Latest / Paramount Wealth Perspectives / Where Do We Go from Here? - 11/11/24

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Where Do We Go from Here? - 11/11/24 · Paramount Wealth Perspectives

• 0:00
  Intro song game on.
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  Hello, everyone.
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  Welcome to paramount wealth perspectives.
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  Your go-to podcast for the latest updates on global markets and current economic events.
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  This is your host, Chris Coyle.
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  Each week we strive to bring you expert analysis on market trends, economic shifts.
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  And key financial developments from around the world.
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  Whether you're an investor business leader.
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  Or simply curious about the global economy.
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  Our podcast is here to keep you informed and ahead of the curve.
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  Now let's dive into the markets and explore what shaping the world of finance today.
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  Here with us today.
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  We have Scott Tremlett chief investment officer and managing partner at paramount associates, wealth management.
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  Scott.
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  Looking back to last week.
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  What are some major events you would like to highlight?
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  Thanks, Chris.
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  Us stocks were higher for the week with the S and P 500 and NASDAQ.
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  Ending the week at record highs.
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  The Russell 2000 had its best week since March of 2020.
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  All sectors were higher.
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  With the standouts being big tech banks, investment banks, credit cards, auto suppliers and airlines.
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  Under-performers included dollar stores.
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  China tech toys, pharma, athletic apparel, and food and beverages.
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  Other headlines include a preliminary university of Michigan consumer sentiment report.
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  Which came in at its highest level in six months.
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  The number itself increased at its fastest monthly clip in nearly four years.
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  Included in that report.
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  Consumers 12 month inflation expectations actually ticked down to the lowest level since the pandemic.
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  October us services, beat expectations with its highest print since July of 2022.
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  Last week, we also had a glimpse into the global economy.
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  With our final service numbers and composite numbers coming in from around the globe.
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  Our paramount global rankings were updated just today.
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  Well, I have to say it's encouraging to see the S and P 500 and NASDAQ reach, record highs.
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  And I'm interested to hear more about the updated paramount global rankings.
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  Can you please explain what that is to our listeners.
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  Of course I can, Chris.
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  Paramount global rankings is an economic ranking evaluation that allows me to research different areas of the globe for investment ideas.
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  There are two sides to the model.
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  When I call current power, that is simply apples to apples, whose number is bigger.
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  And then there's momentum.
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  Momentum allows me to analyze trends.
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  Depending on where I feel we are in the economic cycle.
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  Either current or momentum may hold greater importance.
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  I utilize the rankings to guide specific strategic top-down or big picture decisions in asset allocation.
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  I don't want to spend too much time on this today.
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  But in future podcast, I'm certain I would dig deeper into the trends and to the results.
• 3:11
  Thanks for that, Scott.
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  I'm sure a lot of listeners will be interested to hear how paramount global rankings provides a strategic data driven approach to asset allocation.
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  Now last week you mentioned there were some upcoming labor reports, as well as earning reports.
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  Can you please elaborate on those?
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  As for jobs.
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  Initial jobless claims were inline with consensus.
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  And continuing claims we're above consensus.
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  In fact continuing claims were the highest in nearly three years.
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  As for earnings the last two weeks have been the busiest period for S and P 500 earnings.
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  And as of Friday, 91% of the index had already reported.
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  Earnings growth overall ticked up a bit for the week.
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  And now stands at 5.3% growth versus the 4.3% growth that happened expected.
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  Here are some fun stats.
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  The number of companies reporting earnings per share above estimates is below the five-year, but equal to the 10-year average.
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  The number of companies reporting revenues above estimates is below both the five-year and 10-year average as well.
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  They're earning beats.
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  Are averaging just 1.2% above estimates, which is below both the five-year and 10-year average.
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  Wow.
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  That's interesting to hear that earnings per share are trailing historical averages.
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  Now as you have stressed the importance of the federal reserve before.
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  Can you please elaborate more on their announcement from last week?
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  Yes, Chris, the federal reserve met last week and cut rates by a quarter point.
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  Their policy statement was little changed.
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  However, the fed did delete the statement that the committee had gained confidence that inflation is moving sustainably towards their 2% goal.
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  Jerome Powell stated that economic activity has been stronger than expected.
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  And the fed will have to wait and see where the data leads them before deciding on policy in December.
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  Markets are now pricing in a 30% chance that the fed leaves rates unchanged in December.
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  Up from 17% the previous week.
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  The committee also emphasized that labor market conditions had generally eased.
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  Replacing a previous reference to slowing job gains.
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  Elsewhere central banks were also active in the UK, the bank of England cut rates by quarter point.
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  This was expected.
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  The bank of England noted significant upwards revisions to both its growth and inflation expectations.
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  Moving over to emerging markets.
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  China policy makers announced a package to offset local government's debt problems.
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  And provided forward guidance.
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  I'm future policy support for bank recapitalization consumption and the property sector.
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  Understood.
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  It sounds like the fed will continue to let data guide their decisions in December and moving forward.
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  Looking to the other major event last week that everyone is speaking about.
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  Can you please discuss the elections implications?
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  Yes, Chris.
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  And then there was the election.
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  Donald Trump, the Republican nominee defeated Kamala Harris, vice president, and the democratic candidate in Tuesday's vote.
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  I have been in conferences since the election regarding the potential market impact of a Trump presidency.
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  Let's keep in mind that campaign rhetoric often does not match actual policy.
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  This time around, however, Trump will not be restrained by divided government.
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  Also, he can't run on a third term, so he doesn't have to support policies just to get reelected.
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  I don't want to dig too deep into the weeds here as a guest speaker.
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  And I will discuss this more in the coming weeks, but here are some of the expectations this time around.
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  First.
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  Last time Trump did tariffs on China, be executive order, and this could be immediate in 2025.
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  We'll see how this plays out, but initial expectations are for more inflation in the us, and it may also force Chinese policy makers to make quicker and more drastic.
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  Fiscal policy moves to offset any decline in foreign consumption.
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  Tariffs may be short term, depending on how they're classified.
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  They may hold longer term.
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  It they're looked at as a funding source to offset reductions in taxes.
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  Next we do have taxes and regulations.
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  Tax cuts.
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  We're set to expire at the end of 2025 should be extended.
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  Also should Republicans win a majority in the house?
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  The corporate tax rate could potentially drop from 21% to 15%.
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  For domestic manufacturers.
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  One report.
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  I read estimates that proposed tax cut itself may boost S and P earnings by almost 4%.
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  As far as regulation or deregulation.
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  That is really driving market expectations for financials.
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  Namely asset managers.
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  Do the possibility of more MNA and IPO's as the election overhang lifts from the markets.
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  I will say lastly, but I'm not sure that this will be the last thing that comes up there is immigration and the extent of the deportation policies.
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  Keep in mind, those workers jobs will have to come from somewhere no matter what.
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  This may lead to wage growth with less workers in the workforce overall.
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  And I think I would say this for either candidate in different ways.
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  Proposed policies are inflationary in this case.
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  Inflation may be caused by a tighter job market.
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  And tariffs.
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  Well, you make it clear that this new Trump administration could bring significant shifts in tariffs taxes.
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  And regulations.
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  All of which are likely to have a profound impact.
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  On inflation, corporate earnings and even labor markets.
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  So, what does this mean for market expectations?
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  So far, Chris inflation expectations have driven up interest rates.
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  And strengthen the dollar.
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  As a more resolute, better reserve is anticipated.
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  Consequently, the number of fed rate cuts projected for 2025 has dropped to just two down from four in mid-October.
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  There are some possible shifts in investment strategy.
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  Considering the possibility of less globalization.
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  And more policy uncertainty that is really expected to drag on both Chinese and European growth.
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  As these areas seem most vulnerable.
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  Overall to end on a positive.
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  The current economic environment is favorable for stock markets.
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  Rates coming down at all and real wage gains help an American consumer that continues to spend.
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  That makes sense.
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  And it sounds like an active investment management approach is imperative during times like these.
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  What major events are you looking at this week?
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  Scott?
• 10:24
  This week, we have two big inflation reports in the U S and Friday.
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  We have retail sales, which I pay close attention to.
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  We have fed chair Powell, governor Waller.
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  And New York fed president Williams scheduled to speak.
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  China publishes a range of economic reports.
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  And the UK gives a snapshot of growth on Friday.
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  Earnings are slow this week.
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  With just nine S and P 500 firms reporting.
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  Well, we will certainly keep on the lookout for those reports and I'm sure we will have plenty to discuss next Monday.
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  For now.
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  Stay informed.
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  Stay ahead.
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  And join us next week for more key updates shaping the global economy.
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  Thank you for tuning into paramount wealth perspectives.
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  We hope you have a fantastic week.