Latest / Paramount Wealth Perspectives / Fed Speak Rattles Markets - 12/23/24

Transcript

Fed Speak Rattles Markets - 12/23/24 · Paramount Wealth Perspectives

• 0:00
  Chris Coyle: Intro song game on.
• 0:12
  Chris Coyle: Hello, everyone.
• 0:13
  Chris Coyle: Welcome to paramount wealth perspectives.
• 0:15
  Chris Coyle: Your go-to podcast for the latest updates on global markets and current economic events.
• 0:21
  Chris Coyle: This is your host, Chris Coyle.
• 0:23
  Chris Coyle: Each week we strive to bring you expert analysis on market trends, economic shifts.
• 0:28
  Chris Coyle: And key financial developments from around the world.
• 0:32
  Chris Coyle: Whether you're an investor business leader.
• 0:34
  Chris Coyle: Or simply curious about the global economy.
• 0:37
  Chris Coyle: Our podcast is here to keep you informed and ahead of the curve.
• 0:41
  Chris Coyle: Now let's dive into the markets and explore what shaping the world of finance today.
• 0:46
  Chris Coyle: Here with us today.
• 0:47
  Chris Coyle: We have Scott Tremlett chief investment officer and managing partner at paramount associates, wealth management.
• 0:53
  Chris Coyle: Scott.
• 0:54
  Chris Coyle: Looking back to last week.
• 0:56
  Chris Coyle: What are some major events you would like to highlight?
• 0:59
  Thank you, Chris.
• 1:00
  Last week, major indices, Val.
• 1:03
  The S and P 500 fell 2% for its second straight, weekly decline.
• 1:09
  The S and P did end at streak of 14 days of more declining stocks than gainers on Friday.
• 1:16
  The Dow Jones, industrial average.
• 1:18
  I finally closed up last Thursday after 10 straight days of declines.
• 1:23
  It's the largest daily slide since 1974.
• 1:27
  What didn't fall the 10-year treasury rate.
• 1:30
  The yield is now up nearly half a percent in the last two weeks alone.
• 1:35
  Remember yields going up mean bond prices are going down.
• 1:40
  Also gaining for the week was the dollar.
• 1:43
  Which hit its two year high last week.
• 1:46
  But the big gainer for the week was volatility.
• 1:50
  The volatility index surge after the fed announcement Wednesday.
• 1:55
  And fed chair Paul's testimony.
• 1:57
  Uh, 74% jump in one day.
• 2:01
  It's second biggest daily increase ever.
• 2:04
  Wow, Scott, it sounds like the surgeon volatility alongside the rising yields and a strengthening dollar really underscores how sensitive markets are to fed actions and Pal's testimony last week.
• 2:17
  How about the economic reports from last week, Scott?
• 2:21
  Economic reports were generally positive last week, Chris.
• 2:24
  November retail sales beat.
• 2:26
  Up over 6% year over year.
• 2:29
  It's highest growth rate since 2021.
• 2:32
  Headline and core PCE inflation numbers.
• 2:35
  Each came in softer than consensus.
• 2:38
  Initial jobless claims were lower than expected.
• 2:41
  And the university of Michigan's consumer sentiment report came in at its highest mark since April.
• 2:47
  Third quarter us GDP was revised up.
• 2:49
  An existing home sales were better than anticipated.
• 2:53
  I hear you, Scott, while the positive economic data is encouraging.
• 2:57
  It's a classic case of good news being bad news.
• 3:01
  As stronger growth could complicate the Fed's path toward easing rates.
• 3:05
  So overall, what are you taking away from last week?
• 3:09
  Yes, Chris.
• 3:10
  Good economic news can be bad news for markets in periods of monetary policy change.
• 3:18
  The markets want rates to come down.
• 3:20
  They are somewhat dependent on at this point.
• 3:23
  But, and this is the biggest news item for last week.
• 3:26
  Good economic news and inflation, seemingly sticking around.
• 3:31
  Change the projected pace of federal reserve rate cuts for 2025.
• 3:36
  Last week the fed did cut the overnight rate.
• 3:39
  Another quarter point.
• 3:41
  But markets and volatility moves were directly related to the fed indicating that will only cut rates twice in 2025.
• 3:50
  That has been my expectation.
• 3:52
  But I guess the market needed to hear it to believe it.
• 3:56
  The fed raised future projections for inflation.
• 3:59
  And stated that they can afford to be more cautious and keep an eye on the extent and timing.
• 4:05
  Of additional moves.
• 4:06
  Reading different comments from fed participants.
• 4:09
  It seems that possible paths are widening even within the fed.
• 4:14
  Some members, state inflation is coming down as expected.
• 4:17
  Some do not think that the be the case.
• 4:20
  Some members state that they are considering potential trade and other policy changes in the us.
• 4:25
  Some including fed chair Powell.
• 4:28
  As stated that they have not taken us policies into consideration at all.
• 4:33
  Sounds like a moving target.
• 4:35
  Data dependent.
• 4:36
  We will have to wait and see what all this means for 2025.
• 4:41
  Thanks for that explanation, Scott, it's clear that the Fed's cautious tone and revise projections for your fewer rate cuts in 2025.
• 4:49
  Are reshaping market expectations.
• 4:52
  Underscoring just how sensitive markets are to both economic data and policy signals.
• 4:58
  So, what are you thinking for next year?
• 5:01
  Chris, we did touch on expectations for 2025 last week.
• 5:05
  And I'm certain, we will come back to this topic again.
• 5:08
  But.
• 5:09
  At week's end, the big picture market outlook.
• 5:13
  Is really mixed the bull case points to fed easing disinflation, a strong us consumer strong labor market optimism for us policies and AI excitement.
• 5:26
  The bear case considers a more hawkish fed.
• 5:29
  Stretch valuations.
• 5:31
  And geopolitical concerns.
• 5:33
  That's understandable with such a mixed outlook.
• 5:36
  It's fascinating to see the bull case driven by optimism and innovation while the bear case keeps a cautious focus on valuations.
• 5:45
  And global uncertainties.
• 5:47
  Finally, what are you looking at this week?
• 5:49
  Scott?
• 5:50
  Due to the holiday.
• 5:51
  Economic data is light this week, Chris.
• 5:54
  Tomorrow market's closed early and Wednesday markets in the U S are closed.
• 5:59
  Today we saw the conference.
• 6:01
  Board's consumer confidence number disappoint.
• 6:04
  Well below projections as optimism was replaced by pessimism about future business conditions and incomes.
• 6:13
  Durable good orders came in today, much weaker than expected.
• 6:17
  With transportation leading to decline.
• 6:20
  We have weekly Java's claims on Thursday and overseas.
• 6:23
  We have various releases from Japan, China, and South Korea this week.
• 6:28
  I didn't mention earlier.
• 6:29
  But both the UK and Japan held rates last week, no moves up or down.
• 6:35
  I want to leave our listeners with a heartfelt, happy holidays.
• 6:39
  I hope you and your loved ones take advantage of this time together and appreciate the moments the holidays bring us.
• 6:45
  Well, maybe not the shopping or wrapping gifts.
• 6:48
  I know all of us here at paramount.
• 6:50
  Appreciate all of you.
• 6:52
  Well, we will certainly keep on the lookout for those reports and trends.
• 6:57
  And I'm sure we will have plenty to discuss next Monday.
• 7:00
  For now stay informed, stay ahead and join us next week.
• 7:04
  For more key updates shaping the global economy.
• 7:07
  Thank you for tuning into paramount wealth perspectives.
• 7:10
  We hope you all have a fantastic week.
• 7:13
  And a great holiday season.