Paramount Global Rankings & Earnings Season Ending - 11/18/24

Paramount Wealth Perspectives is your trusted podcast for expert insights into global markets and economic trends. Hosted by Chris Coyle, each episode dives into key financial developments, market analysis, and strategic investment insights to help investors, business leaders, and curious minds stay ahead. This week’s discussion highlights the latest U.S. stock market movements, inflation data, and earnings trends, including the strong performance of overseas-focused firms and investor optimism despite stretched valuations.

Scott Tremlett, Chief Investment Officer at Paramount Associates, also shares insights from the Paramount Global Rankings, spotlighting India, China, and Brazil as top economies. As the holiday season approaches, the focus shifts to major retail reports and global market movers, including Nvidia’s earnings. Stay informed, stay ahead, and join us weekly for essential updates shaping the global economy.

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 to last week. What are some major events you would like to highlight? Thanks. Chris us stock markets were all lower for the week with the biggest loser being the Russell 2000 falling over 4% after gaining over 8% the prior week. Four sectors. The biggest laggards were biotech, pharma, hospitals, semiconductors, home builders, and China technology. Outperformers where again, financials as banks and life insurers. Lead the way. Only two sectors were up for last week, financials and energy. Treasury yields were mixed. It seems to me that there is a new floor on yields. Now at a higher mark. Since the presidential election. The dollar also continued to strengthen. Driving gold down over 4% for the week. Economic reports were headlined by October's consumer inflation report and retail sales. CPI. The measure of consumer inflation. I am referencing. I came in as projected at 2.6%. Year over year. This did mark the first month over month increase in the number since March. Any a streak of six months of the clients. Shelter is stalling. The pace of disinflation and is still up nearly 5% since October of last year. We have one more CPI announcement. Before the next fed meeting in December. That's good to hear that inflation was in line with expectations, but I know a lot of people around the country have been impacted by the higher costs of shelter. I know you mentioned retail sales last week. Where did those numbers come in? Retail sales came in slightly higher than consensus, Chris. Much of the strength was due to a large increase in motor vehicle sales. Electronics and appliances also led the rise for the month of October. It is estimated that much of the gains in motor vehicles and electronics. Was associated with the hurricanes in the south. The fed is noticing the strength of the economy. And fed chair. Paul said, quote, unquote. The economy is not sending any signals that we need to be in any hurry to lower rates. I mentioned last week that by some estimates, we are only expected to get two rate cuts by the end of next year. And now I am reading that the timing of the cuts maybe pushed to later in the year than first expected. Maybe the fed will just take longer to even get to the two cuts. I'm in that camp. Fewer cuts and longer to get there. But like the fed, my thoughts are data dependent. And I also must keep an eye on policy change. In 2025. I would have to agree with you, Scott and also pal. With retail sales coming in strong, we will have to see how the data continues to trend. How did earnings look last week? Well, Chris third quarter earnings season is nearing an end. And the scorecard so far. Is mixed. As a Friday with 93% of the S and P 500 companies reporting. 75% of S and P companies have reported a positive earnings surprise. And 61%. Ever reported a positive revenue surprise. And for the third quarter. The year of a year earnings growth rate. Is 5.4%. It, this continues. It'll be the fifth straight quarter of year over year earnings growth. Those numbers sound pretty good. But many earnings per share numbers are falling behind both the 5-year and the tenure averages. In fact, the beats are slowing as companies reporting revenue, beets are only doing so on an average of 1.2% above expectations. Again. Below, both the five-year and 10-year averages. Overall earnings revision momentum has declined into negative territory. There was divergence within the numbers as well. Depending on where firms sell their services. According to FactSet. For example, companies that generate more than 50% of sales within the U S have a blended growth rate of just 1.5%. On the flip side, those firms that generate more than 50% of sales overseas. Have a blended growth rate of nearly 13%. This is buoyed by an Nvidia Pfizer alphabet and Metta whom all generate more sales overseas. However, none of this is stopping investor optimism. S last week was the second largest inflow of money into us stocks. Since 2008. At the same time, valuations in the U S maybe stretched. With the highest forward price to earnings ratio and more than three years. We will see how this all plays out. But high valuations reductions and earnings revisions. Lots of money coming in due to higher sentiment. Um, as a contrarian. One might say those are all cell signals. Well, I know you have said to me that there are times to be a contrarian investor. And times when not to be. I'm sure our listeners and myself included would like to hear more on this in the future. But for now, I wanted to ask you more about the paramount global rankings. You had mentioned last week. Can we please take some time to discuss these rankings further? Of course, Chris. Last week I did update the paramount global rankings. The results do align with the earnings statistics provided earlier, showing that companies deriving over 50% of sales overseas. Are experiencing higher earnings growth. Here are my top five. India, China, Brazil, Spain, and Canada. The us came in at number six. The us has been in the upper third for most of 20, 24, but only cracking into the top five in two months. India has been the strongest economy in all months, but one. India is an interesting case. With manufacturing numbers that the rest of the globe is jealous of. And over three years of consistent new order growth. You add to that? More working age, population growth than the rest of the world. Combined. You come up with an economic mixture that could lead to stable returns. Incoming years. I've been an investor in India and not China for some time. Now. Due to domestic consumption, particularly in the service sector. India may be more insulated from tariff pain than China or Europe. India's valuation is in line with longterm averages. However, you can look at their GDP per capita number. That's a measure of average wealth or income per person. Versus the rest of the world. Wow. Keep in mind that the economic and population growth is so strong and you can make an assumption that economically. The country is undervalued. We'll dive a little more into this the first week of December. When our first guest speaker joins our podcast. Thanks for elaborating more on the paramount global rankings. And where they currently stand. Scott, I'm eager to hear you discuss them further with our guest in December. Finally, what are we looking at this week in the United States and globally? Chris. This week, we have several readings on the us consumer. Walmart Lowe's target and TJ Maxx all report this week. We also expect to see retailers projections for the holiday shopping season. Retailer outlooks are key. As the fourth quarter is typically the strongest period of the year. We have a couple of housing reports this week. We have us leading economic indicators. Some flash PMI reports and the university of Michigan's final consumer sentiment report. Comes out on Friday. Uh, overseas. China's back on the clock with their loan prime rate announcement. And we have retail sales from the UK and Canada. But the biggest potential news comes to us Wednesday as the world's largest company. Depending on the second you look in the video reports, earnings. On Wednesday. Futures markets are pricing in a move 9%, the stock either way. And with the size and the video. That's likely to have an overall market impact. Well, we will certainly have to keep on the lookout for those reports and trends. And I'm sure 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 all have a fantastic week.