixed Income investments that offer attractive income with reduced volatility, and together this combination can help provide excellent returns. 

On defense, we’re addressing positions that aren’t working and using stop-loss strategies and hedging to help manage downside risk and preserve hard-earned gains.

For eligible high-net-worth investors, we also offer access to private markets and other alternative investments that may behave differently from traditional stocks and bonds. When appropriate, these strategies can help broaden diversification and support long-term goals, although they carry their own risks and limit access to your money.

We will remain disciplined—and committed to the families we serve—and this drives us every day to make thoughtful decisions on our client’s behalf. If you’re listening and you are not currently a client, we’d welcome the opportunity to talk with you about your goals and how our approach might fit your needs.

JENNA:

Thank you for listening to the Hoffman Private Wealth Group Podcast. If you find this conversation helpful, please share it with someone who could benefit. We’re welcoming new client relationships, and we’d be pleased to speak with you or someone you introduce to us. You can reach our team by phone, text or email. We also have a convenient scheduling link on our website. 

TODD:

Thank you for listening to the Hoffman Private Wealth Group October Podcast.