2024 Midyear Outlook Pt. 1

Episode Transcript

(00:00):
This is straight talk from the Housewith certified financial planner Tracy Andton right here
on thirteen ten wib A. Tracycomes to us from Tanton Investment House,
a fee only fiduciary with offices rightin Middleton. The website Tantoninvestment House dot
com. That's t A N.T O N Investment House dot com.
The telephone number for the office inMiddleton six oh eight five zero one,

(00:23):
fifteen forty nine. That's six soheight five zero one, fifteen fourty nine.
And joining us this morning in certifiedFinancial Planner Tracy Anton. Tracy,
how are you doing this week?I'm doing great, Sean, and you
I'm doing really well. It isgreat to see you, and we're going
to be we're kind of at thathalfway point of the year. We're gonna
get a midway look, aren't we. What is kind of the topic about
this week? Yeah, this weekwe're just going to take a look and

(00:45):
see what are their projections. Particularly, this is American Funds perspective on where
the economy is the projections for thisyear. They're going to talk about how
global growth is shaping up, whatthe Federal Reserve is likely to do.
In their opinion. And also we'regonna discuss earning expectations for twenty twenty four

(01:06):
and beyond and whether markets are overpricedor not. And also if you have
missed this recent market rally in theiropinion, you know, is it too
late. We're going to go backand look at some history to say,
you know, is it or isn'tit? And of course you never know
for sure, right, but it'llbe it'll be kind of thought provoking or

(01:29):
at least good food for thought whenyou take a look at you know,
what has the past been and youknow, hint. Basically, I don't
think it's too late, Yeah,exactly, it'll be. I never think
it's. Yeah. Well, andit's been proven out time and time again.
The best time was yesterday, ifnot yesterday today, So we'll yeah,

(01:49):
like your attitude, attitude I've learnedfrom the best over the years.
Talking this morning with certified financial plannerTracy Anton, that's what I'm talking about
this morning, of course, Tracy. So it's for t Anton Investment House,
the website Tanton investment House dot com. That's t A N t ninvestment
House dot com. And again thetelephon number six so eight five zero one
fifteen forty nine. That's six soeight five zero one fifteen forty nine.

(02:14):
Big question about this, and asAmericans, I think it's important. Are
we still the kind of that majordriver when it comes to global growth?
Tracy, Yeah, in the UnitedStates is the world's largest economy and is
once again the driver of the globalgrowth. While Europe and China faced economic
challenges, the US, along withIndia and Japan, is showing resilience.

(02:35):
So it's surprising. I mean,even Japan is doing better, So that's
interesting, and a lot of companiesare going toward India to solve some of
the supply chain issues. So again, despite high interest rates and inflation,
the International Monetary Fund, the IMFpredicts the US economy will grow this year
at more more than twice the rateof other developed countries, So that's really

(03:00):
interesting. And additionally the strength ofAmerica's consumer driven economy is helping to boost
growth worldwide. So even though youknow we're growing, we also are helping
other countries that obviously are doing alot of exporting to US. Really good
stuff to hear this morning. Imentioned, of course, the website earlier
Tanton Investment House dot com I urgeyou to stop on over during the program,

(03:23):
I had to check out the website. Head over to Tanton Investment House
dot com. While you're there,you get to know Tracy and the team.
You can also listen back to thisprevious shows podcasts as well. Also
fantastic opportunity. If you're looking formoney management or portfolio management, Tracy in
our team would love to talk withyou. They'd love to get to know
you. All I gotta do ishead on over to Tanton investment House dot
com. That's t A N TO N investment House dot com. From

(03:45):
there you can schedule appointment at atime and a date that's convenient to you.
You can also, of course pickup phone give a call at the
office in Middleton six'oh eight fivezero one, fifteen forty nine. That's
six oh eight five zero one,fifteen forty nine. So now that I'm
feeling nice and confident USA, USA, what is mean then for future outlooks?
Tracy, that's a good question.Well, according to the Capitol Group,
in the coming years, it's lesslikely that a small group of highly

(04:09):
valued companies will dominate returns. Sowhile the US markets will continue to perform
well, they won't be the onlysource of high returns according to again the
people that manage money at the AmericanFunds, so bonds have also become more
appealing as fixed income markets start offeringbetter returns. So despite what may seem

(04:30):
like a more pessimistic outlook for stocksin the future, it's really one of
the portfolio managers says, it's anopportunity for individual stocks selection to significantly impact
portfolios. And this major shift bringsuncertainty, of course, but we're moving
from a period of relatively low volatilityto what could be a much higher volatility

(04:55):
in the future. And again they'remaking a case for active manage, you
know, stock selection, not justowning that index. And what's interesting is
a lot of these mutual fund companiesare also getting into having their own actively
managed ETF and American Funds also hasthem. And I'm not saying that,
you know, there's not other goodatfs out there. I'm just saying it's

(05:18):
an interesting world right where I thinkit does make sense to have some active
management because they're kicking the tires ofthe companies and making sure we know,
for example, AI is going tobe a big driver of growth but which
companies will survive and you know whowill do well? That is a fascinating

(05:38):
thought and definitely someone that will bepaying attention to us. We're getting a
bit of a mid year outlook fromfrom Tracy. Of course, Tracy comes
to with from t Anton Investment House. We've got got a lot of interesting
stuff on the horizon as well,as I mentioned the website earlier, Tnton
Investment House dot com, the telephonnumber six oh eight five zero one,
fifteen forty nine. That's six oheight five zero one fifteen forty nine for

(06:00):
the office in Middleton, and Tracyof course, I think a lot of
people then wonder, Okay, whatabout this year is the US expected?
There is there expected growth this year? Yeah, the US is expected to
grow at around three percent this year, driven mostly by again strong consumer spending,
a tight labor market, and manufacturersinvesting in more diversified supply chains.

(06:21):
India, among emerging markets, isbenefiting significantly from these changes, and in
the post pandemic world, many companiesare turning to India for additional manufacturing capacity
and China's economy matures and again asfar as the growth rates, Sean in
April the IMF increased its US growthforecast to two point seven percent compared to

(06:45):
Europe, which was zero point eightpercent. So again, why is the
US doing so much better? It'sthe consumer driven economy is really helping to
boost that growth. We do.I know, we like to complain about
money, but we'd like to spendit. Oh sure, we we like
to do a lot of things.And we're all about, you know,
taking that bite out of the appYes, exactly, just doing our part.

(07:06):
This point, they're Tracy talking withcertified financial planner Tracy Anton right here,
thirteen to ten. Wiba, whatabout the I words, the interest
rates, the inflation? What's kindof the status there, Tracy. So,
despite the highest federal reserve policy ratein twenty three years, the US
economy has remained remarkably resilient. Sean, So we have the labor market is

(07:29):
strong, consumer spending is strong,corporate fundamentals are healthy. So one of
the portfolio managers at the Capitol Group, his name is promad Atuluri. He
says that while growth continues to slow, the US economy has largely adapted to
this new rate environment, and heexpects that growth to remain above a healthy

(07:51):
two percent in twenty twenty four.So that's a great I mean, is
he right, that's the question,right if rates stay up for longer,
you know, are we going tobe able to maintain this growth? So
I think everyone's been a little surprisedat how well we've done in this high
rate environment. According to the FEDshare Jerome Powell, he cited two paths

(08:15):
to cut rates. He said,unexpected weakness in the labor market or inflation
sustainably down to two percent. Soinflation declined in twenty twenty three, Sean,
but it basically stalled above three percentin early twenty twenty four. So
this portfolio manager American Funds again atSlurry. He's optimistic that prices increases will

(08:41):
fall closer to the Fed's target bythe year end, and that largely because
rent Apparently, rent increases a majorreason for the core consumer price index remains
elevated, continues to modestly improve.So additionally, the higher inflation we saw
for certain goods and services earlier thisyear may be reflecting some seasonal adjustment distortion.

(09:05):
So all of that to say is, you know, they're optimistic that
by the end of the year we'regoing to see some rate cuts and of
course that always helps the economy.Fascinating stuff. As always, as we
talk with SORTI find financial planner TracyAnton right here on thirteen ten wiv A.
Don't forget. If you missed anypart day show, or you want
to listen back to the program,or if you want to share the show

(09:26):
or listen to the previous shows,you can always head on over to Tanton
Investment House dot com. That's tA N t O N investment House dot
com. All the podcasts are available. They are also some great information about
Tracy and the team at Tanton InvestmentHouse. Also great opportunity if you're looking
for money management or portfolio management.Tracy would love to get to know you
again. I'll get to do this. Set on over to Tanton Investment House

(09:48):
dot com. From there you canschedule apployment real convenient at a time and
a date that works for you.You can also, of course pick a
phone call the office six oh eightfive zero one fifteen forty nine. That's
six soh eight five zero one fifteenforty nine. Tracy asked the question at
the beginning of the program. We'regoing to get the answers on this one,
if investors have missed out, ifthey've had their money in cash.
We'll get the details from Tracy onthat so much more next as Straight Talk

(10:09):
from the House continues right here thirteenten wui b A. This is straight
Talk from the House with certified financialplanner Tracy Andton right here on thirteen ten
double UiB A talking this week withTracy about a kind of a mid year
outlook and some information from American funds. And if you missed that earlier segment,
it was really really good, don'tfor You can always listen back at
Tantoninvestment House dot com. That's tA N t O N investment House dot

(10:33):
com. You can also make anappoyment right online or call the office in
Middleton. Six so eight five zeroone fifteen forty nine. That's six so
eight five zero one fifteen forty nine. Tracy, what about those folks that
maybe had their money in cash?Have they have they kind of missed out
on this or or what's what's thetake there? Well, that's the big
question. When people want to getback into the markets and they think,

(10:56):
oh my gosh, and now it'sgone up, should I wait or watch
that I do, maybe there'll stillbe a pullback, and of course markets
do correct ten percent a year,so it's not unheard of, but it's
really hard to catch those down moments. So again, I think when stocks
hit record highs like we've had,investors might think that the market is peaked

(11:16):
and they've missed their chance. Soif we look back at history, basically
it shows that usually not that's notthe case, that you haven't missed out.
And of course the past is neverguarantee of the future, but let's
take a look and see what didhappen. So over long periods, markets
have generally trended upward and reached newpeaks multiple times. So while market declines

(11:39):
really are in inevitable and stocks candrop at any time, history again shows
that new highs have often been goodentry points for long term investors. So
if they go back to nineteen fifty, each time the S and P five
hundred index hit its first all timehigh in at least a year, stocks

(12:00):
then delivered an average of seventeen pointone percent average return for the subsequent twelve
months. So again, I hadthis chart in this pamphlet that American Funds
put out, and it said sincenineteen fifty. The SMP hundred index has
reached new highs one thousand, fourhundred and thirty four times since nineteen fifty.

(12:22):
I know, it seems like alot of times. I was like,
wow, that's a lot. Andthen when the SNP had five hundred
reached its first new high in morethan a year, thirteen out of the
fourteen periods were high. The averagefor the next twelve months again was seventeen
point one percent, So an investorwould have gained in each of these fourteen

(12:43):
thirteen out of fourteen periods except forthe start of the global financial crisis in
two thousand and seven. So again, you know, we don't know if
it's going to be any kind oflike okay, the futures, you know,
there's no guarantee and all that.But the reality when you look at
is like you probably have it missedout, you know, if you are

(13:03):
and I just say, if youare a long term investor, so you
know, because there's no guarantee,you don't want to put short term money
in thinking wow, of course shesaid it's likely to go up, and
seventeen percent sounds good to you.You know, that's not it. It's
like, if you're a long terminvestor, your money shouldn't be you know,
of course, emergency should be incash, and you can have some

(13:24):
money in CD money. But eventuallythose rates will come down because a riskless
asset will never be inflation long term. So let me say that again,
a riskless asset will never beat inflationlong term. And I heard that on
a webcast from one of the Americangroups about six months ago, and I

(13:45):
think that's so well put. Soif it's long term money, don't have
it sitting in a CD, don'thave it sitting in some kind of high
yield savings. If it's long termmoney and it's supposedly for retirement, get
it invested properly in the stock andbond markets. And yes, you have
to go up up and down,up and down with the markets, but

(14:05):
long term, it should be inflationover the long term. Talking this morning
with certified financial planner Tracy Anton righthere on thirteen ten, WUIVA, don't
get to know Tracy in the teamall online the website Tanton Investment House dot
com. Great tool and great resourcefor that information. Also great opportunity you're
looking for money management or portfolio managementin schedule appoyment at a time and a

(14:26):
date that's convening to you right atTanton Investment House dot com, or pick
up a phone call the office rightin middle ten six so eight five zero
one fifteen for a nine that's sixso eight five zero one fifteen four and
not so Currently, what does theAmerican funds? What do they think about
the current market? Tracy? Well, again, I'm just kind of quoting,
but one of the comments was bya portfolio manager named Martin Jacobs,

(14:50):
and he said, you know,he focuses on themes like globalization, productivity,
innovation that are just incredibly powerful forcesfor growth, and that's why he
always believes, you know, we'regoing to have downturns, but that doesn't
change the long term trajectory of markettrending up. And so the bottom line

(15:11):
that you can take away I thinkfrom this is that historically ball markets have
been much longer than bear markets,leading to new highs within each cycle.
So good, no guarantees, ofcourse, but again, if it's long
term money, you know, beoptimistic about the future. And my two

(15:31):
cents and again I can't read thetea leaves. I don't know, I
don't have a crystal ball on mydesk. But we've just had a big
market correction, have we not?It was only two years ago, So
I'm betting that stocks are probably atleast certain sectors are not overpriced, and
it's a good place to be.And even in the bond market, we've
had incredible you know, the FederalReserve has raised rays all the way up

(15:56):
to five percent. It's been along trajectory of raising rates. Now they've
stopped raising rates. Where they're goingafter this, they might stall, they
might not lower rates for a while, but eventually they'll probably lower rates.
So the bond markets will also lookgood. And if you're if you're looking
at bonds, some of those highquality corporate bonds paying out five percent in

(16:17):
interest, plus they have potential forappreciation and that could be significant to the
point of a double digit so,which is which is rare for bonds.
Pretty fascinating stuff. And Tracy,as we talk about kind of where we
are, kind of the current market. Also currently it's hard to avoid right
now. AI seems to be everywhere, and I've got to ask, have
we seen AI affect the stock marketor the economy in any ways? Oh

(16:40):
my gosh, yes, so yeaha I. You know, it's the
arms race is in full swing.Basically, AI has a vast potential to
transform industries and the way people work. It's offering exciting investment opportunities, and
to succeed, investors need to understandthe AI what they call the stack,
which is the four technology layers thatmake up AI function. So companies are

(17:06):
competing for dominance in each layer,including semiconductors, infrastructure, applications, and
the AI models themselves. So ascompanies compete for dominance in each of these
layers, understanding their interactions and contributionsto the overall AI ecosystem is crucial for
making informed investment decisions. And againyou don't have to decide, but the

(17:29):
people who you choose to have,you know, manage your money. And
namely I'm talking about the big firms, the big mutual fund companies. You
know, they're looking at the AIstack and seeing, you know, which
companies are going to do well.It's not a question of well AI change
you know, our productivity, ofcourse, but who who is going to

(17:51):
lead that and which companies are goingto benefit from that. So again,
the competition landscape is evolving rapidly,and that they're identifying key players in emerging
technologies within each layer and that canhave strategic advantages and promising returns. You
know, American Funds believes for thefuture. So we talk AI tracy,

(18:12):
who are do we know the nameslike? Who are kind of the big
players in the world of AI.So again I'm not saying run out and
buy these stocks because you have tolook at what the prices are right relative
to earnings. But according to oneof the articles by American Funds, you
know, they said the big AIplayers are Alphabet, Meta, Microsoft,
and they're investing tens of billions ofdollars to lead in multiple layers of the

(18:36):
stack. And there's also three othernames that are developing their own processes,
like chip makers like Navidia, Broadcom, and Micron are also expected to maintain
their market dominance for years to come. And then there's AI data centers.
Apparently they use a lot of electricity, which will increase the need for various

(18:57):
energy sources, including nuclear power.For instance, this article pointed out that
in June of twenty twenty three,Microsoft made an agreement with Constellation Energy to
provide nuclear power for one of itsdata centers, so so much has change.
The landscape is changing so much,as you know, that's why markets
moved up, because of the exciting, you know part of AAI. What

(19:21):
can it do for us? Butof course there's always the scary size.
Who knew? How many you gonnatalk about that? No, no,
no, there's so many lizzens.This is really I love talking about this
stuff, Tracy. It's always soinformative, informative as we talk with certified
financial planner Tracy Anton right here onthirteen ten WIBA getting that mid year outlook
from Tracy. Don't forget if youhaven't been to the website, it's a

(19:41):
great time right now to head onover Tanton investment House dot com. That's
t A N t O N InvestmentHouse dot com telephon number six oh eight
five zero one, fifteen forty nine. That's six oh eight five zero one,
fifteen forty nine for the office rightin Middleton and Tracy. Before we
wrap things up this week, arethere some other areas there are other things
that seen uncertainty throughout twenty twenty four. Well, you know, the bond

(20:03):
market had faced some challenges due tothe Federal Reserve raising rates and yields going
up so high. Right, Sodespite this though, areas like investment grade
bonds and mortgage backed securities really dostill offer some potential value. And again,
as it kind of continues to growand investor demand stay strong, the
difference in yields between credit assets andUS treasuries has become smaller. So what

(20:29):
that means, Sean, is thatthe best chance for higher returns on bonds
with credit risk and again I'm justtalking quality corporate bonds now really pretty much
depends on interest rates falling rather thannarrowing of this yield spread. So again,
given the recent rally and corporate bondspreads, we're seeing better opportunities in
higher quality sectors with attractive yields,such as securitized credit and agency and mortgage

(20:53):
backed securities. And this information isgood, again coming from a portfolio manager
that all he does all day longis look at the bonds, right,
and so you know, he's justsaying that because they have this what they
call a higher coupon, they're payingout really attractive rates and you have the
ability the potential interest rates falling inthe future. You know, they're really

(21:18):
optimistic for the bonds and I wouldsay, you know, if your portfolio
has gotten slightly heavier, too heavyin stocks, and you're a retiree and
you're taking out a pretty healthy distribution, now might not be a bad time
to make sure your allocation between stocksand bonds is what you want going forward.
I still still think stocks will alwaystend to beat bonds, but coming

(21:42):
up, bonds should have a prettygood rally if interest rates fall. Really
important stuff and great stuff to takeaway from this week's program. Don't forget
if you mess missed any part oftoday's shoe, you can always listen back
to send on over to Tanton investmentHouse dot com. Listen to this in
previous programs. Podcasts also a lotof great information about t Anton Investment House.

(22:02):
You can learn more about the team, you can learn more about t
Aton Investment House, and of courseyou can schedule appointment at a time and
a date that's convenient to you.I gotta do is head on over to
Tanton investment House dot com. That'st A N T O N investment House
dot com. From there, youcan schedule appointment right online at a time
and a date that's convenient to you, or pick a phone call the office
right in Middleton six oh eight fivezero one, fifteen forty nine. And

(22:23):
that's six oh eight five zero one, fifteen forty nine, Tracy. Time
always flies by and we're talking.It's great to see you enjoy this beautiful
day. Thanks so much on YouTube. Take care,