From Shutdown to Showdown: Markets Brace for Real Data Again - 11/18/25

In this episode of Paramount Wealth Perspectives, host Chris Coyle and Chief Investment Officer Scott Tremlett break down a deceptively calm week in the markets and reveal the powerful sector rotations happening beneath the surface. From healthcare’s surge to discretionary’s slump, we explore what these moves say about consumer strength, investor sentiment, and the widening financial divide.

We unpack the macro chaos following the record-breaking government shutdown, the Fed’s shifting tone, and the long-awaited return of crucial economic data—including the September jobs report and retailer earnings from Walmart, Target, and Home Depot. Chris and Scott also dig into global trends across Europe, the UK, Japan, and emerging markets, and close with a rapid-fire lightning round covering the key risks, opportunities, and market signals to watch as we head toward 2026.

Stay informed. Stay ahead. And get the perspective you need to navigate an increasingly complex global economy.

Transcript

Chris Coyle: 0:00

Intro song

0:11

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. I am the market director and an advisor here at Paramount Associates Wealth Management, and today I'm joined by our Chief Investment Officer, Scott Tremlett. Let's walk through the first half of last week because even though the headline numbers were quiet, the underlying tone really shifted. Markets looked calm on the surface. But sector moves, certainly were not. What stood out to you? Well, we basically had a flat market that felt anything but that. The s and p had a small gain, but beneath the surface, the rotation was evident. Healthcare ripped almost 4% energy gain, more than 2% in consumer discretionary fell nearly 3%. What we're seeing there isn't just market noise, it is the widening separation between those who still feel financially secure and those who don't. Higher incomes are still spending, but are dialing it back some. As the volatility in stocks rise while lower income households we're tightening already together, that shaping the spending picture right now. High beta names, retail favorites, and anything speculative so meaningful drawdowns over the last four to six weeks, and interest rates are still cooling spending in some circumstances. That vibe feeds directly into weaker spending confidence. The other big theme from last week was just how much macro noise investors had to digest. Between the end of the shutdown, the data backlog, and the fed chatter, there was a lot hitting at once. How did you make sense of it? Well layer that onto the record breaking 43 day government shutdown, and You had a muddled backdrop. The shutdown didn't just delay major data. It's disrupting the data collection itself. The CBO estimates about$15 billion in GDP just evaporated and markets had to digest the idea that even the data we eventually get may be compromised still. Once the shutdown ended, the market's attention went right to the Fed. December cut odds fell to near 50% as officials question whether cutting into 3% inflation would risk losing progress on that front. That hawkish lean sparked last week's selloff and temporarily cooled enthusiasm for the mega cap stocks globally. Europe had a strong week. The stock 600 up almost 2%. Japan's markets also gain nearly 2% on solid corporate earnings and yields drifted higher. The 10 year treasury at about 4.15%. Not dramatic, but enough to create a little pressure and remind everyone rates aren't done mattering yet. Now as we turn the page to this week, the tone feels totally different. After weeks of speculation and piecing together estimates, we finally get hard data again. Walk us through what matters most over the next few days. Yeah. Finally, real data. The September jobs report hits more than a month late. The market's been operating with one eye closed for weeks now. This helps reopen it, and when we get the retailers. Walmart, target, home Depot. That's the heartbeat of the US consumer. Their commentary will reveal more about the fourth quarter behavior than any government survey. Right now. The question is simple. Is the consumer bending or breaking? We have Nvidia too huge for sentiment, but I'd argue retailers drive the macro while Nvidia drives the narrative. We know the numbers will be unreal for Nvidia. Plus this is a week packed with fed speakers. Almost the entire roster is on stage. Markets are listening for even slight hints about December. Remember, the tone has turned more cautious globally. Europe brings consumer inflation services and manufacturing numbers and consumer confidence. The UK releases inflation with unemployment heading near 5%, and in Canada, inflation, Japan, GDP and Hong Kong, CPI, and you've got global data coming in fast. All of it matters because the last six weeks were driven mostly by vibes. Now we finally get stats. Let's step back and look at the broader earnings picture, because we're now at the point where the narrative is fully formed. The season was busy, it was noisy, and it was surprisingly strong in a few areas. How do you interpret what we've seen? Well, we're past the 90% mark, and the takeaway is better than expected. Blended s and p earnings growth is around 13%, up from 8% expectation heading into the season. Beat rates look strong. Over 80% on earnings per share. Mid seventies on sales sector dispersion matters though healthcare absolutely crushed it with almost a 10% average operating profit. Beat tech was close behind with roughly 6% materials, also posted solid numbers. Meanwhile, services inside consumer discretionary struggled. There was soft foot traffic, softer pricing power, and signs that the post pandemic demand surge is starting to fade. Even cruise operators, which usually flex pricing power guided weaker on yield growth this week, is the cleanup crew, but it's meaningful earnings from Walmart. Target, home Depot, Lowe's, TJX, Medtronic, Palo Alto, BJ's, Intuit, and of course Nvidia. Walmart is the swing boat for the macro narrative. Nvidia is a swing boat for sentiment. Both will move markets for different reasons. The Fed storyline keeps evolving and it feels like every week the tone shifts just a little more between inflation sticking near 3% and the uncertainty created by the shutdown. There's a lot for markets to digest. What's your read on where they stand? Well, we've clearly shifted. Away from a December cut, confidence inflation hovers around 3%, where they look at now casting or economist surveys, and that creates hesitation. Several fed members have openly said they'd rather wait for cleaner data after the shutdown, and this shutdown wasn't trivi. Some agencies couldn't collect or even verify any data, which means the Fed is essentially flying with incomplete stats. Labor cooling helps the case for cuts, but not enough yet. The Fed's internal divide is widening. You've got one camp wanting to push ahead with cuts, and the other saying. Let's get the 2% inflation before we celebrate markets. Still price in about 0.8% of cuts through 2026, but timing is now the entire story. Also, the funding bill expires January 30th. Believe it or not, another political showdown in early first quarter is absolutely possible, and the Fed knows it. Europe doesn't get the same attention as the United States. But last week, the data coming out of the region's surprise to the upside. Growth was revised higher inflation is moderating, and sentiment is stabilizing. What's happening there? Well, Europe actually posted a surprisingly constructive outlook. The European Commission upgraded 2025 growth to 1.3% and sees inflation tracking towards that 2% number. Remember, listeners numbers really mean something as a change in percentage versus expectations, sometimes not just the number itself, and they've really survived the tariff volatility better than expected. Front loaded exports helped. Fiscal spending helped and the labor market stayed tight. Spain and France grew faster than the region overall. Germany and Italy basically stalled, but are expected to close that gap next year. And the ECBs tone has really improved. They're not eager to cut more unless something breaks. Markets follow that tone. German BUN yields moved higher. The region isn't booming, but it's stabilizing in a world where stability is scarce, that does have value. Now, let's zoom out with earnings wrapping up, economic data normalizing and policy paths becoming clearer. Investors are naturally asking what next year might look like. What's your base case going into 2026? Well, the near term outlook is actually improving across the board. Some analysts see the s and p 500 rising nearly 15% over the next year. Those would say that we're in the early innings of a new earning cycle built on AI driven efficiency, stable rates, and a friendlier policy backdrop. Meanwhile, others are more neutral, long term, projecting less than half of that for us, equity returns over the next decade. Both sides will probably look right at different times, but if you're balancing the exposure over a period between the US and international markets, I'd put it closer to 15%. And remember, both sides in that debate are still expecting emerging markets growth north of 10% from a macro standpoint. The shutdowns lost output does matter, but much of the government spending backlog gets pushed into the first quarter of next year. So you could see stronger early year GDP prints as delayed activity. Normalizes the risks to me, consumer fatigue, another funding shutdown, and global policy missteps. But the base case is surprisingly constructive. Alright, let's move on to the lightning round. Scott, December Cut. Well, odds are fading. Inflation's sticky, and the Fed wants cleaner data, but probably key earnings this week. Walmart, the read through on the low income consumer is the single most important macro data point, but NVIDIA may mean more for markets due to the economies of scale. Top data release, definitely the September jobs report. It finally resets that labor narrative. What is the strongest sector right now trading wise? That would be healthcare earning strength, defensive appeal, remember that and technical follow through. What about the weakest? Definitely consumer discretionary, that wealth effect, drag and soft foot traffic are hurting. What will be the NVIDIA result? Likely an earnings beat, but it's the guidance that really moves the stock. I think it'll all be great, but the market may just want more. What about Europe next quarter? Slight upside Stability there is improving faster than anyone expected. What do you predict yields will be by year end? Slightly lower as shut down, distortions clear maybe. What about oil next month, roughly? Flat, around 60 bucks. Uh, supply and demand is fairly balanced there. How about the gold trend still upward to sideways? It definitely thrives in uncertainty and, and we do have plenty of that. Is AI trade too crowded? You can make an argument that the front end is crowded, but the second tier plays are still underappreciated in my mind. The consumer bending or breaking bending now, but the bifurcation makes the numbers more positive. What will be the strongest region next year? I think emerging markets, you know, the valuations are still discounted, earning cycles are improving, and policy support is building across key countries like China. And what about a surprising, weak region point? I would say Japan, uh, it came into the year with some of the highest expectations, but the follow through just isn't there relative to what the market was pricing in. Most mispriced asset class. I would say this most times and most times it's mid-cap stocks. They're overlooked and primed for re-rating. If earnings hold the biggest tail risk, well believe it or not, a January government funding fight that would rattle that first quarter. In your opinion? Biggest upside wild card, a first quarter GDP Pop as delayed spending hits all at once. How about a soft landing? We're there, the baseline is soft, but there are definitely some pockets of stress showing. Volatility ahead. Absolutely. Volatility will be elevated. There's just too much uncertainty for a volatility collapse. One chart that matters most to me, that would be the consumer discretionary stocks versus the overall market. It's the cleanest early warning signal for fatigue in demand. Well, thanks Scott. I appreciate the insight. Sure thing, Chris. We'll catch you next time. I also want to thank our audience for tuning in and remember to please submit your questions via email to general@paramountassoc.com. For now, stay informed. Stay ahead and join us next time for more key updates shaping the global economy.