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Perspectives

The Economy and Markets Keep on Trucking

by Fortem Financial September 3, 2024

Stocks put in a mixed performance last week as the S&P 500 increased (0.27%) but the NASDAQ fell (-0.91%). Treasuries were weaker with the yield curve steepening. Discussion revolved around AI (especially Nvidia’s earnings) and the Fed’s attempt at a soft landing. Best sectors were financials (+2.95%) and industrials (+1.71%); worst sectors were technology (-1.47%) and communication services (-0.69%).

 

  1. U.S. Q2 GDP growth was unexpectedly revised up to 3.0% from 2.8%.
  2. All the focus regarding monetary policy is on the Fed. Not to be ignored is the rate of growth of M2 (the Fed’s estimate of the total liquid money supply) and TGA (Treasury General Account).
  3. It would be a first-a significant Fed rate-cutting cycle at the same time earnings are growing 15% (the consensus expectation).
  4. Over the last 12 months, more than 80% of net new jobs have been in government, healthcare, and education.
  5. We expect labor demand to continue slowing with negative feedback loops, pushing the unemployment rate higher and culminating in a mild recession.
  6. We are skeptical that the upcoming easing cycle will produce a soft landing. Economic conditions are currently responding to the previous tightening cycle and this new easing cycle is likely to be too little, too late.
  7. While money market assets are at record levels, they represent only 13% of S&P 500 market cap. down from a peak of 64% in 2010.
  8. According to BCA Research, the S&P 500’s current valuation stands at the third percentile of historic distribution (i.e., valuations are exceptionally stretched).
  9. Nvidia's much anticipated earnings were better than expected, along with a $50 billion buyback announcement. The initial reaction was to sell the stock, as technology leadership continues to wane. (Financials picking up the leadership baton.)
  10. Berkshire Hathaway (Warren Buffett's company) became the first non-tech stock to reach $1 Trillion in market value.

Source: Bob Doll, Crossmark CEO

 

Market and Index Changes for the Week Ending 8/23/2024

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments. Data provided by Refinitiv.

 

Sincerely,

Fortem Financial
(760) 206-8500
team@fortemfin.com

 

 

Latest News

 

Corporate America has a revenue problem

Nvidia's share price slump after its strong, but not exceptionally strong, second-quarter results raises a broader question for U.S. stocks: Are 2025 earnings growth forecasts too optimistic?

Reuters

Read Story

 

US manufacturing mired in weakness; construction spending falls

U.S. manufacturing contracted at a moderate pace in August amid some improvement in employment, but a further decline in new orders and rise in inventory suggested factory activity could remain subdued for a while.

Reuters

Read Story

 

Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017, 2018 Five Star Wealth Managers!

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The Five Star Wealth Manager award is based on 10 eligibility and evaluation criteria: 1) Credentialed as an investment advisory representative (IAR) or a registered investment advisor; 2) Actively employed as a credentialed professional in the financial services industry for a minimum of five years; 3) Favorable regulatory and complaint history review; 4) Fulfilled their firm review based on internal firm standards; 5) Accepting new clients; 6) One-year client retention rate; 7) Five-year client retention rate; 8) Non-institutionalized discretionary and/or non-discretionary client assets administered; 9) Number of client households served; and 10) Educational and professional designations. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine. The award methodology does not evaluate the quality of services provided. Additional information about this award is available at: fivestarprofessional.com/2016FiveStarWealthManagerMethodology.pdf
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Data Sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market Data: Based on reported data in WSJ Market Data Center (indexes); U.S. Treasury (Treasury Yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness.

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The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighed index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

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