Latest / Paramount Wealth Perspectives / Navigating the Fed Cut: Markets, Earnings, and Global Opportunities - 11/3/25

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Navigating the Fed Cut: Markets, Earnings, and Global Opportunities - 11/3/25 · 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.
• 0:26
  And today I'm joined by Paramount's, chief Investment Officer Scott Trem.
• 0:30
  Let's start with the big one, the fed cut rates by 25 basis points.
• 0:34
  How are you reading this latest move?
• 0:37
  Well, it's consistent with the pivot We've been expecting the fed's walking a fine line.
• 0:42
  They wanna support slowing growth, but not let inflation reheat.
• 0:45
  But Powell's tone was still hawkish, which tells me they're not in full easing mode yet.
• 0:51
  But directionally, they've moved from fighting inflation to managing the landing.
• 0:56
  Consumer confidence came in at 94.6 for October up a little bit.
• 1:02
  That feels counterintuitive given the layoffs and mixed data, what's going on there?
• 1:06
  Well, it's really a tale of two consumers.
• 1:08
  Lower income households are feeling the squeeze right now, but higher earners are still spending the headline number, masks that divide.
• 1:17
  What's interesting is that confidence fell most for those making under$75,000 a year while households earning over$200,000 remain Pretty upbeat.
• 1:28
  The split will shape Q4 spending trends.
• 1:31
  Let's hit the labor market.
• 1:33
  We've seen some notable layoffs lately, UPS, Amazon, Intel.
• 1:37
  Yet jobless claims are down.
• 1:39
  How do you square that?
• 1:40
  That's the paradox.
• 1:42
  Corporate headlines are scary, but the underlying data really remain stable.
• 1:46
  Aggregated state level numbers actually show claims falling from 231,000 to 218,000.
• 1:54
  So the job market isn't breaking yet, but we're seeing cracks in confidence, And I think that will become more visible early next year.
• 2:03
  One story that's gaining traction is this idea of a.
• 2:07
  Tax refund stimulus in 2026.
• 2:10
  What are you expecting?
• 2:11
  Well, it's gonna be significant.
• 2:13
  There are estimates that refunds could average about$3,200 per filer with some households exceeding almost$4,000 by 2026.
• 2:23
  It's likely to hit in the first half of the year, a short term boost for spending and possibly inflation.
• 2:30
  Housing's been quiet lately, pending home sales.
• 2:32
  We're flat in September.
• 2:34
  What's your read there?
• 2:35
  Well, mortgage rates are still high, around 6.3%, and that's keeping both buyers and sellers on the sidelines.
• 2:42
  Inventories are tight, affordability is stretched, and you can feel the market just waiting for the Fed to cut again before moving.
• 2:50
  It's frozen more than it is weak.
• 2:53
  We've now seen roughly 70% of s and p companies report earnings.
• 2:58
  How do you grade this season?
• 3:00
  Uh, B to a b plus earnings are tracking about 8% year over year ahead of the 6% consensus.
• 3:08
  The mega cap names are carrying a lot of that weight, but the broader market.
• 3:12
  Isn't collapsing.
• 3:13
  We are seeing the breadth of earnings beats broaden out more than just the last few years for sure.
• 3:20
  The story this quarter is resilience, especially in financials where strong trading activity and improving credit quality definitely stand out.
• 3:29
  Let's, let's stay on that.
• 3:31
  Financials had a big quarter.
• 3:32
  What's fueling the strength?
• 3:34
  Well, three things in my mind.
• 3:35
  The capital markets reopening consumer credit, holding up, and regional banks finally stabilizing IPO activity jumped 40% year over year.
• 3:46
  Delinquency rates actually fell to a two year low, and trading volumes were robust.
• 3:52
  It's a reminder that quality balance sheets still matter and the market's rewarding that.
• 3:57
  Our valuation starting to concern you Again, the s and p is up over 17% year to date.
• 4:03
  Well, it's getting pricey per historical norms, uh, no question on that.
• 4:07
  But the four PE is around 22 times, which isn't cheap.
• 4:11
  Again, by historical norms.
• 4:13
  My argument is that the economy is much different than the historical norm and due to the largest companies in the market having higher price to earnings multiples, the market trades at higher valuations, but look at the earnings growth of these companies.
• 4:27
  I think we are fairly valued around where we are now.
• 4:30
  And remember the combination we have earnings are growing.
• 4:33
  Inflation is trending lower, and the Fed is beginning its rate cutting cycle.
• 4:38
  But while we're not in bubble territory, I do think selectivity matters.
• 4:43
  Quality and cash flow are what win from here.
• 4:46
  International markets.
• 4:48
  Any bright spots outside of the United States?
• 4:50
  Absolutely.
• 4:51
  We've moved from a selective stance to a broader overweight and developed international equities and equal weight in emerging markets.
• 4:58
  Valuations overseas remain attractive.
• 5:01
  The US still trades at about a 50% premium to non-US markets compared with a historical average closer to 18%.
• 5:09
  That discount creates the opportunity.
• 5:12
  Europe's been one of the quiet winners this year.
• 5:14
  Resilient consumer demand stabilizing inflation in a more dovish ECB.
• 5:19
  Meanwhile, India continues to lead globally in growth momentum.
• 5:23
  It was slightly overvalued at this point.
• 5:26
  China's getting more interesting, again with a renewed government stimulus and potential tariff related cooperation, improving that sentiment.
• 5:33
  So we're seeing a rotation not away from the us, but beyond it.
• 5:37
  It's a good time to broaden exposure where valuations and policy alignment both favor upside.
• 5:44
  You mentioned Europe earlier, what gives you confidence there despite the slower growth narrative?
• 5:49
  Well, Europe's quietly becoming one of the more interesting regions out there.
• 5:53
  The story isn't about breakneck growth.
• 5:57
  It's about resilience and adaptation.
• 5:59
  Companies have been navigating the tariffs environment better than expected, cutting costs, and even shifting production to protect margins.
• 6:07
  A Goldman Sachs basket of tariff exposed European stocks actually outperformed the broader market by nearly two times in October, which tells you the damage was far less than feared.
• 6:20
  What's really standing out is the earnings recovery.
• 6:22
  The stock 600 is on track for double digit profit growth next year, and you're seeing big names posting strong North American sales despite tariffs.
• 6:32
  That's been the surprise.
• 6:33
  European companies are finding ways to grow through friction, not around it.
• 6:38
  And in an ECB that's gone from tightening to a holding pattern, attractive relative valuations.
• 6:45
  Europe's trading roughly 50%.
• 6:47
  Cheaper than the us remember.
• 6:48
  And a consumer base that's still spending on quality brands and you've got a region that doesn't need perfection to outperform, stabilization alone can drive upside.
• 6:59
  So from a portfolio perspective, Europe's mood from a void to accumulate.
• 7:04
  And it's not about chasing momentum, it's about buying durability at a discount.
• 7:09
  Are global investors finally being rewarded for looking outside of the United States?
• 7:14
  Yes.
• 7:15
  And that's something we haven't said in years.
• 7:18
  The developed international index is up around 27%.
• 7:22
  Year to date emerging markets, 33%, and both outpacing the s and Ps, about 16% gain through last Friday's close.
• 7:30
  That performance gap is being driven by favorable currencies, rate cuts abroad and stronger earnings breadth.
• 7:37
  For the first time in a while, international diversification is adding value instead of diluting it.
• 7:43
  Given that backdrop, what's the biggest risk to your international overweight?
• 7:47
  Definitely the US dollar.
• 7:49
  That's plain and simple.
• 7:50
  A strong dollar can erode foreign returns for US investors.
• 7:54
  Right now I expect dollar strength to persist in the near term, but over the next year or so, rate differentials could narrow easing that headwind.
• 8:02
  Alright, let's move to the lightning round.
• 8:04
  Short questions, quick answers.
• 8:06
  Let's do it.
• 8:07
  Rate, cut or pause in December.
• 8:10
  Rate cut, but smaller odds than the market thinks.
• 8:13
  Soft landing or mild recession.
• 8:16
  Soft landing.
• 8:18
  Best performing asset class in quarter four.
• 8:20
  Large cap growth.
• 8:22
  Most underappreciated sector financials, namely asset managers, most overextended small caps.
• 8:31
  I'm not a fan.
• 8:32
  Where's the 10 year yield by year end.
• 8:36
  Around 4% gold or Bitcoin gold oil in six months.
• 8:42
  Higher or lower, slightly higher Favorite inflation hedge right now infrastructure.
• 8:50
  Will the Fed start cutting aggressively in 2026?
• 8:54
  Only if inflation breaks lower.
• 8:57
  Biggest geopolitical risk on your radar Trade friction Reescalating with China.
• 9:04
  US dollar strength or weakness in 2026?
• 9:07
  Gradual weakening.
• 9:09
  Where's the next leadership rotation in the s and p 500?
• 9:14
  I don't see one coming.
• 9:16
  Preferred fixed income?
• 9:18
  Duration?
• 9:19
  Intermediate.
• 9:20
  What keeps you up at night?
• 9:22
  Sticky inflation expectations.
• 9:26
  And what's encouraging you most right now?
• 9:28
  Corporate earnings Resilience.
• 9:30
  What's the most overlooked opportunity in this market?
• 9:34
  Quality mid-cap stocks.
• 9:36
  Most underpriced risk in markets.
• 9:39
  Re-acceleration of inflation in 2026.
• 9:43
  One word to describe investor mood resilience.
• 9:48
  One piece of advice for investors, investors, stay diversified, stay disciplined, and ignore the noise.
• 9:56
  Appreciate it, Scott.
• 9:58
  Catch you again in two weeks.
• 10:00
  I also want to thank our audience for tuning in and remember to please submit your questions via email to general@paramountassoc.com.
• 10:10
  For now, stay informed.
• 10:12
  Stay ahead and join us next time for more key updates shaping the global economy.