Fedspeak Continues - 10/14/24

Episode Transcript

(00:00):
I don't know.
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 coil.
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.
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(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 at last week, whatare some major events you would
like to highlight?
Thank you, Chris.
Well, big picture.

(01:02):
The S and P 500 did end the weekup a little over 1%.
The S and P 500 actually notchedas 45th all time highs of the
year.
Last Friday.
Overseas European markets weremixed.
Last Tuesday, China actuallyposted its largest one day
decline since 2008.
And did snap a two week streakand gains.

(01:24):
For the week.
Chinese markets were down oversix and a half percent.
Treasury yields continue toincrease.
After fed minutes showed thatthe half percent rate cut was
not universal.
As well.
Atlanta fed president Bosticmentioned that he is open to the
idea of skipping a rate cut inNovember.
Along with treasury ratesrising, the dollar appreciated

(01:46):
as the perceived path of ratecuts has eased.
Interesting.
So it looks like your forecastabout the path of rate cuts are
proving accurate.
What do you think will happennext?
Well, Chris, maybe I'm right sofar, but everything is data
dependent at this point.
Before the next fed meeting, westill have their preferred
inflation gauge PCE.

(02:08):
And a handful of employment orjobless claims reports.
Last week's consumer inflationreport was a little worse than
expected.
However, the producer inflationreport was a little better than
consensus.
Hmm.
It seems like a mixed bag ofinflation data.
So what else happened last week?
Yeah.
I mentioned China earlier.
It does seem like marketparticipants are reversing

(02:29):
course on that short term trade.
In fact, the Chinese financeministers briefing on Saturday,
really lacked details aroundstimulus.
Disappointing investors.
Back here in the U S consumersentiment was little change
month to month.
With long run businessconditions, lifting to the
highest reading and six months.
At the same time.
You're ahead.

(02:50):
Inflation expectations.
Did tech hire.
We also started third quarterearnings season headlined by
some of the big banks on Friday.
We are early in the earningseason, but optimism is growing
that third quarter earnings maybeat the reduced expectations of
4.4% year over year growth.
On Friday.
Uh, publication stated thatbased on earning so far.

(03:11):
They expect 7% plus earningsgrowth.
That would be above consensus.
Earning season.
That always is interesting.
You commented on earnings lastweek.
Could you refresh us on what isneeded from earnings through the
end of this year?
What I feel is most importantfor the earnings going forward.

(03:32):
It's for the results to supportcurrent market valuations.
Throughout the year priceearnings multiples have
increased as has the stockmarket.
When multiples increase, thatmeans that prices of stocks have
gone up versus earnings.
Making the stocks moreexpensive.
This is called multipleexpansion and happens in
anticipation of a growingeconomy.

(03:52):
What is needed now, in myopinion is for earnings to
increase either bringing themultiples down or at the very
least supporting where pricesare now.
It's hard to be negative on thestate of the us economy.
There were other countriesaround the world that may have
more upside in my mind.
However I'm cautiouslyoptimistic and have recently
added to us equity exposure inportfolios.

(04:14):
That makes sense.
Thanks Scott.
So what are you looking at thisweek?
This week, we have a busy weekof earnings with 43 S and P 500
companies reporting.
We had the New York feds empiremanufacturing survey and the
Philly fed index.
On Thursday, we have us retailsales and industrial production.

(04:35):
As well as jobless claims.
We have two us housing reportsthis week, which should be
interesting considering therecent rise in interest rates.
Overseas.
We have India inflation numbers.
China reports, GDP, industrialproduction, house price, index,
and retail sales in the UK.
We have unemployment and retailsales.

(04:56):
We have Eurozone industrialproduction and the European
central bank announcement onThursday.
Would they expect it to cutrates by 0.25%.
Bringing their deposit rate downto 3.2, 5%.
Sounds like quite the busy week.
So what are you expecting todrive markets this week?

(05:16):
Well, this week earnings maygive us some insight into the
true health of the U S economy.
In Taiwan, semiconductor isexpected to report earnings on
Thursday.
This might provide some guidanceon that semi trade.
But I think the biggest marketmoving events will be remarks
this week from the fed.
As to fed reserve governors andfour fed bank presidents are

(05:39):
scheduled to speak this week atvarious events.
The federal reserve and its pathmoving forward.
We'll continue to be the biggeststory.
As we move forward with theirplan to ease and help the
economy potentially fend off aweakening job market.
Well, we will certainly keep aneye out on those and I'm sure we
will have plenty to discuss nextMonday.

(05:59):
For now, thanks for tuning intoparamount wealth perspectives.
Stay informed.
Stay ahead.
And join us next week for morekey updates shaping the global
economy.