Consumer Sentiment & More Earnings - 10/28/24

Tune in to learn about what happened last week in the Global Markets, and some major events happening this week to watch out for!

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Intro song game on. Hello, everyone. Welcome to paramount wealth perspectives. Your go-to podcast for the latest updates on global markets and current economic events. This is your host, Chris Coyle. Each week we strive to bring you expert analysis on market trends, economic shifts. And key financial developments from around the world. Whether you're an investor business leader. Or simply curious about the global economy. Our podcast is here to keep you informed and ahead of the curve. Now let's dive into the markets and explore what shaping the world of finance today. Here with us today. We have Scott Tremlett chief investment officer and managing partner at paramount associates, wealth management. Scott looking back at last week, what are some major events you would like to highlight? Thanks Chris, last week, the S and P 500 Dow Jones, industrial average Russell, 2000 and most international markets. Fell from recent highs. The NASDAQ and the Russell 1000 growth ended the week, slightly positive. Treasury rates continue to climb. And the 10-year treasury yield has risen nearly 20% since the federal reserve reduced rates. By half a point last month. That's interesting. You said treasury rates have increased since the federal reserve cut rates last month. Why would that be? There are several factors that can lead to rising rates. I think this time it comes down to market expectations about future fed actions. Fed officials have stated that a pause and rate cuts may be in the cards at the next fed meeting. Coupling that with sticky inflation concerns, the expectations for rapid reductions in the federal funds rate have come down. I do want to add that the expectations coming down are due to a stronger than expected us economy. Going into this year. The U S face many uncertainties. My main concern. Was rising credit delinquency rates paired with decreasing personal savings rates. I have been tracking this closely and thought that consumer spending might slow. And once again, I was reminded that the one thing I should count on is the American consumer spending money. There's definitely divergence of what am I about to say? However, the us consumer looks healthy. There is still more than one job for each job seeker. And wages have increased year over year for 17 straight months. Understood. It sounds like overall the average us consumer is in a pretty decent spot. So you mentioned some economic data and earnings were to be reported last week. What exactly did you see there? Last Monday, the conference board released the United States leading economic indicators report. The indicators have been declining. And including last month they have fallen over two and a half percent over just the last six months. The conference board's points to us manufacturing as the biggest drag. And we knew manufacturing, factory orders, signal uncertainty heading into 2025. Us housing reports were mixed last week. However, the increasing interest rates may slow or even reverse any positives that can be pulled from last week's announcements. Jobless claims. Fell below expectations. The feds beige book, they commented that inflation continued to moderate overall. But there were a few sources, upward price pressures, including input prices for goods, insurance, healthcare costs. And food. Led by eggs and dairy. Overall of the 12 districts, six reported conditions that were neither expanding or contracting. Three reported expansion. And three report is slight decreases in activity. As for earnings. Earnings have been mixed. As of Friday, we had just over one third of the S and P 500 reporting. They have reported year over year earnings growth for the fifth straight quarter. But the S and P 500 had reported its lowest year over year earnings growth rates since the second quarter. Of 2023. So far financials and consumer discretion, they have led while industrials, healthcare and energy sectors have been the biggest detractors. Overall earnings growth has been positive. At 3.6% versus the expected 4.3% going into the quarter. Revenue growth is also declining. And as of last Friday, revenue growth is trailing both its five-year and 10-year averages. Bright side of that statement is if revenue growth continues as more companies report. This would mark the 10th consecutive quarter of revenue growth for the S and P 500. Well, we will have to see if the SNP can continue its streak of earnings and revenue growth. what about consumer sentiment? You had mentioned that last week. Yes, Chris consumer sentiment was reported last Friday and it came in stronger than expected. There was slight upward momentum, but it was really restrained due to uncertainties about inflation and the U S presidential election. I place special emphasis. On the university of Michigan's consumer sentiment report. Studies by Roger Ibbotson, who is a professor at the Yale school of management. Illustrate the biggest contributor or detractor on investment returns is actually popularity. Traditionally market participants expect that greater risk equals greater returns. Ibbotson's studies show that returns are not necessarily all risk based. His study shows that greater returns come stocks or investments. That have either grown out of favor or just wildly unpopular. Ibbotson studied stock performance from 1980 through 2016. And found that the most popular stocks, average 7.67% per year. while. The stocks with the least popularity. Average over 15% per year. Wow. That's quite a spread between average returns there. What are you looking at this week? Scott? In the U S we have the S and P 500 peak week of earnings with over 160 S and P 500 companies reporting. From big tech to consumer names like visa and MasterCard. Tomorrow we have the conference board's consumer confidence and the labor department's job openings report. There are a handful of housing reports this week, including the case, Shiller home price index. Wednesday, we have a us GDP print. Jobless claims on Thursday, along with the Fed's preferred inflation gauge PCE. And Friday, we have payrolls ways growth. And a manufacturing number. Outside of the U S Japan earnings start today. And 60% of the Japanese market will report over the next two weeks. The bank of Japan also announces on Wednesday on its target rate decision. Is expected that they will maintain current rates. In Europe, we have economic sediment, uh, GDP flash report. Unemployment and inflation. Manufacturing numbers from around the globe start Thursday was South Korea, Taiwan, and China. With India and the UK reporting manufacturing on Friday. Well, it sounds like we will have plenty to discuss next Monday. For now. Thanks for tuning into paramount wealth perspectives. Stay informed. Stay ahead. And join us next week for more key updates shaping the global economy. If you have any questions. Please call us at seven two zero nine two one. 1000. We're here to help educate our community.