Market Musings 10/16/2024
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
Markets are at all-time highs with investors optimistic we’ll avoid a recession. So how do we do it?
Investors will be primary focused on #RateCuts, #LaborMarkets, #ConsumerConfidence and corporate outlooks to gauge whether we can avoid a #Recession.
#Inflation is important too, but we feel investors are comfortable with the recent inflation progress and thus less of a concern outside of a big negative surprise.
So first, #RateCuts…
The Fed sharply raised rates to combat the surging inflation from a couple years ago.
Increasing rates slows the economy and cutting rates is typically the opposite－boosting the economy.
#RateCuts started at last month’s Fed meeting with investor expectations for more this year and next. The next meeting is in November with markets are hoping for quick and sizable cuts.
Next, #LaborMarkets…
An unfortunate side effect of slowing the economy is impact to jobs.
A weak labor market can imply companies are pessimistic and less willing to invest in growth as well as impacting consumers with less job prospects.
While not that weak from a historical standpoint, you’ve probably noticed the job market getting tougher over the past couple of years.
Investors will look towards weekly jobless claims and jobs reports to show weaker #LaborMarkets are starting to stabilize.
However, if #LaborMarkets continues to weaken, avoiding a #Recession will be much harder.
Especially with it’s impact on #ConsumerConfidence…
Consumer spending drives a large portion of the economy. It has been incredibly resilient despite #Inflation, rate hikes, weakening #LaborMarkets and waning confidence.
Investors are hoping consumers continue to power through until the economy turns.
They’ll be monitoring spending data like retail sales as well as consumer confidence surveys. As an outsized portion of spend and sentiment gauge, holiday spending will be a big focus.
And finally, corporate outlooks…
Businesses play a crucial role in the economy through hiring, spending and investing.
Corporate earnings will be a big focus as investors evaluate sentiment from both Q4 guidance and early 2025 outlooks.
They’ll be hoping for positive commentary on consumer demand, spending plans and overall sentiment.
While there are still some wildcards particularly the escalating #GlobalTension, markets are banking on improving economic data across #LaborMarkets, #ConsumerConfidence and business outlooks to avoid a #Recession.
Investors will pay close attention to even the smallest changes to gauge whether the soft landing is on track.
A soft landing is a delicate balancing act which is why it’s often referred to as a #Goldilocks soft landing.
Not too cold, not too hot, but just right…
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The statements, opinions and analyses presented here are provided as general information. This article is the opinion of the author. Anything within this article should NOT be considered an investment recommendation or advice. See Ursa’s full disclosures here.
Original Photo by Pixabay.