Latest / Paramount Wealth Perspectives / Big Week Ahead for the US - 11/4/24

Transcript

Big Week Ahead for the US - 11/4/24 · 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.
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  What are some major events you would like to highlight from the month of October and last week?
• 1:01
  Well, Chris, for the month of October, the S and P 500 broke a streak of five consecutive monthly gains.
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  And the NASDAQ ended October lower for the first time in three months.
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  Monthly losers include semi-conductors home builders, home improvement and housing retail.
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  October winners include energy cruise lines, airlines.
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  Most travel-related firms.
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  Also asset managers and investment banks.
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  Treasury yields surge by almost half a percent due to increase concerns about future us deficits and a broad reassessment of the pace at which the federal reserve might cut rates.
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  The odds for a second half point cut this week have fallen from nearly 35% to 0%.
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  This repricing is on the heels of strong economic data headlined by a blowout.
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  September payroll is report.
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  And an upward revision to the last two months of payroll numbers.
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  Other labor data was mixed as the jolts job openings report bell to the lowest level since January of 2021.
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  As per last week, the conference board's consumer confidence index recorded its strongest monthly gain since March of 2021.
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  The share of consumers anticipating a recession in the next 12 months fell to its lowest level.
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  Since the question was first asked in these consumer surveys back in July of 2022.
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  Consumers views of current business conditions turned positive as all five index components improved.
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  I mentioned the jolts job openings report dipped.
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  With private education and the house services leading to the downside.
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  Total job separations increased slightly.
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  With layoffs, increasing and job quits falling.
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  Fridays nonfarm payrolls fell well below the reduced consensus of 125,000 gains.
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  Due to the hurricanes and Boeing strike with only a gain of 12,000 payrolls for October.
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  This figure may not attract significant intention from the fed, unless the trend persists beyond the temporary impacts of weather and strikes.
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  But there was also a net downward revision of 112,000 payrolls.
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  For the prior two months reports.
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  The case Shiller home price index shows.
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  Housing inflation continues to slow.
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  I feel increasing interest rates and mortgage rates have something to do with that.
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  The us GDP.
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  Number of 2.8% was a little short of expectations.
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  But it does remain above the feds long-term forecast of 1.8%.
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  Consumer spending continues to power.
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  The expansion of the United States.
• 3:45
  Thanks for that detailed overview.
• 3:47
  Scott it's clear that market volatility and mixed economic signals are influencing investor sentiment.
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  What about recent earning reports in the United States?
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  As per earnings.
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  Each week of the third quarter earning season, we have gone through the numbers.
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  And last week, I stated that the earnings growth stood at 3.6% as of October the 25th.
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  As of last Friday.
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  This number now stands at 5.1%.
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  Above the 4.3% that was expected going into this earning season.
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  But.
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  Earnings beats for the S and P 500 are still below.
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  Both the one-year and five-year averages.
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  As well only 60% of S and P 500 companies have outperformed sales expectations.
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  This is also below.
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  The one-year and five-year averages.
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  We are still tracking on a year, over year basis.
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  For the S and P 500 to report earnings growth for the fifth straight quarter.
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  We had some big names report earnings last week, including several members of the so-called magnificent seven.
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  And we are seeing a trend that the Meg seven share of earnings growth is decreasing.
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  As other S and P 500 companies share in the growth is increasing.
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  One reason for this trend is that we are seeing big tech companies make significant investments in capital expenditures.
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  With an estimated 42% increase in CapEx this year alone.
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  Here's an impressive number, Chris, including research and development.
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  The Meg seven's total investment in AI.
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  Is expected to reach$500 billion per year.
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  Wow.
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  That is interesting to hear about the increased capital investments in AI.
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  And it's great to see earnings growth in the United States surpass expectations at 5.1%.
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  Now.
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  Looking abroad.
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  What would you like to highlight overseas?
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  Last week, the bank of Japan maintained current rates.
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  But stated that rates are at significantly low levels.
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  And they will continue to raise interest rates if economic growth and inflation progress in line with the BOJ is outlook.
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  Moving over to Europe.
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  Sentiment in Europe is not keeping up with the U S and sentiment unexpectedly declined in Europe.
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  Inflation expectations in Europe, rose.
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  And inflation assumptions in the consumer sector.
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  Hit their highest number since March European flashed GDP numbers did come in stronger than expected.
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  Turning to manufacturing, manufacturing around the globe did marginally increased in October.
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  But overall.
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  Does still remain in contraction.
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  A few countries to mention South Korea and France matched forecasts.
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  The United Kingdom and Taiwan.
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  Bell slightly lower than expected.
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  China, Switzerland, India and Germany.
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  They all beat.
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  And the U S did beat projections.
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  But still remains in manufacturing contraction.
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  Well, it sounds like global economic conditions remain mixed with Japan, maintaining low rates, European sentiment, declining.
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  And manufacturing, staying in contraction.
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  So looking ahead to this week, what economic events have your focus?
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  This Thursday, we have a fed announcement and decision.
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  The fed is seeing strong consumption and softer hiring.
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  Last week, the GDP print and visa earnings are proof that the us economy continues to be resilient.
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  Against major reductions in consumption.
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  Well, unemployment held steady at 4.1%.
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  The share of workers who are permanently unemployed, did increase to its highest level in a year.
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  Signs that there is less demand for workers.
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  The market expects a quarter point reduction in the fed funds rate.
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  If that is the case, I wouldn't be surprised if that is the last rate cut for calendar year 2024.
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  Earnings continue with another 103 S and P firms reporting this week.
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  Global services and composite numbers start tomorrow.
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  And there is a preliminary university of Michigan consumer sentiment report on Friday.
• 8:06
  Thanks Scott.
• 8:07
  And you know, I have to ask, is there anything else you may have left off?
• 8:13
  Hm.
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  Let me think.
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  Do you mean the presidential election in the United States, Chris?
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  Yeah, Scott that did come to mind.
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  Well, for those that don't know me.
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  There is always a method to my madness.
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  And I guess I just can't get away from this one.
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  But since you asked.
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  Yes, there is the election for the president of the United States on Tuesday.
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  Many times the strength of the us economy going into the election.
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  We'll either benefit or hurt the incumbent parties, odds.
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  The misery index, a measure of economic health that combines both unemployment and inflation.
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  Is strong, relative to past elections.
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  Which could favor the incumbent.
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  However consumer sentiment, although increasing lately.
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  Is historically extremely low.
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  Which could favor the challenger.
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  We'll see how all of this plays out on Tuesday.
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  Well, we definitely have a lot going on this week with the election and the fed announcement.
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  So I know we will have plenty to discuss next Monday.
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  For now 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.