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Perspectives

Uncertainty Levels Have Increased

by Fortem Financial July 29, 2024

U.S. equities were mixed again last week with the S&P 500 (-0.82%) and NASDAQ lower (- 2.08%) and the small cap Russell 2000 (+1.77%). Big tech/momentum were the biggest decliners. Best sectors were utilities (+1.47%), healthcare (+1.41%), and materials (+1.37%); underperformers included communication services (-3.76%), technology (-2.44%), and consumer discretionary (-2.31%).

 

  1. The preliminary release of Q2 2024 U.S. GDP surprised to the upside (+2.8%) with the two largest drivers of the improvement consumption and inventories.
  2. Housing shows no signs of recovery. Existing home sales came in weaker than expected in June - back to cycle lows. Affordability remains a major issue.
  3. A rise in consumer credit is noteworthy in an environment of a softening labor market and dwindling excess savings.
  4. We have been saying for some time that the U.S. economy is slowing. Clearly, it is small cracks, not big cracks. Therefore, the jury is still out on whether this will be a soft or bumpy landing.
  5. The Fed is getting closer to beginning the process of recalibrating monetary policy. Recent commentaries strongly point to a September rate cut, with July’s meeting being used to prep the markets that a series of cuts are on the horizon.
  6. The U.S. yield-curve is its least inverted in two years. That generally happens on the eve of a recession.
  7. AI is making/will make a difference over time, but—productivity gains from the rollout of a new technology can take time; a broad-based expansion in earnings driven by a new technology almost always takes more time to materialize; and the early beneficiaries of a new technology may not end up being the final winners.
  8. Earnings estimates for the second half of 2024 (2H24) are seeing revisions lower, with 3Q coming down 1.4% since July 1 and 4Q coming down 0.2%. A bigger concern is the decline in multiples for big tech due to Al concerns.

Source: Strategas

 

Market and Index Changes for the Week Ending 7/26/2024

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

 

 

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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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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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