Transcript

A Lot Of Noise. · ANGLES.

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SPEAKER_00: A lot of noise.
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SPEAKER_00: My weekly market review, October 13th, 2024.
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SPEAKER_00: Stocks began the week nervously on Monday with tit-for-tat attacks further raising
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SPEAKER_00: the geopolitical temperature in the Middle East and the resulting continued move
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SPEAKER_00: higher in oil prices to above $80.
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SPEAKER_00: Things just grew more dismal as the session wore on,
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SPEAKER_00: with analysts issuing rare downgraded outlooks for both Apple and Amazon.
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SPEAKER_00: Yet another massive destructive storm began to take aim at Florida,
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SPEAKER_00: which crushed the prices of insurance company stocks,
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SPEAKER_00: particularly those with large exposure to the region.
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SPEAKER_00: The indexes all finished the day significantly lower.
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SPEAKER_00: Chinese markets spectacularly crashed off from their recent sugar high after coming
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SPEAKER_00: back from a week's holiday on the back of a letdown regarding the next stage of stimulus,
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SPEAKER_00: dragging European stocks lower.
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SPEAKER_00: But Wall Street shrugged it off when the bell rang on Tuesday morning and set about
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SPEAKER_00: trying to repair the previous day's damage,
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SPEAKER_00: doing a good job in erasing Monday's losses with tech leading the charge higher.
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SPEAKER_00: The energy sector, however, slumped as oil prices reversed sharply lower.
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SPEAKER_00: Stocks opened slightly softer on Wednesday, following a report that the U.S.
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SPEAKER_00: Justice Department is considering a breakup of Alphabet Google,
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SPEAKER_00: signaling a broad antitrust crackdown on big tech,
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SPEAKER_00: and more labor trouble at crisis hit Boeing.
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SPEAKER_00: The mood improved as the session went on,
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SPEAKER_00: with eyes on the CPI inflation numbers the next day and PPI the day after.
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SPEAKER_00: The minutes from the previous Fed rate setting meeting were released in the afternoon,
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SPEAKER_00: and we learned that there had been pretty robust debate at the meeting between the
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SPEAKER_00: half-point cutters and the quarter pointers,
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SPEAKER_00: and that the decision to go with the half-point reduction was a lot tighter than it
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SPEAKER_00: initially appeared.
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SPEAKER_00: Stocks were too busy rallying hard to take much notice,
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SPEAKER_00: though,
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SPEAKER_00: and the S&P 500 closed at its 44th all-time record high of the year.
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SPEAKER_00: The Consumer Price Index,
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SPEAKER_00: CPI,
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SPEAKER_00: measure of retail inflation for September,
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SPEAKER_00: was released pre-market on Thursday.
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SPEAKER_00: It came in a touch hotter than expected at an annualized rate of 2.4%.
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SPEAKER_00: Weekly jobless claims spiked much higher to 258,000,
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SPEAKER_00: but temporary distortions due to Hurricane Helene were likely a major factor,
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SPEAKER_00: and that could also be repeated with this week's data because of Milton,
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SPEAKER_00: as well as the labor dispute at Boeing.
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SPEAKER_00: Stocks initially drifted a little lower in response and stayed depressed during
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SPEAKER_00: what was a bland session overall.
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SPEAKER_00: Friday began with the release of the Producer Price Index,
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SPEAKER_00: PPI measure of wholesale inflation experienced by manufacturers,
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SPEAKER_00: which contrasted with CPI by coming in a touch cooler than expected.
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SPEAKER_00: Prices were unchanged over the month of September and a 1.8% annualized rate.
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SPEAKER_00: Third quarter earnings season kicked off with sparkling reports from JP Morgan,
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SPEAKER_00: Wells Fargo,
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SPEAKER_00: BlackRock and Bank of New York Mellon.
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SPEAKER_00: But after Elon Musk gave a typically awkward,
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SPEAKER_00: evasive and detailed light report on Tesla's cybercab plans,
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SPEAKER_00: remember he once promised that a million of them would be on the road by 2020,
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SPEAKER_00: which totally underwhelmed Wall Street and the stock was severely punished.
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SPEAKER_00: The solid earnings news from the financial names plus the PPI number,
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SPEAKER_00: mostly neutralizing the slight concerns raised by CPI the day before,
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SPEAKER_00: sent all the indexes floating higher all day,
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SPEAKER_00: led by small caps.
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SPEAKER_00: And the S&P 500 closed the week at all-time high number 45 of the year.
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SPEAKER_00: There is a lot of noise out there right now,
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SPEAKER_00: and it's going to stay that way with the election less than a month away.
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SPEAKER_00: The best way to cut through that noise and not get distracted by scary and
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SPEAKER_00: unsettling headlines is to stay focused exclusively on the three key drivers to
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SPEAKER_00: this market.
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SPEAKER_00: One, economic soft landing.
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SPEAKER_00: Two, Fed interest rate cuts.
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SPEAKER_00: And three, stable earnings.
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SPEAKER_00: As long as the news regarding those items remains positive, stocks could well remain resilient.
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SPEAKER_00: Stable economic growth remains by far the most important influence on this market.
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SPEAKER_00: And as long as growth is solid, that's a major support for stocks, even at these high valuations.
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SPEAKER_00: On the Fed,
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SPEAKER_00: market expectations are volatile as investors consistently talk themselves into a
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SPEAKER_00: more aggressively interest rate cutting Fed policy.
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SPEAKER_00: But it's a trap to get caught in that.
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SPEAKER_00: The best-case scenario for investors is a consistent but measured set of rate cuts
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SPEAKER_00: that support stable growth.
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SPEAKER_00: Earnings reports remain somewhat mixed,
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SPEAKER_00: but they simply aren't bad enough to offset solid growth or Fed rate cuts.
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SPEAKER_00: Looking forward, earnings will be a much bigger focus of the market over the next three weeks.
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SPEAKER_00: And the key here is not so much the backward-looking sales and revenue data,
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SPEAKER_00: but forward-looking guidance.
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SPEAKER_00: Unless this guidance is much worse than expected and is so bad that it offsets the
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SPEAKER_00: positives of solid growth and steady interest rate cuts,
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SPEAKER_00: earnings reports of themselves are unlikely to be the main cause of any pullback.