Weekly Market Commentary November 04, 2024

by | Nov 4, 2024 | Carson

The Markets

Are we witnessing an historic event?

For an airplane or a spacecraft, a soft landing occurs when the vehicle “touches the ground in a controlled and gradual way that does not damage it,” according to The Britannica Dictionary.

For the American economy, a soft landing happens when the Federal Reserve raises interest rates to cool the economy and push inflation lower—and achieves its goal without causing a recession and significantly higher unemployment. It’s not an easy task.

“Historically, soft landings have been tough to pull off…Keeping unemployment and inflation low while at the same time having robust growth is difficult. Threading that needle has proven to be quite elusive,” reported a source cited by Aly J. Yale of The Wall Street Journal.

Solid economic growth, low unemployment, rising wages, and falling inflation have one Federal Reserve official and several economists declaring that the American economy has achieved this rare event—a soft-landing, reported Bryan Mena of CNN.

So, exactly how well is the U.S. doing?

“The extent to which America has outperformed other countries since the start of the COVID-19 pandemic is breathtaking. Its real GDP has expanded by more than 10 [percent], nearly three times as much as the euro area. Among the G20 group, which includes both rich countries and emerging markets, America is the only one where output is above pre-pandemic expectations, according to the International Monetary Fund,” reported Simon Rabinovitch of The Economist.

Last week, “with an election and Federal Reserve meeting still to come, stocks faltered under the weight of the uncertainty,” reported Teresa Rivas of Barron’s. Major U.S. stock indices finished the week lower. Uncertainty about the direction of future government spending and its possible effect on Federal Reserve policy caused some turmoil in bond markets, too, reported Paul R. LaMonica of Barron’s. Yields on longer maturities of U.S. Treasuries moved higher over the week, while yields on shorter maturities moved lower.

PERCEPTION VS. REALITY. The human brain is complex and powerful. It runs on about 20 watts of power and brains need to be recharged, just like your cell phone does, according to Northwestern Medicine.

It’s interesting to note that brains are not objective. They catalogue our experiences, beliefs, and emotions and then interpret what’s happening around us. As a result, our reality on any given day is affected by “our personal physical abilities, energy levels, feelings, social identities, and more,” reported Jill Suttie in Greater Good Magazine.

For example, studies have found that hills look steeper when people are:

  • Tired.
  • Wearing backpacks.
  • Thinking of people they dislike.

In contrast, hills look less steep when people feel energetic or think of a supportive friend.

An August survey from the National Federation of Independent Business, a small-business advocacy group, reinforced the idea that there is a gap between economic perception and economic reality. The survey found that small business owners were quite optimistic about the financial state of their businesses, reasonably optimistic about the state of their local economies, and pessimistic about the state of the U.S. economy.

 

  Excellent/ Good Okay Poor
The current financial state of my business is: 70 percent 25 percent 5 percent
The current state of my local economy is: 36 percent 44 percent 20 percent
The current state of the U.S. economy is: 10 percent 32 percent 58 percent

 

When survey participants were asked when the United States might experience another recession, 52 percent said the U.S. economy was in a recession right now. A recession is a downturn in economic activity that lasts for a significant period. Economic data show the U.S. economy, as measured by gross domestic product (the value of all goods and services produced in the U.S.), has been growing since late 2020.

The answers were interesting because most businesses—small and large—experience declines in sales and profitability when the national economy is doing poorly or in a recession. The gap in perception and reality may reflect the fact that “people are upbeat about what they see directly but pessimistic about what they glean indirectly through media (and social media),” opined Rabinovitch of The Economist.

Weekly Focus – Think About It
“A politician needs the ability to foretell what is going to happen tomorrow, next week, next month, and next year. And to have the ability afterwards to explain why it didn’t happen.”
—Winston Churchill, former British Prime Minister

Sources:
https://www.britannica.com/dictionary/soft-landing
https://www.wsj.com/buyside/personal-finance/banking/what-is-a-soft-landing (or go to Https://resources.carsongroup.com/hubfs/WMC-Source/2024/11-04-24_Buy%20Side%20from%20WSJ_2.pdf)
https://www.cnn.com/2024/10/30/economy/us-economy-gdp-q3/index.html
https://view.e.economist.com/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/11-04-24_The%20Economist_Money%20Talks_4.pdf)
https://www.barrons.com/articles/market-tricked-investors-election-day-bounce-7ea56c39?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/11-04-24_Barrons_The%20Market%20Tricked%20Investors_5.pdf)
https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/11-04-24_Barrons%20Data_6.pdf)
https://www.barrons.com/articles/bond-yields-jobs-report-treasury-6f6e602e?mod=md_bond_news (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/11-04-24_Barrons_Bond%20Yields%20Fell%20After%20Jobs%20Report_7.pdf)
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=2024
https://www.nm.org/healthbeat/healthy-tips/11-fun-facts-about-your-brain
https://greatergood.berkeley.edu/article/item/eight_reasons_to_distrust_your_own_perceptions
https://www.sciencedirect.com/science/article/abs/pii/S002210310800070X#:~
https://strgnfibcom.blob.core.windows.net/nfibcom/Banking-Survey-2023-Part-II.pdf [Questions 20-23]
https://fred.stlouisfed.org/series/GDP#0 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/11-04-24_FRED%20Data_13.pdf)
https://www.investopedia.com/articles/economics/08/recession-affecting-business.asp#:
https://www.azquotes.com/quote/56321?ref=funny-political

Weekly Market Insights | Stocks Retreat on Jobs and Election Concerns

by | Nov 4, 2024 | Weekly Stock Market Commentary

Stocks slid last week as mixed economic data and strong-but-not-spectacular Q3 corporate reports failed to inspire investors.

The Standard & Poor’s 500 Index fell 1.36 percent, while the Nasdaq Composite Index declined 1.50 percent. The Dow Jones Industrial Average edged down 0.15 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, slid 0.96 percent.1,2

Q3 Reports Uninspired

Stocks rallied early Wednesday after the gross domestic product report showed a strong economy that appeared on the path to a soft landing. However, stocks moved lower throughout the day as investors digested mixed Q3 reports from a few mega-cap tech names.3,4

Stocks were under more pressure Thursday as disappointing outlooks for some key tech companies pulled the market down. A softer-than-expected jobs report on Friday unsettled investors, but stocks picked up as the day progressed, and attention shifted to how the Fed may interpret the jobs data.5

By Friday, the Nasdaq’s eight-week winning streak had ended, and the S&P fell for the second week.
 
 

Fed Back in Focus After Jobs Report

At its most recent meetings, the Fed has made it clear that it needed to balance the risks of both inflation and employment.

So Friday’s jobs report that showed 12,000 jobs created in October caught some by surprise. Economists expected the Labor Department to report 100,000, down from September’s 223,000 jobs.6

Investors parsed the data and determined the strike at a major aircraft manufacturer and two hurricanes caused the jobs report to fall short of estimates. Investors also appeared to believe the jobs report would prompt the Fed to move on rates at its two-day policy meeting, which ends on November 7.

This Week: Key Economic Data

Monday: Motor Vehicle Sales. Factory Orders.

Tuesday: Election Day.

Wednesday: FOMC Meeting – Day 1. EIA Petroleum Status Report.

Thursday: FOMC Meeting – Day 2. FOMC Announcement. Fed Chair Press Conference. Productivity and Costs.

Friday: Consumer Sentiment. Fed Official Michelle Bowman speaks.

Source: Investors Business Daily – Econoday economic calendar; November 1, 2024
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Monday: Vertex Pharmaceuticals Incorporated (VRTX)

Tuesday: Apollo Global Management Inc. (APO)

Wednesday: Qualcomm Incorporated (QCOM), Gilead Sciences, Inc. (GILD)

Thursday: Arista Networks, Inc. (ANET), Duke Energy Corporation (DUK), Airbnb, Inc. (ABNB)

Source: Zacks, November 1, 2024.
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

“It is not the position, but the disposition.”

– Susan Sontag

Military Members and Their Families Can Receive Free Tax Advice

The IRS started the Volunteer Income Tax Assistance (VITA) program to provide free tax advice, preparation, return filing help, and other assistance to military members and their families. This also includes specific tax advice for military members on combat zone tax benefits, special extensions, and other special rules. VITA has convenient locations on and off base and even has offices overseas.

These offerings are just one way the IRS strives to make tax information available to all. It also offers other free assistance programs to taxpayers who qualify, including the elderly, through its Tax Counseling for the Elderly (TCE) program.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS7

Indoor Exercises to Stay Active

It might be hard to get outside often for walks and exercise in the winter, but you can do plenty of indoor exercises, even when the weather outside is not cooperating. Here are some simple moves to get you exercising indoors:

  • Start with your core. Do 30 crunches followed by a minute-long plank. Repeat for three sets.
  • Do two sets of mountain climbers: 60 seconds on, 30 seconds rest.
  • Do push-ups (either on your knees or your toes), and hold a plank for a minute on your last rep. Rest for 20 seconds, then repeat three more times.
  • Do a standing, reverse lunge, 20 reps on each side. Complete three sets.
  • Do regular squats, but hold at the lowest point for three seconds. Complete 20 reps three times.

Tip adapted from Active8

I am only one syllable long and too heavy for one person to lift, but if you reverse me, I am not. What am I?

Last week’s riddle: How many times can you subtract the number 75 from 7,500? Answer: Once, because after the first subtraction, you will subtract 75 from 7,425.

Yosemite National Park

Sierra Nevada, California

 

Footnotes and Sources

1. The Wall Street Journal, November 1, 2024

2. Investing.com, November 1, 2024

3. CNBC.com, October 30, 2024

4. The Wall Street Journal, October 30, 2024

5. The Wall Street Journal, November 1, 2024

6. The Wall Street Journal, November 1, 2024

7. IRS.gov, March 29, 2024

8. Active, July 24, 2024

Happy Halloween!

by | Oct 31, 2024 | Noteworthy

Weekly Market Commentary

by | Oct 30, 2024 | Carson

The Markets

Financial markets appear to have pre-election jitters.

The United States election is less than two weeks away. The candidates are neck and neck. The outcome remains uncertain. And expectations for volatility have been rising, with the CBOE Volatility Index (VIX) finishing last week at 20.33.

“When the VIX goes north of 20, Wall Street pays attention because that level signals heightened volatility,” reported Connor Smith of Barron’s.

One reason for heightened volatility may be concerns about the election. Ian Salisbury of Barron’s explained, “There are plenty of theories about how particular stocks will fare, depending on next month’s outcome. It isn’t hard to see why. The candidates have tried to curry favor with voters by championing or attacking favored industries, and sometimes individual companies. Vice President Harris has promised to raise the corporate tax rate, a move that could cut into corporate earnings, and Democrats are widely seen as tougher on antitrust issues, a potential hurdle for Wall Street banks looking to capitalize on pent-up [merger and acquisition] activity. Trump, meanwhile, has threatened hefty new tariffs, which could help U.S. manufacturers but hurt multinationals. He’s even threatened individual companies like John Deere over plans to move manufacturing facilities abroad. The good news? Investors can mostly shrug the campaign rhetoric off and focus on stocks’ fundamentals.”

So far, third-quarter earnings reports have been strong. Regardless, stock market investors became significantly less bullish last week, according to the AAII Investor Sentiment Survey. The survey asked investors whether they think the stock market will move higher (bullish) or lower (bearish) over the next six months.

  • Bullish sentiment declined from 45.5 percent the week of October 16 to 37.7 percent last week. (The historic average for bullishness is 37.5 percent.)
  • Bearish sentiment increased from 25.4 percent to 29.9 percent. (The historic average for bearishness is 31 percent).
  • Neutral sentiment also increased from 29.2 percent to 32.4 percent. (The historic average is 31.5 percent.)

Bond investors also have been adjusting their expectations. Since mid-October, the yield on the benchmark 10-year U.S. Treasury note has trended higher. At the start of the month, the 10-year note yielded 3.74 percent. Last week, its yield rose from 4.07 percent to 4.23 percent.

“The rise is likely a reflection of the fact the Federal Reserve will cut interest rates fewer times than investors had thought after September’s Federal Open Market Committee meeting, a result of inflation being above its target and a job market that has grown faster than expected. Also, Donald Trump’s chances of winning the presidential election have risen in the past few months, according to RealClearPolitics. His policies include fiscal spending and tariffs, both of which create inflation and throw cold water on the idea that the Fed will cut rates many times. While the economy could continue to grow, tariffs, for their part, not only lift prices, they destroy demand,” reported Jacob Sonenshine of Barron’s.

Ben Levisohn of Barron’s offered some advice to anyone getting swept up in pre-election jitters. “The truth of the matter is that reading the financial market tea leaves is far from straightforward…In fact, investing with your politics is one of the worst ways to lose money—or miss out on gains.” If you have concerns about market volatility or the possible effect of the election on your portfolio, get in touch. We’re happy to talk with you about your concerns and your portfolio.

Last week, the S&P 500 Index and Dow Jones Industrial Average moved lower, while the Nasdaq notched a seventh week of gains. Yields on longer maturities of U.S. Treasuries moved higher over the week.

DO YOU TALK ABOUT MONEY? A lot of important events and holidays are coming up in November. There’s Election Day, National Calzone Day, No-Shave November, the International Day for Tolerance and Talk Money Day. That’s right! On November 8, everyone is encouraged to put their fears aside and begin talking with other people—spouses, partners, roommates, friends, adult children, and younger children—about money. It’s not going to be easy—money talk is tough for many people. Sixty-two percent of Americans who participated in a 2023 survey said they did not talk about money. Those who did have financial conversations generally conversed with a spouse or partner, reported Kamaron McNair of CNBC.

There are many reasons people avoid financial conversations. They may:

  • Believe it is impolite to talk about money.
  • Worry that discussions will be awkward.
  • Fear being judged for their choices.
  • Think their money is no one else’s business.

The issue is less prevalent among younger people than it is among older people, according to CNBC. “…56 [percent] of millennials and 49 [percent] of Gen Zers say they’re having financial conversations on the regular, compared with just 38 [percent] of Gen Xers and 22 [percent] of baby boomers…Talking about money can help young people increase their financial literacy as they learn from and teach their friends. But it’s equally important for younger people to bring up financial topics with their elders—or at least their more experienced peers—especially when it comes to making big decisions,” reported McNair.

While breaking down the money-talk barrier may be challenging, the rewards can be significant. Financial discussions can improve decision-making, strengthen relationships, and help children develop sound money habits. Our goal is to help the people we serve make financial decisions that help them live the lives they want to lead. If talking about money is a difficult hurdle, get in touch. We can help facilitate these important discussions.

Weekly Focus – Think About It

“The single biggest problem in communication is the illusion that it has taken place.”

—George Bernard Shaw, Nobel Prize-winning playwright

Sources:

https://www.cboe.com/tradable_products/vix/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Cboe_VIX%20Index%20Charts_1.pdf)

https://www.barrons.com/livecoverage/stock-market-today-102324/card/the-dow-keeps-falling-the-market-s-fear-gauge-is-near-a-key-level–349PmzqKaFkDhC1aYtSc?siteid=yhoof2 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Barrons_The%20Dow%20Keeps%20Falling_2.pdf)

 https://www.barrons.com/articles/portfolio-stress-test-election-4218808a?mod=hp_LEDE_C_1 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Barrons_Dont%20Rule%20Out%20a%20Market%20Panic_3.pdf)

https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_102524.pdf

https://www.aaii.com/sentimentsurvey (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Historical%20Sentiment%20Data_5.pdf)

https://finance.yahoo.com/quote/%5ETNX/history/

https://www.barrons.com/articles/stock-market-danger-zone-tariffs-b2bb22e6?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Barrons_Stock%20Market%20Enters%20Danger%20Zone_7.pdf)

https://www.barrons.com/articles/stock-market-trump-harris-election-61b41129?refsec=up-and-down-wall-street&mod=topics_up-and-down-wall-street (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Barrons_Market%20is%20Afraid%20of%20Election%20Day_8.pdf)

https://www.barrons.com/market-data (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/10-28-24_Barrons_Data_9.pdf)

https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202410

https://www.calendarr.com/united-states/calendar-november-2024/

https://nationaltoday.com/talk-money-day/

https://www.cnbc.com/2023/05/10/americans-arent-talking-about-money-it-could-hold-you-back.html

https://www.brainyquote.com/quotes/george_bernard_shaw_385438

Weekly Market Insights: Stocks Mixed Ahead of Election

by | Oct 28, 2024 | Weekly Stock Market Commentary

Stocks were mixed last week as fresh economic data points and election-related uncertainty slowed market momentum.

The Standard & Poor’s 500 Index fell 0.96 percent, while the Nasdaq Composite Index rose 0.16 percent. The Dow Jones Industrial Average dropped 2.68 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, slid 2.30 percent.1,2

Nasdaq Leads

Stocks were mixed for the first half of the week as investors geared up for a steady stream of Q3 reports. The 10-year Treasury yield continued to trend higher, which caught the attention of some traders. 

Markets fell Wednesday morning with news that existing home sales fell to a 14-year low in October; still slowed by higher interest rates, sales are on track for their worst year since 1995. Also, pre-election jitters remained an undertow with traders.3,4,5

News that durable goods orders rose in September buoyed sentiment a bit. At Friday’s close, the Nasdaq, fueled by technology names, marked its seventh consecutive week of gains but the S&P 500 broke its 6-week winning streak.6,7

Election Focus

With the election cycle in full swing, some traders appear to be preparing for an uptick in volatility in the coming weeks.

In late August, nearly 90 percent of stock traded above their 20-day moving average. However, that momentum has slowed. On Tuesday, Standard & Poor’s reported that the number of stocks above their 20-day moving average fell to nearly 50 percent. Traders may be moving to more of a “risk off” position ahead of November 5.8

This Week: Key Economic Data

Tuesday: International Trade in Goods. Consumer Confidence. Case-Shiller Home Price Index.

Wednesday: Gross Domestic Product. Treasury Refunding Announcement. Pending Home Sales. ADP Employment Report.

Thursday: Personal Income and Outlays.

Friday: Employment Situation. ISM Manufacturing Index.

Source: Investors Business Daily – Econoday economic calendar; October 25, 2024
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Monday: Waste Management, Inc. (WM)

Tuesday: Alphabet Inc. (GOOG, GOOGL), Visa Inc. (V), Advanced Micro Devices, Inc. (AMD), McDonald’s Corporation (MCD), Pfizer Inc. (PFE)

Wednesday: Microsoft Corporation (MSFT), Meta Platforms, Inc. (META), Eli Lilly and Company (LLY), AbbVie Inc. (ABBV), Caterpillar Inc. (CAT), Amgen Inc. (AMGN), Booking Holdings Inc. (BKNG), Automatic Data Processing, Inc. (ADP), Starbucks Corporation (SBUX)

Thursday: Apple Inc. (APPL), Amazon.com, Inc. (AMZN), Mastercard Incorporated (MA), Merck & Co., Inc. (MRK), Uber Technologies, Inc. (UBER)

Friday: Berkshire Hathaway (BRK.A, BRK.B), Exxon Mobil Corporation (XOM), Chevron Corporation (CVX)

Source: Zacks, October 25, 2024 Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

“Keep your thoughts free from hate, and you need have no fear from those who hate you.”

– George Washington Carver

Is Your Office in a Historic Building? You May Be Eligible for a Tax Credit

To protect heritage sites and other history, the IRS implemented its rehabilitation tax credit, which offers an incentive to renovate and restore old or historic buildings. Here are some of the highlights to help you determine whether your building is eligible:

  • The credit may pay 20 percent of the qualifying costs of rehabilitating a historic building.
  • This 20 percent needs to be spread out over five years.
  • The credit doesn’t apply to the purchase of the building.
  • Taxpayers use Form 3468, Investment Credit, to claim the rehabilitation tax credit.

Although this credit might not significantly improve many situations, it’s still a step toward preserving our country’s history.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS9

Neck and Shoulder Stretches for Desk Potatoes

Many of us sit at a desk for hours a day and stare at a screen. These easy desk stretches can help:

  • Overhead side stretch: Put your arms over your head and lean in one direction while sitting up straight. Repeat on the other side. 
  • Side-neck stretch: Gently put your hand on the back of your head and guide it to your chest. Then, instead of putting your head straight down, turn it slightly by looking at your thigh.  
  • Neck-roll stretch: Relax and lean your head forward. Slowly roll your head to one side and hold for about 10 to 20 seconds, then slowly roll it to the other side. 
  • Upper-trap stretch: Gently pull your head toward each shoulder. Hold on each side for 10 to 20 seconds.

Tip adapted from Healthline10

How many times can you subtract the number 75 from 7,500?

Last week’s riddle: How could Gail drive her car from Cleveland to Miami with a flat tire?
Answer: Her spare tire was flat, not any of the four tires she was driving on.

Humpback whale (Megaptera novaeangliae) breaching among of icebergs at Ilulissat Icefjord

Unesco World Heritage Site, Greenland

 

Footnotes and Sources

1. The Wall Street Journal, October 25, 2024

2. Investing.com, October 25, 2024

3. MarketWatch.com, October 23, 2024

4. The Wall Street Journal, October 23, 2024

5. The Wall Street Journal, October 23, 2024

6. ABA Banking Journal, October 25, 2024

7. CNBC.com, October 25, 2024

8. The Wall Street Journal, October 25, 2024

9. IRS.gov, April 30, 2024

10. Healthline, July 24, 2024
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