August 23, 2024 • 13 mins
The Federal Reserve confirmed what the market has been looking for this week and the market liked it. That said, we have some concerns both short and longer term. What concerns? TUNE IN TO FIND OUT!!!
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Episode Transcript
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(00:34):
Hello and welcome
to this week's edition of The Big Money Report. I'm
your host, David Boothe, President and Financial Advisor at BIG Investment
Services. That's B-I-G, Boothe Investment Group.
We're a full-service financial advisory based out of Dover, Delaware, serving
clients all across America. And you can read
(00:57):
all about us at abigplan.com. That's www.abigplan.com. I
like to put the show together once a week just to give you a recap of the week
behind and a peek at the week and weeks to come, trying
to keep you up to speed with you and your money. And we're glad you're
with us today. It is Friday, August 16th,
(01:18):
2024. What a solid week for the markets. Wow. Nice, big
turnaround. Two weeks ago, the world was falling apart. Chicken
littles were running all around the place, screaming for the Fed to
step in and do emergency rate cuts. It was the end
of the world as we knew it. Who sang that song? R.E.M.? Anyway,
and here we are two weeks later, and we're approaching all-time highs almost.
(01:40):
We're not quite there. We go over to work to get to the all-time highs, but the bottom
line is we're a lot further than where we were, and everybody was
saying, oh, wait, wait, don't buy yet, don't buy yet. We jumped
in. We bought it pretty aggressively. I think it's worked out pretty nicely. One
of the things we've been talking about when it comes to the market is
downtrends and uptrends. And one of the things that I wanted to
(02:01):
see was the market get to a higher high
from its last high that we had. We get
these ups, we get downs, ups and downs, and you
want to get a higher high than the previous one. We are kind of
like right there. I haven't quite fully crossed
it yet. I'm looking at the highs on August 1st and we haven't
(02:23):
quite crossed that yet. We are super, super close.
Maybe we'll get that Monday, but you know, we want to see that or
we're going to remain in a bit of a downtrend potentially
here for a while longer, maybe between now and the election. We'll
see. This week was a really productive week for the market. Let's just
go and jump into the numbers. The Dow Jones up 2.9% this
(02:46):
week. The S&P 500 up 3.9% on
the week. The Nasdaq composite, a lot of your tech stocks, growth
stocks in there up 5.2% this week. And the Russell small
cap also joining the party up 2.9% on
the week. The volatility index, which was at
65. two weeks ago, dropped 27% this week,
(03:09):
all the way down to a 14.8. We're getting right
back down to that level of complacency that
we've been in most of the year, outside of a couple of spikes
in October and that big one here the last couple of weeks ago.
Volatility Index has worked its way back down, again, showing that
markets aren't too nervous about what lies ahead in the next
(03:30):
30 to 45 days or so. Look at some other things,
long-term bonds as measured by the TLT. That's
a basket of long-term treasuries up 1.2% this week.
So that made some gains. Gold was up 3.3% this week.
Silver up 5.7. And we take a
look at all of the sectors. Everything was good. It
(03:51):
was just an everything kind of rally. With the growthier stuff,
if that's a word, is growthier a word? The growthier stuff doing a
little bit better. Semiconductors up 9.7, tech up 7.5, industrials up
2.1, retail sales up 5%. So what pushed markets higher this week? Well,
we had some good news on the economic front, some pretty solid news.
(04:14):
We had some big inflation numbers coming out this week. The PPI, that's a
producer price index, that's like wholesale numbers,
right? So when one business is selling to another or the price is
going higher or lower, that came in better than expected. Again,
we want to see things taming a little bit on the inflation front.
So any cooler numbers on PPI, that's
(04:35):
a good thing. And then we followed that up with a cooler CPI.
That's a consumer price index that measures inflation for
the individual, for the retail consumer. That was also better
than expected. And then we followed that up with
a much, much stronger retail sales number.
And that's big because listen, the consumer, look,
(04:56):
a lot of companies are reporting earnings and they're suggesting that
consumer is weakening a bit and
I find it kind of interesting as I've been reading these earnings
reports and hearing, you know, the consumer here, the
consumer, this consumer, that to me, it's not been very consistent.
It seems like it's some companies blame a weakening consumer and
(05:18):
their numbers aren't quite there. Others have said the consumer is
fine and doing just fine and doing great, maybe even strengthening.
We're not getting the same narrative from all companies. Seems
like it's a bit of a mixed bag here in that. And then Walmart reported
this week, and we don't have it in any of our models at the moment, but they reported a
monster, monster quarter. That stock just went straight
(05:40):
up. I mean, what a huge move it had on a really strong, strong quarter. So
I've been like scratching my head a little bit as to why the
narrative amongst different companies is
so vastly different from one to another. I think
some of it may be the consumer still spending money,
but I think they're looking for more value for their dollar. And
(06:03):
as you kind of read the tea leaves and you hear which
companies are still struggling and blame it on the consumer and
which companies are doing great, i.e. Walmart, and
crediting the consumer, it seems to me that consumers are
still spending. They're just steering their spending in
different directions. and maybe looking for more value for
(06:24):
their dollar. And maybe that's why Walmart's doing so well.
I think a lot of higher end wealthier consumers are
starting to change their spending habits a little bit. And I think that's
where Walmart's picking up its additional sales. I
think people are trading down. And then the lower end
consumer, I think is under some pressure right now. We're seeing the credit card
defaults, auto loan defaults, things like that a little bit higher. But you know, what's
(06:47):
interesting is it used to be years ago when
things started slowing down for the consumer, Dollar General did great. But
it seems like Walmart is just like supplanted everybody. It's like
if you want the best deals, you just kind of go there. It seems like that's who's really
cleaning up at the moment. And any sort of retailer is really discounting well.
So that's what we've been seeing. So earnings season is really winding
(07:09):
down right now. We have seen earnings growth on
S&P 500 at about 10.9%, almost 11%. And that compares to 8.9% at the end of last quarter. So we're seeing Earnings
growing more than they did last quarter. That's a good thing.
Revenue, however, not growing so much. And revenue, top line
revenue, I think that's important. That shows the amount of sales
(07:32):
actually being conducted by businesses. And that was
a little bit on the lighter side, a little bit light on the average as
well. So That's something I've been watching. We talked about it
coming into this quarter that I think that companies can
continue beating earnings if they
continue to work the numbers really hard. But what we really want to see is revenue growth.
We want to see more money coming in, more top line growth. Because
(07:56):
if that continues to contract, you can only do so much magic with
the bottom line, right? You got to have that top line. The
top line's not there. Eventually you're going to run out of steam. So
we do want to see some acceleration on the top line. We'll
see what the next quarter brings. But I think overall, if
you compare both the bottom top and all of the companies that have reported,
(08:18):
I'd give earning season a B. I wouldn't quite say a B plus, but
I'd give it a B. So I think it's been okay. I think overall it's been
okay. And we've seen pretty wild outcomes from
companies that have executed versus companies that have not. But
it's coming down to a close. We're kind of winding down. We're going to
be going to a period where it's not going to be a whole lot to talk about. The Fed's going to have Jackson Hole
(08:38):
meeting out there in Wyoming where they all get together and talk
about the economy. They'll probably set the stage for rate cuts in September.
I think the market's looking for that. I think the inflation data
that came in this week helps give the Fed cover to go ahead and make that rate cut.
So we're going to be in a period of time probably from now well
into September where things are just going to be driven a little bit by
(08:59):
headlines, those types of things, what the Fed might have to say,
things along those lines. So I think we're in a pretty good spot. We did a
lot of buying here a couple of weeks ago. Real happy that we
did. We jumped in, we bought hand over fist there when the market was
getting hammered. A week ago this past Monday, and it's played out
very nicely, but I don't think we're out of the woods yet. We haven't got
(09:20):
that higher high yet, got real close today, but we're not quite there yet. We
want to see the market break out of this downtrend, this little miniature
downtrend that it's in. I'm not sure it will. It
might, but I'm not sure it will. I do think that the intermediate technicals
on the market do look a little on the weak side, but that's to
be expected. I think, as I mentioned maybe last week, that we'll
(09:40):
probably have a retest of that low from two weeks ago at some point.
Probably lines up well with end of September going into October ahead
of the election. So I like where things stand for
us. We're going to stay in pat right now. I'm not going to get too cute.
Don't overtrade. Just kind of want to keep what we've got, keep the positioning that
we have, see if this retest comes about, see
(10:01):
what the data looks like if it happens, and then go from there. Otherwise,
we're starting to look at 2025 at this point. And I
do think that as we move into 2025, we're going to be
looking to position ourselves a little bit more defensively, kind
of brace ourselves for maybe some more economic weakening and
a potential recession. Because I don't think we're out of the woods on that yet either. Even
(10:22):
though a lot of our industry is kind of waving the victory flag, I think it's premature
to do that. So I'm going to wrap up. Not so long this week,
right? But between now and next few minutes, you're thinking about your future, your long-term goals, all
the things you want to do. with you and
your money. Maybe it is build that second home
somewhere, an Airbnb it, or retire a
(10:42):
little early, or take that big trip. I've got a couple clients taking
some nice cruises. You know what your goals are. Don't just think about
them. Think big. Think BIG. And I will
Thank you for listening to this week's edition of The Big Money Report with
your host, David Boothe, President and Financial Advisor at
BIG Investment Services. For more information on BIG and
(11:05):
how you can access their planning and investment management services, visit
them at abigplan.com. That's abigplan.com. Or
call them toll free at 866-946-PLAN. That's 866-946-7526. The
foregoing content reflects the opinions of David Boothe and Boothe Investment Group,
(11:26):
Inc. and is subject to change at any time without notice. There is no guarantee
that the statements, opinions, or forecasts provided herein will prove to
be correct. Content provided herein is for informational purposes only and
should not be used or construed as investment advice or a recommendation regarding the
purchase or sale of any security. All investing involves risk, including the
potential for loss of principal. There is no guarantee that any investment plan or
Hello and welcome
to this week's edition of The Big Money Report. I'm
your host, David Boothe, President and Financial Advisor at BIG Investment
Services. That's B-I-G, Boothe Investment Group.
We're a full-service financial advisory based out of Dover, Delaware, serving
clients all across America. And you can read
(00:57):
all about us at abigplan.com. That's www.abigplan.com. I
like to put the show together once a week just to give you a recap of the week
behind and a peek at the week and weeks to come, trying
to keep you up to speed with you and your money. And we're glad you're
with us today. It is Friday, August 16th,
(01:18):
2024. What a solid week for the markets. Wow. Nice, big
turnaround. Two weeks ago, the world was falling apart. Chicken
littles were running all around the place, screaming for the Fed to
step in and do emergency rate cuts. It was the end
of the world as we knew it. Who sang that song? R.E.M.? Anyway,
and here we are two weeks later, and we're approaching all-time highs almost.
(01:40):
We're not quite there. We go over to work to get to the all-time highs, but the bottom
line is we're a lot further than where we were, and everybody was
saying, oh, wait, wait, don't buy yet, don't buy yet. We jumped
in. We bought it pretty aggressively. I think it's worked out pretty nicely. One
of the things we've been talking about when it comes to the market is
downtrends and uptrends. And one of the things that I wanted to
(02:01):
see was the market get to a higher high
from its last high that we had. We get
these ups, we get downs, ups and downs, and you
want to get a higher high than the previous one. We are kind of
like right there. I haven't quite fully crossed
it yet. I'm looking at the highs on August 1st and we haven't
(02:23):
quite crossed that yet. We are super, super close.
Maybe we'll get that Monday, but you know, we want to see that or
we're going to remain in a bit of a downtrend potentially
here for a while longer, maybe between now and the election. We'll
see. This week was a really productive week for the market. Let's just
go and jump into the numbers. The Dow Jones up 2.9% this
(02:46):
week. The S&P 500 up 3.9% on
the week. The Nasdaq composite, a lot of your tech stocks, growth
stocks in there up 5.2% this week. And the Russell small
cap also joining the party up 2.9% on
the week. The volatility index, which was at
65. two weeks ago, dropped 27% this week,
(03:09):
all the way down to a 14.8. We're getting right
back down to that level of complacency that
we've been in most of the year, outside of a couple of spikes
in October and that big one here the last couple of weeks ago.
Volatility Index has worked its way back down, again, showing that
markets aren't too nervous about what lies ahead in the next
(03:30):
30 to 45 days or so. Look at some other things,
long-term bonds as measured by the TLT. That's
a basket of long-term treasuries up 1.2% this week.
So that made some gains. Gold was up 3.3% this week.
Silver up 5.7. And we take a
look at all of the sectors. Everything was good. It
(03:51):
was just an everything kind of rally. With the growthier stuff,
if that's a word, is growthier a word? The growthier stuff doing a
little bit better. Semiconductors up 9.7, tech up 7.5, industrials up
2.1, retail sales up 5%. So what pushed markets higher this week? Well,
we had some good news on the economic front, some pretty solid news.
(04:14):
We had some big inflation numbers coming out this week. The PPI, that's a
producer price index, that's like wholesale numbers,
right? So when one business is selling to another or the price is
going higher or lower, that came in better than expected. Again,
we want to see things taming a little bit on the inflation front.
So any cooler numbers on PPI, that's
(04:35):
a good thing. And then we followed that up with a cooler CPI.
That's a consumer price index that measures inflation for
the individual, for the retail consumer. That was also better
than expected. And then we followed that up with
a much, much stronger retail sales number.
And that's big because listen, the consumer, look,
(04:56):
a lot of companies are reporting earnings and they're suggesting that
consumer is weakening a bit and
I find it kind of interesting as I've been reading these earnings
reports and hearing, you know, the consumer here, the
consumer, this consumer, that to me, it's not been very consistent.
It seems like it's some companies blame a weakening consumer and
(05:18):
their numbers aren't quite there. Others have said the consumer is
fine and doing just fine and doing great, maybe even strengthening.
We're not getting the same narrative from all companies. Seems
like it's a bit of a mixed bag here in that. And then Walmart reported
this week, and we don't have it in any of our models at the moment, but they reported a
monster, monster quarter. That stock just went straight
(05:40):
up. I mean, what a huge move it had on a really strong, strong quarter. So
I've been like scratching my head a little bit as to why the
narrative amongst different companies is
so vastly different from one to another. I think
some of it may be the consumer still spending money,
but I think they're looking for more value for their dollar. And
(06:03):
as you kind of read the tea leaves and you hear which
companies are still struggling and blame it on the consumer and
which companies are doing great, i.e. Walmart, and
crediting the consumer, it seems to me that consumers are
still spending. They're just steering their spending in
different directions. and maybe looking for more value for
(06:24):
their dollar. And maybe that's why Walmart's doing so well.
I think a lot of higher end wealthier consumers are
starting to change their spending habits a little bit. And I think that's
where Walmart's picking up its additional sales. I
think people are trading down. And then the lower end
consumer, I think is under some pressure right now. We're seeing the credit card
defaults, auto loan defaults, things like that a little bit higher. But you know, what's
(06:47):
interesting is it used to be years ago when
things started slowing down for the consumer, Dollar General did great. But
it seems like Walmart is just like supplanted everybody. It's like
if you want the best deals, you just kind of go there. It seems like that's who's really
cleaning up at the moment. And any sort of retailer is really discounting well.
So that's what we've been seeing. So earnings season is really winding
(07:09):
down right now. We have seen earnings growth on
S&P 500 at about 10.9%, almost 11%. And that compares to 8.9% at the end of last quarter. So we're seeing Earnings
growing more than they did last quarter. That's a good thing.
Revenue, however, not growing so much. And revenue, top line
revenue, I think that's important. That shows the amount of sales
(07:32):
actually being conducted by businesses. And that was
a little bit on the lighter side, a little bit light on the average as
well. So That's something I've been watching. We talked about it
coming into this quarter that I think that companies can
continue beating earnings if they
continue to work the numbers really hard. But what we really want to see is revenue growth.
We want to see more money coming in, more top line growth. Because
(07:56):
if that continues to contract, you can only do so much magic with
the bottom line, right? You got to have that top line. The
top line's not there. Eventually you're going to run out of steam. So
we do want to see some acceleration on the top line. We'll
see what the next quarter brings. But I think overall, if
you compare both the bottom top and all of the companies that have reported,
(08:18):
I'd give earning season a B. I wouldn't quite say a B plus, but
I'd give it a B. So I think it's been okay. I think overall it's been
okay. And we've seen pretty wild outcomes from
companies that have executed versus companies that have not. But
it's coming down to a close. We're kind of winding down. We're going to
be going to a period where it's not going to be a whole lot to talk about. The Fed's going to have Jackson Hole
(08:38):
meeting out there in Wyoming where they all get together and talk
about the economy. They'll probably set the stage for rate cuts in September.
I think the market's looking for that. I think the inflation data
that came in this week helps give the Fed cover to go ahead and make that rate cut.
So we're going to be in a period of time probably from now well
into September where things are just going to be driven a little bit by
(08:59):
headlines, those types of things, what the Fed might have to say,
things along those lines. So I think we're in a pretty good spot. We did a
lot of buying here a couple of weeks ago. Real happy that we
did. We jumped in, we bought hand over fist there when the market was
getting hammered. A week ago this past Monday, and it's played out
very nicely, but I don't think we're out of the woods yet. We haven't got
(09:20):
that higher high yet, got real close today, but we're not quite there yet. We
want to see the market break out of this downtrend, this little miniature
downtrend that it's in. I'm not sure it will. It
might, but I'm not sure it will. I do think that the intermediate technicals
on the market do look a little on the weak side, but that's to
be expected. I think, as I mentioned maybe last week, that we'll
(09:40):
probably have a retest of that low from two weeks ago at some point.
Probably lines up well with end of September going into October ahead
of the election. So I like where things stand for
us. We're going to stay in pat right now. I'm not going to get too cute.
Don't overtrade. Just kind of want to keep what we've got, keep the positioning that
we have, see if this retest comes about, see
(10:01):
what the data looks like if it happens, and then go from there. Otherwise,
we're starting to look at 2025 at this point. And I
do think that as we move into 2025, we're going to be
looking to position ourselves a little bit more defensively, kind
of brace ourselves for maybe some more economic weakening and
a potential recession. Because I don't think we're out of the woods on that yet either. Even
(10:22):
though a lot of our industry is kind of waving the victory flag, I think it's premature
to do that. So I'm going to wrap up. Not so long this week,
right? But between now and next few minutes, you're thinking about your future, your long-term goals, all
the things you want to do. with you and
your money. Maybe it is build that second home
somewhere, an Airbnb it, or retire a
(10:42):
little early, or take that big trip. I've got a couple clients taking
some nice cruises. You know what your goals are. Don't just think about
them. Think big. Think BIG. And I will
Thank you for listening to this week's edition of The Big Money Report with
your host, David Boothe, President and Financial Advisor at
BIG Investment Services. For more information on BIG and
(11:05):
how you can access their planning and investment management services, visit
them at abigplan.com. That's abigplan.com. Or
call them toll free at 866-946-PLAN. That's 866-946-7526. The
foregoing content reflects the opinions of David Boothe and Boothe Investment Group,
(11:26):
Inc. and is subject to change at any time without notice. There is no guarantee
that the statements, opinions, or forecasts provided herein will prove to
be correct. Content provided herein is for informational purposes only and
should not be used or construed as investment advice or a recommendation regarding the
purchase or sale of any security. All investing involves risk, including the
potential for loss of principal. There is no guarantee that any investment plan or
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