Today’s market action is filled with contradictions. There are signs of optimism, but there are also warnings. It is difficult for investors because we want consistency and coherence. How should we interpret the mixed signals? Are they just noise? Here are some examples:

We hear that few companies are hiring. Those new to the workforce find it more than challenging to find a good full-time job and both Carlyle Group and Goldman Sachs believe new hiring is only getting worse. At the same time, the economy is at full employment. Today’s 4.3 percent unemployment rate is well below the long-term average unemployment rate of 5.7 percent.

Large-cap stocks, as measured by the S&P 500 index, have a year-to-date gain of 16 percent. At the same time the S&P Small Cap 600 index is only up 5 percent. Are stocks having a good year or a bad one?

Along the same line, technology stocks are having a great year (iShares Technology is up 28 percent) but the Schwab Dividend Equity ETF (SCHD), which holds 103 stocks from many industries, has a year-to-date loss of one percent. Again, are stocks having a good year or a bad one?

The Fed cut interest rates and plans two more cuts before year-end. At the same time the economy is growing at nearly 4 percent. Cutting rates into a strong economy where stocks are near their highs is seldom happens.

Gold has risen 56 percent this year. Some investors are buying it as a “safe haven” investment because of soaring debt. They view the price increase as a sign that the government will inflate their way out of the debt problem. But if there is a fear of a debt blowup then why aren’t bond yields rising? The 10-year Treasury yields 4 percent and the 30-year is lower now than it was at the start of the year. No worries there.

I’m better at identifying the mixed signals than I am of explaining them. My view is the economy is strong due to AI spending, but is weak outside of that. Inflation remains a problem so long-term rates won’t fall even if the Fed continues to cut rates. If they cut too much, long-term rates will actually rise. Of course, some of the mixed signals might become clearer once the government is open for business so we can actually get economic data! Soon would be nice.

David Vomund is an Incline Village-based Independent Investment Advisor. Information is found at http://www.VomundInvestments.com or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.