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!

Episode Transcript

(00:00):
Intro song game on.
Hello, everyone.
Welcome to paramount wealthperspectives.
Your go-to podcast for thelatest updates on global markets
and current economic events.

(00:21):
This is your host, Chris Coyle.
Each week we strive to bring youexpert analysis on market
trends, economic shifts.
And key financial developmentsfrom around the world.
Whether you're an investorbusiness leader.
Or simply curious about theglobal economy.
Our podcast is here to keep youinformed and ahead of the curve.

(00:41):
Now let's dive into the marketsand explore what shaping the
world of finance today.
Here with us today.
We have Scott Tremlett chiefinvestment officer and managing
partner at paramount associates,wealth management.
Scott.
Looking back.
What are some major events youwould like to highlight from the
month of October and last week?

(01:01):
Well, Chris, for the month ofOctober, the S and P 500 broke a
streak of five consecutivemonthly gains.
And the NASDAQ ended Octoberlower for the first time in
three months.
Monthly losers includesemi-conductors home builders,
home improvement and housingretail.
October winners include energycruise lines, airlines.

(01:23):
Most travel-related firms.
Also asset managers andinvestment banks.
Treasury yields surge by almosthalf a percent due to increase
concerns about future usdeficits and a broad
reassessment of the pace atwhich the federal reserve might
cut rates.
The odds for a second half pointcut this week have fallen from

(01:44):
nearly 35% to 0%.
This repricing is on the heelsof strong economic data
headlined by a blowout.
September payroll is report.
And an upward revision to thelast two months of payroll
numbers.
Other labor data was mixed asthe jolts job openings report
bell to the lowest level sinceJanuary of 2021.

(02:07):
As per last week, the conferenceboard's consumer confidence
index recorded its strongestmonthly gain since March of
2021.
The share of consumersanticipating a recession in the
next 12 months fell to itslowest level.
Since the question was firstasked in these consumer surveys
back in July of 2022.

(02:28):
Consumers views of currentbusiness conditions turned
positive as all five indexcomponents improved.
I mentioned the jolts jobopenings report dipped.
With private education and thehouse services leading to the
downside.
Total job separations increasedslightly.
With layoffs, increasing and jobquits falling.

(02:51):
Fridays nonfarm payrolls fellwell below the reduced consensus
of 125,000 gains.
Due to the hurricanes and Boeingstrike with only a gain of
12,000 payrolls for October.
This figure may not attractsignificant intention from the
fed, unless the trend persistsbeyond the temporary impacts of

(03:11):
weather and strikes.
But there was also a netdownward revision of 112,000
payrolls.
For the prior two monthsreports.
The case Shiller home priceindex shows.
Housing inflation continues toslow.
I feel increasing interest ratesand mortgage rates have
something to do with that.
The us GDP.

(03:31):
Number of 2.8% was a littleshort of expectations.
But it does remain above thefeds long-term forecast of 1.8%.
Consumer spending continues topower.
The expansion of the UnitedStates.
Thanks for that detailedoverview.
Scott it's clear that marketvolatility and mixed economic
signals are influencing investorsentiment.

(03:54):
What about recent earningreports in the United States?
As per earnings.
Each week of the third quarterearning season, we have gone
through the numbers.
And last week, I stated that theearnings growth stood at 3.6% as
of October the 25th.
As of last Friday.
This number now stands at 5.1%.

(04:15):
Above the 4.3% that was expectedgoing into this earning season.
But.
Earnings beats for the S and P500 are still below.
Both the one-year and five-yearaverages.
As well only 60% of S and P 500companies have outperformed
sales expectations.

(04:37):
This is also below.
The one-year and five-yearaverages.
We are still tracking on a year,over year basis.
For the S and P 500 to reportearnings growth for the fifth
straight quarter.
We had some big names reportearnings last week, including
several members of the so-calledmagnificent seven.
And we are seeing a trend thatthe Meg seven share of earnings

(04:58):
growth is decreasing.
As other S and P 500 companiesshare in the growth is
increasing.
One reason for this trend isthat we are seeing big tech
companies make significantinvestments in capital
expenditures.
With an estimated 42% increasein CapEx this year alone.
Here's an impressive number,Chris, including research and

(05:20):
development.
The Meg seven's total investmentin AI.
Is expected to reach$500 billionper year.
Wow.
That is interesting to hearabout the increased capital
investments in AI.
And it's great to see earningsgrowth in the United States
surpass expectations at 5.1%.
Now.

(05:41):
Looking abroad.
What would you like to highlightoverseas?
Last week, the bank of Japanmaintained current rates.
But stated that rates are atsignificantly low levels.
And they will continue to raiseinterest rates if economic
growth and inflation progress inline with the BOJ is outlook.

(06:02):
Moving over to Europe.
Sentiment in Europe is notkeeping up with the U S and
sentiment unexpectedly declinedin Europe.
Inflation expectations inEurope, rose.
And inflation assumptions in theconsumer sector.
Hit their highest number sinceMarch European flashed GDP
numbers did come in strongerthan expected.

(06:23):
Turning to manufacturing,manufacturing around the globe
did marginally increased inOctober.
But overall.
Does still remain incontraction.
A few countries to mention SouthKorea and France matched
forecasts.
The United Kingdom and Taiwan.
Bell slightly lower thanexpected.
China, Switzerland, India andGermany.

(06:46):
They all beat.
And the U S did beatprojections.
But still remains inmanufacturing contraction.
Well, it sounds like globaleconomic conditions remain mixed
with Japan, maintaining lowrates, European sentiment,
declining.
And manufacturing, staying incontraction.
So looking ahead to this week,what economic events have your

(07:09):
focus?
This Thursday, we have a fedannouncement and decision.
The fed is seeing strongconsumption and softer hiring.
Last week, the GDP print andvisa earnings are proof that the
us economy continues to beresilient.
Against major reductions inconsumption.
Well, unemployment held steadyat 4.1%.

(07:32):
The share of workers who arepermanently unemployed, did
increase to its highest level ina year.
Signs that there is less demandfor workers.
The market expects a quarterpoint reduction in the fed funds
rate.
If that is the case, I wouldn'tbe surprised if that is the last
rate cut for calendar year 2024.

(07:52):
Earnings continue with another103 S and P firms reporting this
week.
Global services and compositenumbers start tomorrow.
And there is a preliminaryuniversity of Michigan consumer
sentiment report on Friday.
Thanks Scott.
And you know, I have to ask, isthere anything else you may have
left off?

(08:13):
Hm.
Let me think.
Do you mean the presidentialelection in the United States,
Chris?
Yeah, Scott that did come tomind.
Well, for those that don't knowme.
There is always a method to mymadness.
And I guess I just can't getaway from this one.

(08:33):
But since you asked.
Yes, there is the election forthe president of the United
States on Tuesday.
Many times the strength of theus economy going into the
election.
We'll either benefit or hurt theincumbent parties, odds.
The misery index, a measure ofeconomic health that combines
both unemployment and inflation.

(08:55):
Is strong, relative to pastelections.
Which could favor the incumbent.
However consumer sentiment,although increasing lately.
Is historically extremely low.
Which could favor thechallenger.
We'll see how all of this playsout on Tuesday.
Well, we definitely have a lotgoing on this week with the

(09:16):
election and the fedannouncement.
So I know we will have plenty todiscuss next Monday.
For now stay informed.
Stay ahead.
And join us next week for morekey updates shaping the global
economy.
Thank you for tuning intoparamount wealth perspectives.
We hope you have a fantasticweek.