The economy reached an inflection point, with labor market conditions squarely in focus.
The seasons are changing. This weekend marks the autumn equinox—a time of year when the days get shorter, the weather gets cooler, and the leaves start to turn (at least for our friends in the north). While our calendars will show that fall has officially arrived, it may not feel like it as much of the nation will be enjoying unseasonably warm weather.
The time has come! After the most aggressive tightening cycle in modern history, the Fed is ready to turn the page and begin dialing back its policy restraint after the second longest ‘on hold’ period (14 months) in history. Barring any surprises, the Fed should lower interest rates at its meeting next week—the first rate cut in over four years—in the hopes of preserving a soft landing for the economy.
Fed officials must recalibrate their policy stance to ensure the economy stays on solid footing to achieve that elusive soft landing they have been aiming for after their quest to quash inflation.
Happy National Cheap Flight Day! Yes, you heard that right—there is a national celebration day to mark the start of a lull in travel demand. Who knew this would be a day to celebrate? Regardless, it’s good news for consumers as airfares should continue their recent downward trend!
This week marks the ‘unofficial’ end to 2Q24 earnings season – and aside from a few wobbles, it has been reasonably good. S&P 500 earnings growth came in at a solid 11.2% YoY pace – its best quarterly performance since 4Q21.
During volatile times, it is important to maintain perspective, stay focused on your long-term objectives, and avoid knee-jerk reactions based on the latest twists and turns in the market.
Take the market narrative with a grain of salt and look at the fundamentals in determining your outlook for the economy and financial markets. We ultimately believe this soft patch of data will prove to a be a ‘growth scare,’ not a ‘recession reality.’
Following the historic decision by President Biden to drop out of the 2024 race, Raymond James CIO Larry Adam provides insight into his team's economic and market outlook.
This week marks the official start to 2Q24 earnings season, with the big banks among the first to report. While much of the last six weeks has been dominated by the softening macro backdrop, the S&P 500 looked past the weakening data – notching 37 record closes already this year.
We’re borrowing from the upcoming Paris Summer Olympics for our quarterly theme – with a twist. Instead of using the most popular events (like gymnastics, swimming, and track & field) to express our views, we’ll go beyond the spotlight.
Key Takeaways
After the S&P 500’s incredible run—up 57% from its October 2022 lows and with an election on the horizon, its normal for investors to wonder whether to take some chips off the table or hold off on investing to see what happens.
The S&P 500 surpassed its 27th record high for the year this week—and still notching more (up to 29 already!)—driven by rising earnings, cooling inflation, and an economy that remains on solid ground.
We connect the dots between the micro data points (what we learned during 1Q earnings season) and what we expect the forthcoming macro data will reveal about the state of the economy.
As we set our sights on the summer, here are five dynamics that could drive the financial markets between Memorial Day and Labor Day:
As goes the consumer, so goes the U.S. economy. As Wall Street knows, the importance of the consumer cannot be overstated. That’s because consumer spending is the main engine of growth, representing ~70% of US economic activity – nearly 10% more of the economy than it did in the early 1980s.
Happy National Small Business Day! Every year on May 10, small businesses are officially recognized for their contributions to the US economy. And rightfully so. Small businesses are the backbone of the US economy.
A recap of the important drivers, along with our views on how things will play out over the rest of the year.
Our top five picks for events that have the potential to be market moving.
We put the recent market movements in perspective, which have been driven by time (it has been a while since we had a 5%+ pullback), overly optimistic, complacent market sentiment, and higher Treasury yields amid persistent inflationary pressures and signs of a more patient Fed.
Growth and inflation have remained remarkably resilient since the start of the year, causing the market to once again rethink the Fed’s rate path. As a result, the odds of a June rate cut have collapsed
While artificial intelligence and new technologies have captured the market's attention, this quarter we reminisce about the good old days and a key piece of technology that has endlessly entertained us all – classic video games.
With technology changing the way we live, we are taking a trip down memory lane to look back at a piece of technology that has entertained generations: classic video games.
Larry Adam takes stock of how the economy and markets have performed since the beginning of the year and take a fresh look at where we are heading as we progress through the year.
With the U.S. economy posting two consecutive quarters of 3%+ GDP growth, recession calls have quieted down.
The move higher in the S&P 500 has been historic. In fact, the S&P 500 has climbed ~17% over the last four months and is on pace to rally 17 of the last 19 weeks.
The economy continues to hum along (Atlanta Fed 1Q24 GDP estimate: +3.0%), albeit shifting down a notch from the pace seen in the final quarters of last year.
Equity investors didn't mind the extra day this February as both domestic large-cap stocks and small-to-mid-cap stocks saw steady gains through the month, bringing both groups into positive territory year-to-date, though the latter continues to lag.
Four years ago this week (2/19 to be exact) the S&P 500 climbed to an all-time high of 3,386 before plunging over -34% as the world economy shutdown due to the pandemic.
Mega-cap Tech names have been strong outperformers year-to-date. In fact, a composite of the biggest names, or MAGMAN (MSFT, APPL, GOOGL, META, AMZN, NVDA) is up 12%, while the rest of the S&P 500 is up just 2%.
A period of market volatility and consolidation is likely as markets have already priced in much of the economy's good news.
The Fed concluded its January policy meeting leaving interest rates unchanged, which was widely expected.
Mega-cap tech-related names (MAGMAN) drove equity returns in 2023. However, heading into 2024 market consensus expected returns to broaden to other equity sectors and market cap sizes.
Treasury yields have steadily climbed since the start of the year, with the 10-year Treasury yield rising back to 4.16% after reaching a low of 3.79% in late December.
Currently, consensus earnings growth is expected to be 1.3% YoY for the fourth quarter, which would mark a deceleration from 3Q (+6.1%).
The long-awaited recession never materialized in 2023 as the sectors of the economy rotated from hot (i.e., travel and leisure) to cold (i.e., housing) over the last few years.
Here are our 10 themes for 2024. Count on more than a few surprise ingredients throughout the year to spice up the financial markets.
Over the last few months, we have highlighted that the Fed should be done with its tightening cycle based on real-time, high-frequency data that suggested that economic growth and inflation were cooling.
Investors are beginning to price in a 'soft landing' as the base case over the next 12 months. This is evident across a number of indicators.
For much of 2023, the market has tried to anticipate a Fed pivot – only to be wrongfooted several times. However, sharply higher interest rates, cooling inflation pressures and moderating wages have the market convinced that the Fed’s current tightening cycle is over.
Following the surge in inflation, the most aggressive Fed tightening cycle since the 1980s and multi-decade lows in business and consumer confidence, calls for a U.S. recession have been prevalent all year.
Good news – the earnings recession is over! After three consecutive quarters of negative earnings growth, 3Q S&P 500 earnings are on pace to climb 5% YoY. If sustained, this would be the best quarter of earnings growth since 2Q22.
While 3Q23 growth showed the economy expanded at a 4.9% annualized rate, it is important to remember that the GDP report is backward-looking.
Much like Halloween, it has been a scary time for investors.
With next week’s 3Q GDP report shaping up to be a blockbuster number (the Atlanta Fed GDPNow is tracking a +5.4% growth rate), it is worthwhile to reiterate our thoughts on the economy and how we expect growth to unfold over the next year.
The recent repricing in longer-maturity yields has pushed the 10-year Treasury yield to levels not seen in 16 years.
As heightened inflation has lingered, the Federal Reserve diminished hopes of 2024 interest rate cuts and economic data suggests a mild recession in the first half of 2024.
Investors had gotten used to smooth sailing with the economy remaining resilient, the equity market soaring double digits, and volatility remaining (mostly) subdued.
Inflation has declined considerably from last year’s peak of ~9.0% to ~3.7%. However, policymakers still think they have more work to do and have signaled that one additional rate hike is likely.
