Big Week Ahead for the US - 11/4/24

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

Transcript

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