December 16, 2024 • 9 mins
In this episode of Paramount Wealth Perspectives, host Chris Coyle and Chief Investment Officer Scott Tremlett dive into the key events shaping global markets. They discuss last week’s mixed market performance, the S&P 500’s first weekly drop since mid-November, and how stretched valuations and inflation data are driving cautious market sentiment ahead of the Federal Reserve’s highly anticipated rate decision.
Scott offers insights into 2025 market predictions, including the disparity in analyst expectations, improving sentiment, and record household wealth. While some foresee volatility and potential double-digit gains, Scott shares his balanced outlook, emphasizing the importance of forward-looking fundamentals and opportunities to reduce risk later in the year.
Looking ahead, the episode highlights upcoming events such as the Fed’s policy announcement, retail sales, housing data, and global monetary policy moves from the UK, Japan, and more. Tune in for a comprehensive breakdown of the latest market trends and what to watch in the week ahead!
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Transcript
Episode Transcript
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Chris Coyle (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 to last week.
What are some major events youwould like to highlight?
Thank you, Chris.
Last week, most major indiceswere lower.
(01:03):
The Russell 2000 was theunder-performer while the NASDAQ
outperformed and was supportedby big tech.
It's been an interesting twoweeks and Friday was the 10th
straight session where more Sand P 500 stocks actually
declined.
Then advanced.
This was also the S and P firstweekly drop since mid November.
(01:25):
In fact, the Dow Jonesindustrial average as a Friday
has dropped seven straight days.
The dollar strengthened for theweek and gold was up marginally.
The defensive tone of themarkets may be stemming from
stretch valuations.
That means that prices haverisen faster than actual
earnings growth.
But the market seemed to bewaiting for the federal reserves
(01:46):
announcement on rates thisWednesday.
The market is now pricing innearly a hundred percent odds
that the fed will lower rates bya quarter point.
Odds increased after consumerinflation was in line with
expectations.
Well, inflation did risequicker.
Than in the past four months andthe year of a year figure did
(02:06):
see a slight uptick.
The most notable highlight wasthe deceleration in shelter
inflation.
Turning to producer inflation.
The producer price index didincrease by more than expected.
Both the month over month andthe year of a year numbers came
in hotter than firstanticipated.
We also saw small businesssentiment, jump.
(02:28):
The NFI B small businesssentiment index posted its
biggest monthly gain on recordin November.
And best print since 2021.
Snapping a 34 month streak ofrecord high uncertainty.
Elsewhere.
China pledged more support totheir economy.
And South Korea is parliamentvoted to impeach their
(02:48):
president.
Following this unexpecteddeclaration of martial law.
Thanks Scott, it's fascinatingto see how mix economic signals.
And global developments areshaping market sentiment.
Ahead of the feds, highlyanticipated rate decision this
Wednesday.
What are you hearing aboutexpectations for price targets
around the us equity markets?
(03:10):
Everything I'm reading thesedays, Chris.
Includes an expert opinion for2025.
And the targets are in for mostlarge firms and there are wide
variety of opinions.
I think much of the disparitystems from the unknowns of
tariffs.
Deportation and immigration.
Taxes.
(03:30):
And potential deregulation.
Keep in mind, the S and P 500 isnow up over 70% since it's
October 20, 22 low.
Those analysts expecting marketsdecline in 2025 point directly
to valuations and one researchdepartment, warns of a quote
unquote.
(03:51):
Major global trade war.
Pushing markets down some 25%.
Now that one report is anoutlier to the downside.
However, we really don't knowwhat is going to happen.
With policies, markets oreconomics.
Until it really happens.
Well, Scott, you make it clearthat the uncertainty around
(04:12):
policies and global dynamics isdriving a wide range of market
predictions for 2025, which tome highlights just how critical
active management will be.
Can you please explain what iscontributing to these
expectations?
Or if there are any positives.
We've gone through some of thenegatives, Chris.
(04:33):
But those analysts with apositive outlook for markets
next year, see corporate profitsjumping, double digits revenues
increasing in a rise in animalspirits.
Let's not forget that ushouseholds are sitting on record
wealth.
Of nearly$165 trillion.
(04:53):
And at the same time, overallsentiment is improving.
Two major firms just updatedtheir expectations for 2025 from
ending the year in the red.
To expecting double digit gainsfor the us stock market.
The consensus is for increasedvolatility during the year.
And there are several reportsillustrating a great first half
(05:15):
of the year.
Possibly overshooting to theupside.
And then for the market to giveback some of the gains in the
latter, half of the year.
That makes sense, Scott, andit's interesting to see how
improving sentiment and recordhousehold wealth.
Are driving more optimisticforecast.
Though the expectation ofincreased volatility.
Underscores the need forcautious optimism heading into
(05:38):
2025.
Now, where do you stand on thesedifferent targets?
Chris.
My opinion.
Is somewhere in between bothextremes.
First.
Let's keep in mind that industryanalysts on average have
overestimated market gains byalmost 7% per year.
During the previous 20 years.
(05:59):
If I take that number intoconsideration markets should
only be up two to 3% next year.
Looking a little further underthe hood.
Analysts overestimated the finalvalue 13 of the last 20 years.
Uh, leaving seven years, theanalyst underestimated markets.
It's interesting that analystshave underestimated the final
(06:21):
value in four of the past fiveyears.
What does all that mean to me?
Not much, really.
Those that know me, understandthat I'm always forward-looking.
And what happened last time?
It doesn't hold much weight tome.
So for me, what do I expect in2025?
I believe that we will seepositive markets.
(06:42):
I believe broad markets will beup over 5%, but will not end the
year in double digits.
I do believe that there issomething to be said for a
stronger first half of the year.
And I also believe that therewill be an opportunity next
year.
To outperform by reducing risk.
After the animal spirits.
(07:04):
Begin to fade.
I'm with you on this Scott.
While history provides someperspective forward-looking
fundamentals matter most.
And a positive, but modestmarket gain with opportunities
to reduce risk later in theyear.
Sounds like a very balanced.
And realistic outlook.
So, what are you most interestedin this week?
(07:25):
This week, the big event of theweek, Chris is the federal
reserves announcement onWednesday.
I think they will cut this week.
I do agree that there is a caseto be made to not cut rates this
week.
Although markets are expectingit.
And considering we are at ornear all time highs.
The markets need the cut thisweek.
(07:47):
What the fed says about the pathgoing forward will be the market
moving news this time around.
Personally, I think they shouldTelegraph less cuts for next
year.
As the economy continues to runstrong.
Inflation seems to be stickingaround.
And it has come down.
But the next leg down may takemore work than what was needed
(08:08):
to get us to where we are now.
Outside of this, we have theever important retail sales in
the U S tomorrow.
Along with industrial productionand home builder sentiment.
Housing starts and buildingpermits are on Wednesday.
Final third quarter GDP andexisting home sales on Thursday
and Friday, we had the Fed'spreferred inflation gauge PCE.
(08:32):
Along with the university ofMichigan's consumer sentiment
report.
Uh, overseas, we have the bankof Japan's rate announcement on
Thursday.
Where they are expected to holdrates.
We also have the UK, Sweden,Mexico, Norway, the Philippines
and Taiwan.
Announcing monetary policymoves.
(08:52):
Us earnings are light this week.
But we have FedEx, Nike andAccenture on Thursday.
Well, we will certainly have tokeep on the lookout for those
reports and trends.
And I'm sure we will have plentyto discuss next Monday.
For now stay informed.
Stay ahead.
And join us next week for morekey updates shaping the global
(09:14):
economy.
Thank you for tuning intoparamount wealth perspectives.
We hope you all have a fantasticweek.
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 to last week.
What are some major events youwould like to highlight?
Thank you, Chris.
Last week, most major indiceswere lower.
(01:03):
The Russell 2000 was theunder-performer while the NASDAQ
outperformed and was supportedby big tech.
It's been an interesting twoweeks and Friday was the 10th
straight session where more Sand P 500 stocks actually
declined.
Then advanced.
This was also the S and P firstweekly drop since mid November.
(01:25):
In fact, the Dow Jonesindustrial average as a Friday
has dropped seven straight days.
The dollar strengthened for theweek and gold was up marginally.
The defensive tone of themarkets may be stemming from
stretch valuations.
That means that prices haverisen faster than actual
earnings growth.
But the market seemed to bewaiting for the federal reserves
(01:46):
announcement on rates thisWednesday.
The market is now pricing innearly a hundred percent odds
that the fed will lower rates bya quarter point.
Odds increased after consumerinflation was in line with
expectations.
Well, inflation did risequicker.
Than in the past four months andthe year of a year figure did
(02:06):
see a slight uptick.
The most notable highlight wasthe deceleration in shelter
inflation.
Turning to producer inflation.
The producer price index didincrease by more than expected.
Both the month over month andthe year of a year numbers came
in hotter than firstanticipated.
We also saw small businesssentiment, jump.
(02:28):
The NFI B small businesssentiment index posted its
biggest monthly gain on recordin November.
And best print since 2021.
Snapping a 34 month streak ofrecord high uncertainty.
Elsewhere.
China pledged more support totheir economy.
And South Korea is parliamentvoted to impeach their
(02:48):
president.
Following this unexpecteddeclaration of martial law.
Thanks Scott, it's fascinatingto see how mix economic signals.
And global developments areshaping market sentiment.
Ahead of the feds, highlyanticipated rate decision this
Wednesday.
What are you hearing aboutexpectations for price targets
around the us equity markets?
(03:10):
Everything I'm reading thesedays, Chris.
Includes an expert opinion for2025.
And the targets are in for mostlarge firms and there are wide
variety of opinions.
I think much of the disparitystems from the unknowns of
tariffs.
Deportation and immigration.
Taxes.
(03:30):
And potential deregulation.
Keep in mind, the S and P 500 isnow up over 70% since it's
October 20, 22 low.
Those analysts expecting marketsdecline in 2025 point directly
to valuations and one researchdepartment, warns of a quote
unquote.
(03:51):
Major global trade war.
Pushing markets down some 25%.
Now that one report is anoutlier to the downside.
However, we really don't knowwhat is going to happen.
With policies, markets oreconomics.
Until it really happens.
Well, Scott, you make it clearthat the uncertainty around
(04:12):
policies and global dynamics isdriving a wide range of market
predictions for 2025, which tome highlights just how critical
active management will be.
Can you please explain what iscontributing to these
expectations?
Or if there are any positives.
We've gone through some of thenegatives, Chris.
(04:33):
But those analysts with apositive outlook for markets
next year, see corporate profitsjumping, double digits revenues
increasing in a rise in animalspirits.
Let's not forget that ushouseholds are sitting on record
wealth.
Of nearly$165 trillion.
(04:53):
And at the same time, overallsentiment is improving.
Two major firms just updatedtheir expectations for 2025 from
ending the year in the red.
To expecting double digit gainsfor the us stock market.
The consensus is for increasedvolatility during the year.
And there are several reportsillustrating a great first half
(05:15):
of the year.
Possibly overshooting to theupside.
And then for the market to giveback some of the gains in the
latter, half of the year.
That makes sense, Scott, andit's interesting to see how
improving sentiment and recordhousehold wealth.
Are driving more optimisticforecast.
Though the expectation ofincreased volatility.
Underscores the need forcautious optimism heading into
(05:38):
2025.
Now, where do you stand on thesedifferent targets?
Chris.
My opinion.
Is somewhere in between bothextremes.
First.
Let's keep in mind that industryanalysts on average have
overestimated market gains byalmost 7% per year.
During the previous 20 years.
(05:59):
If I take that number intoconsideration markets should
only be up two to 3% next year.
Looking a little further underthe hood.
Analysts overestimated the finalvalue 13 of the last 20 years.
Uh, leaving seven years, theanalyst underestimated markets.
It's interesting that analystshave underestimated the final
(06:21):
value in four of the past fiveyears.
What does all that mean to me?
Not much, really.
Those that know me, understandthat I'm always forward-looking.
And what happened last time?
It doesn't hold much weight tome.
So for me, what do I expect in2025?
I believe that we will seepositive markets.
(06:42):
I believe broad markets will beup over 5%, but will not end the
year in double digits.
I do believe that there issomething to be said for a
stronger first half of the year.
And I also believe that therewill be an opportunity next
year.
To outperform by reducing risk.
After the animal spirits.
(07:04):
Begin to fade.
I'm with you on this Scott.
While history provides someperspective forward-looking
fundamentals matter most.
And a positive, but modestmarket gain with opportunities
to reduce risk later in theyear.
Sounds like a very balanced.
And realistic outlook.
So, what are you most interestedin this week?
(07:25):
This week, the big event of theweek, Chris is the federal
reserves announcement onWednesday.
I think they will cut this week.
I do agree that there is a caseto be made to not cut rates this
week.
Although markets are expectingit.
And considering we are at ornear all time highs.
The markets need the cut thisweek.
(07:47):
What the fed says about the pathgoing forward will be the market
moving news this time around.
Personally, I think they shouldTelegraph less cuts for next
year.
As the economy continues to runstrong.
Inflation seems to be stickingaround.
And it has come down.
But the next leg down may takemore work than what was needed
(08:08):
to get us to where we are now.
Outside of this, we have theever important retail sales in
the U S tomorrow.
Along with industrial productionand home builder sentiment.
Housing starts and buildingpermits are on Wednesday.
Final third quarter GDP andexisting home sales on Thursday
and Friday, we had the Fed'spreferred inflation gauge PCE.
(08:32):
Along with the university ofMichigan's consumer sentiment
report.
Uh, overseas, we have the bankof Japan's rate announcement on
Thursday.
Where they are expected to holdrates.
We also have the UK, Sweden,Mexico, Norway, the Philippines
and Taiwan.
Announcing monetary policymoves.
(08:52):
Us earnings are light this week.
But we have FedEx, Nike andAccenture on Thursday.
Well, we will certainly have tokeep on the lookout for those
reports and trends.
And I'm sure we will have plentyto discuss next Monday.
For now stay informed.
Stay ahead.
And join us next week for morekey updates shaping the global
(09:14):
economy.
Thank you for tuning intoparamount wealth perspectives.
We hope you all have a fantasticweek.
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