Latest / Paramount Wealth Perspectives / From Shutdown to Showdown: Markets Brace for Real Data Again - 11/18/25

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From Shutdown to Showdown: Markets Brace for Real Data Again - 11/18/25 · Paramount Wealth Perspectives

• 0:00
  Chris Coyle: Intro song
• 0:11
  Hello everyone.
• 0:12
  Welcome to Paramount Wealth Perspectives, your go-to podcast for the latest updates on global markets and current economic events.
• 0:19
  This is your host, Chris Coyle.
• 0:21
  I am the market director and an advisor here at Paramount Associates Wealth Management, and today I'm joined by our Chief Investment Officer, Scott Tremlett.
• 0:29
  Let's walk through the first half of last week because even though the headline numbers were quiet, the underlying tone really shifted.
• 0:37
  Markets looked calm on the surface.
• 0:40
  But sector moves, certainly were not.
• 0:42
  What stood out to you?
• 0:44
  Well, we basically had a flat market that felt anything but that.
• 0:48
  The s and p had a small gain, but beneath the surface, the rotation was evident.
• 0:54
  Healthcare ripped almost 4% energy gain, more than 2% in consumer discretionary fell nearly 3%.
• 1:02
  What we're seeing there isn't just market noise, it is the widening separation between those who still feel financially secure and those who don't.
• 1:11
  Higher incomes are still spending, but are dialing it back some.
• 1:15
  As the volatility in stocks rise while lower income households we're tightening already together, that shaping the spending picture right now.
• 1:24
  High beta names, retail favorites, and anything speculative so meaningful drawdowns over the last four to six weeks, and interest rates are still cooling spending in some circumstances.
• 1:37
  That vibe feeds directly into weaker spending confidence.
• 1:41
  The other big theme from last week was just how much macro noise investors had to digest.
• 1:48
  Between the end of the shutdown, the data backlog, and the fed chatter, there was a lot hitting at once.
• 1:54
  How did you make sense of it?
• 1:56
  Well layer that onto the record breaking 43 day government shutdown, and You had a muddled backdrop.
• 2:02
  The shutdown didn't just delay major data.
• 2:05
  It's disrupting the data collection itself.
• 2:09
  The CBO estimates about$15 billion in GDP just evaporated and markets had to digest the idea that even the data we eventually get may be compromised still.
• 2:22
  Once the shutdown ended, the market's attention went right to the Fed.
• 2:26
  December cut odds fell to near 50% as officials question whether cutting into 3% inflation would risk losing progress on that front.
• 2:35
  That hawkish lean sparked last week's selloff and temporarily cooled enthusiasm for the mega cap stocks globally.
• 2:43
  Europe had a strong week.
• 2:44
  The stock 600 up almost 2%.
• 2:47
  Japan's markets also gain nearly 2% on solid corporate earnings and yields drifted higher.
• 2:53
  The 10 year treasury at about 4.15%.
• 2:57
  Not dramatic, but enough to create a little pressure and remind everyone rates aren't done mattering yet.
• 3:03
  Now as we turn the page to this week, the tone feels totally different.
• 3:07
  After weeks of speculation and piecing together estimates, we finally get hard data again.
• 3:13
  Walk us through what matters most over the next few days.
• 3:16
  Yeah.
• 3:17
  Finally, real data.
• 3:18
  The September jobs report hits more than a month late.
• 3:22
  The market's been operating with one eye closed for weeks now.
• 3:25
  This helps reopen it, and when we get the retailers.
• 3:29
  Walmart, target, home Depot.
• 3:32
  That's the heartbeat of the US consumer.
• 3:34
  Their commentary will reveal more about the fourth quarter behavior than any government survey.
• 3:39
  Right now.
• 3:40
  The question is simple.
• 3:41
  Is the consumer bending or breaking?
• 3:44
  We have Nvidia too huge for sentiment, but I'd argue retailers drive the macro while Nvidia drives the narrative.
• 3:52
  We know the numbers will be unreal for Nvidia.
• 3:54
  Plus this is a week packed with fed speakers.
• 3:58
  Almost the entire roster is on stage.
• 4:01
  Markets are listening for even slight hints about December.
• 4:04
  Remember, the tone has turned more cautious globally.
• 4:09
  Europe brings consumer inflation services and manufacturing numbers and consumer confidence.
• 4:15
  The UK releases inflation with unemployment heading near 5%, and in Canada, inflation, Japan, GDP and Hong Kong, CPI, and you've got global data coming in fast.
• 4:27
  All of it matters because the last six weeks were driven mostly by vibes.
• 4:32
  Now we finally get stats.
• 4:35
  Let's step back and look at the broader earnings picture, because we're now at the point where the narrative is fully formed.
• 4:42
  The season was busy, it was noisy, and it was surprisingly strong in a few areas.
• 4:47
  How do you interpret what we've seen?
• 4:49
  Well, we're past the 90% mark, and the takeaway is better than expected.
• 4:55
  Blended s and p earnings growth is around 13%, up from 8% expectation heading into the season.
• 5:01
  Beat rates look strong.
• 5:03
  Over 80% on earnings per share.
• 5:05
  Mid seventies on sales sector dispersion matters though healthcare absolutely crushed it with almost a 10% average operating profit.
• 5:14
  Beat tech was close behind with roughly 6% materials, also posted solid numbers.
• 5:21
  Meanwhile, services inside consumer discretionary struggled.
• 5:25
  There was soft foot traffic, softer pricing power, and signs that the post pandemic demand surge is starting to fade.
• 5:33
  Even cruise operators, which usually flex pricing power guided weaker on yield growth this week, is the cleanup crew, but it's meaningful earnings from Walmart.
• 5:43
  Target, home Depot, Lowe's, TJX, Medtronic, Palo Alto, BJ's, Intuit, and of course Nvidia.
• 5:53
  Walmart is the swing boat for the macro narrative.
• 5:55
  Nvidia is a swing boat for sentiment.
• 5:58
  Both will move markets for different reasons.
• 6:00
  The Fed storyline keeps evolving and it feels like every week the tone shifts just a little more between inflation sticking near 3% and the uncertainty created by the shutdown.
• 6:12
  There's a lot for markets to digest.
• 6:14
  What's your read on where they stand?
• 6:17
  Well, we've clearly shifted.
• 6:18
  Away from a December cut, confidence inflation hovers around 3%, where they look at now casting or economist surveys, and that creates hesitation.
• 6:28
  Several fed members have openly said they'd rather wait for cleaner data after the shutdown, and this shutdown wasn't trivi.
• 6:37
  Some agencies couldn't collect or even verify any data, which means the Fed is essentially flying with incomplete stats.
• 6:45
  Labor cooling helps the case for cuts, but not enough yet.
• 6:48
  The Fed's internal divide is widening.
• 6:51
  You've got one camp wanting to push ahead with cuts, and the other saying.
• 6:54
  Let's get the 2% inflation before we celebrate markets.
• 6:58
  Still price in about 0.8% of cuts through 2026, but timing is now the entire story.
• 7:05
  Also, the funding bill expires January 30th.
• 7:08
  Believe it or not, another political showdown in early first quarter is absolutely possible, and the Fed knows it.
• 7:16
  Europe doesn't get the same attention as the United States.
• 7:19
  But last week, the data coming out of the region's surprise to the upside.
• 7:24
  Growth was revised higher inflation is moderating, and sentiment is stabilizing.
• 7:29
  What's happening there?
• 7:30
  Well, Europe actually posted a surprisingly constructive outlook.
• 7:34
  The European Commission upgraded 2025 growth to 1.3% and sees inflation tracking towards that 2% number.
• 7:42
  Remember, listeners numbers really mean something as a change in percentage versus expectations, sometimes not just the number itself, and they've really survived the tariff volatility better than expected.
• 7:54
  Front loaded exports helped.
• 7:56
  Fiscal spending helped and the labor market stayed tight.
• 8:00
  Spain and France grew faster than the region overall.
• 8:03
  Germany and Italy basically stalled, but are expected to close that gap next year.
• 8:08
  And the ECBs tone has really improved.
• 8:10
  They're not eager to cut more unless something breaks.
• 8:14
  Markets follow that tone.
• 8:16
  German BUN yields moved higher.
• 8:18
  The region isn't booming, but it's stabilizing in a world where stability is scarce, that does have value.
• 8:25
  Now, let's zoom out with earnings wrapping up, economic data normalizing and policy paths becoming clearer.
• 8:33
  Investors are naturally asking what next year might look like.
• 8:37
  What's your base case going into 2026?
• 8:40
  Well, the near term outlook is actually improving across the board.
• 8:43
  Some analysts see the s and p 500 rising nearly 15% over the next year.
• 8:49
  Those would say that we're in the early innings of a new earning cycle built on AI driven efficiency, stable rates, and a friendlier policy backdrop.
• 8:59
  Meanwhile, others are more neutral, long term, projecting less than half of that for us, equity returns over the next decade.
• 9:07
  Both sides will probably look right at different times, but if you're balancing the exposure over a period between the US and international markets, I'd put it closer to 15%.
• 9:18
  And remember, both sides in that debate are still expecting emerging markets growth north of 10% from a macro standpoint.
• 9:26
  The shutdowns lost output does matter, but much of the government spending backlog gets pushed into the first quarter of next year.
• 9:34
  So you could see stronger early year GDP prints as delayed activity.
• 9:38
  Normalizes the risks to me, consumer fatigue, another funding shutdown, and global policy missteps.
• 9:46
  But the base case is surprisingly constructive.
• 9:50
  Alright, let's move on to the lightning round.
• 9:53
  Scott, December Cut.
• 9:56
  Well, odds are fading.
• 9:57
  Inflation's sticky, and the Fed wants cleaner data, but probably key earnings this week.
• 10:05
  Walmart, the read through on the low income consumer is the single most important macro data point, but NVIDIA may mean more for markets due to the economies of scale.
• 10:16
  Top data release, definitely the September jobs report.
• 10:20
  It finally resets that labor narrative.
• 10:23
  What is the strongest sector right now trading wise?
• 10:26
  That would be healthcare earning strength, defensive appeal, remember that and technical follow through.
• 10:34
  What about the weakest?
• 10:36
  Definitely consumer discretionary, that wealth effect, drag and soft foot traffic are hurting.
• 10:41
  What will be the NVIDIA result?
• 10:43
  Likely an earnings beat, but it's the guidance that really moves the stock.
• 10:48
  I think it'll all be great, but the market may just want more.
• 10:53
  What about Europe next quarter?
• 10:55
  Slight upside Stability there is improving faster than anyone expected.
• 11:00
  What do you predict yields will be by year end?
• 11:03
  Slightly lower as shut down, distortions clear maybe.
• 11:07
  What about oil next month, roughly?
• 11:09
  Flat, around 60 bucks.
• 11:12
  Uh, supply and demand is fairly balanced there.
• 11:14
  How about the gold trend still upward to sideways?
• 11:18
  It definitely thrives in uncertainty and, and we do have plenty of that.
• 11:22
  Is AI trade too crowded?
• 11:25
  You can make an argument that the front end is crowded, but the second tier plays are still underappreciated in my mind.
• 11:32
  The consumer bending or breaking bending now, but the bifurcation makes the numbers more positive.
• 11:39
  What will be the strongest region next year?
• 11:42
  I think emerging markets, you know, the valuations are still discounted, earning cycles are improving, and policy support is building across key countries like China.
• 11:52
  And what about a surprising, weak region point?
• 11:55
  I would say Japan, uh, it came into the year with some of the highest expectations, but the follow through just isn't there relative to what the market was pricing in.
• 12:04
  Most mispriced asset class.
• 12:06
  I would say this most times and most times it's mid-cap stocks.
• 12:10
  They're overlooked and primed for re-rating.
• 12:12
  If earnings hold the biggest tail risk, well believe it or not, a January government funding fight that would rattle that first quarter.
• 12:21
  In your opinion?
• 12:22
  Biggest upside wild card, a first quarter GDP Pop as delayed spending hits all at once.
• 12:29
  How about a soft landing?
• 12:30
  We're there, the baseline is soft, but there are definitely some pockets of stress showing.
• 12:36
  Volatility ahead.
• 12:37
  Absolutely.
• 12:38
  Volatility will be elevated.
• 12:40
  There's just too much uncertainty for a volatility collapse.
• 12:44
  One chart that matters most to me, that would be the consumer discretionary stocks versus the overall market.
• 12:51
  It's the cleanest early warning signal for fatigue in demand.
• 12:56
  Well, thanks Scott.
• 12:57
  I appreciate the insight.
• 12:58
  Sure thing, Chris.
• 12:59
  We'll catch you next time.
• 13:00
  I also want to thank our audience for tuning in and remember to please submit your questions via email to general@paramountassoc.com.
• 13:11
  For now, stay informed.
• 13:12
  Stay ahead and join us next time for more key updates shaping the global economy.