When US Federal Reserve Chair Jerome Powell faces the media after the central bank’s policy-making meeting next week, he’ll probably get a politically fraught question: How will the Fed incorporate president-elect Donald Trump’s stated plans — including tax cuts, tariffs and deportations — into its economic outlook and monetary policy?
Federal Reserve officials will lower interest rates this month for a third straight time and pare back the number of rate cuts they anticipate next year, according to economists surveyed by Bloomberg News.
Corporations are currently producing the highest level of profitability, as a percentage of GDP, in history.
In his 2025 investment outlook, Head of U.S. Securitized Products John Kerschner shares his U.S. securitized outlook, identifying the key trends he believes will drive investment returns in the year ahead.
“Should I hire a financial advisor?” people often ask Jon Fee. The answer is never “No.” But sometimes the answer is “Maybe.”
Fixed income markets face key questions that will shape their direction in 2025. This post explores these questions & their potential impact.
What does the ratio of unemployment claims tell us about where we are in the business cycle and recession risk?
Multiple jobholders account for 5.4% of civilian employment. The survey captures data for four subcategories of the multi-job workforce, the relative sizes of which we've illustrated in a pie chart.
Let's take a close look at November's employment report numbers on Full and Part-Time Employment. The latest data shows that 82.8% of total employed workers are full-time (35+ hours) and 17.2% of total employed workers are part-time (<35 hours).
Wholesale inflation rose 0.4% last month, above economist estimates of 0.2%. The producer price index for final demand was up 0.1% month-over-month (s.a.). On an annual basis, headline PPI accelerated from 2.6% in October to 3.0% in November.
In the week ending December 7th, initial jobless claims were at a seasonally adjusted level of 242,000. This represents an increase of 17,000 from the previous week's figure and is worse than forecasts for 221,000.
To most of us, a power plant is a source of electricity. To Exxon Mobil Corp., it’s a machine that converts natural gas into money. And this is a propitious time for doing that.
Republicans have lashed out at the Inflation Reduction Act (IRA), a landmark package of incentives for clean energy, since it was passed two years ago.
Our outlook on the 11 S&P 500 equity sectors.
To improve potential returns and mitigate risks, investors should choose from the widest range of opportunities.
Riverfront's stock selection team performs analysis on individual equities that provides useful insights into how we position our portfolios.
Better than expected economic data in November appears to be thwarting the FOMC's efforts to engineer lower short-term interest rates.
The weekly leading economic index (WLEI) is a composite for the U.S economy that draws from over 20 time-series and groups them into the following six broad categories which are then used to construct an equally weighted average. As of November 29, the index was at 32.851, up 1.819 from the previous week, with 5 of the 6 components in expansion territory.
This series has been updated to include the November release of the consumer price index as the deflator and the monthly employment update. The latest hypothetical real (inflation-adjusted) annual earnings are at $51,510, down 6.5% from over 50 years ago. After adjusting for inflation, hourly earnings are below their all-time high from April 2020.
Let's do some analysis of the Consumer Price Index, the best-known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.
Inflation rose slightly in November. According to the Bureau of Labor Statistics, the headline figure for the Consumer Price Index rose to 2.75% year-over-year, right in line with economist expectations. Additionally, core CPI came in at 3.3% as expected.
China’s economic ascent over the past four decades has been a remarkable story of growth, driven by several factors.
There are not many attractive opportunities in the US large-cap space. History suggests the market is overdue for a correction.
The U.S. economy and stock market are entering 2025 from a position of strength, but risks of volatility—especially pertaining to policy—are much higher compared to last year.
The Santa Claus rally that started a few weeks back continued as the market logged its 53rd record high for 2024. While the Scrooges bemoaned inflation and tariffs, other investors embraced the strong economic data and loaded their sleds with market returns.
India’s institutional strength used to be reflected in the reliability of its national accounts.
December is a big month for stock buybacks, and by month’s end, companies are expected to spend more money repurchasing shares this year than ever before.
The markets sure had a lot to process this year – from surprisingly resilient economic data, to the Fed kicking off its easing cycle to an unprecedented presidential election season.
On the latest edition of Market Week in Review, Investment Strategist BeiChen Lin discussed the ouster of France’s prime minister and the potential market implications. He also provided an update on the health of the U.S. economy.
When the ECB’s rate-cutting cycle ends, should the neutral rate be far higher than pre-pandemic? Not in our view.
Why hasn’t tighter monetary policy caused a recession? One reason: federal budget deficits have been huge.
Last week we processed robust economic data and growing clarity on Federal Reserve policy, instilling a consensus view for a strong market that is now well reflected in positioning.
As the office buildings market faces headwinds, investors look to alternative sectors.
We believe municipal bonds currently offer a compelling balance of risk and reward for investors in higher tax brackets.
Just a few short years (months?) ago, few would have believed it possible. But it happened: Bitcoin has traded above $100,000 for the first time ever.
Do you recall the famous line from the movie Glengarry Glen Ross? “Always Be Closing.” This may be good advice later in the process of working with a prospective client, but in the first conversation, try this instead: Always Be Curious.
U.S. policies are set for a major reshaping as full Republican control takes hold in 2025.
Five of Franklin Templeton’s specialist investment managers provide their annual outlooks for the global economy and key asset classes, including global equities; global fixed income; global infrastructure; the macro fixed income environment; municipal bond market; high yield bond market; small cap equities; U.S. dollar; U.S. economy; and U.S. equities.
China’s central bank will deliver the biggest interest-rate cuts in a decade next year as policymakers intensify efforts to shore up growth and arrest deflation, in the view of a number of Wall Street lenders.
Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process.
There is a general belief that there are four big indicators that the NBER Business Cycle Dating Committee weighs heavily in their cycle identification process. This commentary focuses on one of those indicators, nonfarm employment. November saw a 227,000 increase in total nonfarm payrolls and the unemployment rose to 4.2%.
The latest employment report showed 227,000 jobs were added in November, above forecasts of the expected addition of 202,000 new jobs. Meanwhile, the unemployment rate ticked up to 4.2%.
The Institute of Supply Management (ISM) has released its November services purchasing managers' index (PMI). The headline composite index is at 52.1, worse than the forecast of 55.5. The latest reading moves the index back into expansion territory for 51st time in the past 54 months.
Bond traders seeking support for bets that the Federal Reserve will cut interest rates later this month will closely watch Friday’s US employment report for November.
Hedge fund executive Cliff Asness says artificial intelligence is becoming “annoyingly better” at doing parts of his job.
The bond market is caught between the Federal Reserve's plans to cut interest rates and the risk of higher inflation and federal debt levels.
The BEA's core Personal Consumption Expenditures (PCE) Price Index for October showed that core inflation continues to be above the Federal Reserve's 2% long-term target at 2.3%. The October core Consumer Price Index (CPI) release was higher, at 3.3%. The Fed is on record as using core PCE data as its primary inflation gauge.
The S&P 500 real monthly averages of daily closes reached a new all-time high in July 2024. Let's examine the past to broaden our understanding of the range of historical bull and bear market trends in market performance.
Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $17,236 for an annualized real return of 10.94%.
Our monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations for investment returns. On August 4, 2020, the 10-year Treasury yield hit its all-time low of 0.52%. As of November 29, it was 4.18%.
With the Q3 GDP second estimate and the November close data, we now have an updated look at the popular "Buffett Indicator" -- the ratio of corporate equities to GDP. The current reading is 194.7%, unchanged from the previous quarter.
Here is a summary of the four market valuation indicators we update on a monthly basis.
Based on the November S&P 500 average of daily closes, the Crestmont P/E of 41.3 is 173% above its arithmetic mean, 198% above its geometric mean, and is at the 100th percentile of this 14-plus-decade series.
Here is the latest update of a popular market valuation method, Price-to-Earnings (P/E) ratio, using the most recent Standard & Poor's "as reported" earnings and earnings estimates, and the index monthly average of daily closes for the past month. The latest trailing twelve months (TTM) P/E ratio is 26.6 and the latest P/E10 ratio is 37.3.
The latest job openings and labor turnover summary (JOLTS) report showed that job openings increased in October, reflecting more hiring. Vacancies increased to 7.744 million in October from September's downwardly revised level of 7.372 million. The latest reading was more than the expected 7.510 million vacancies.
The Q Ratio is the total price of the market divided by the replacement cost of all its companies. The latest Q-ratio is at 1.81, unchanged from 1.81 in October.
Quick take: At the end of November, the inflation-adjusted S&P 500 index price was 183% above its long-term trend, up from October.
About the only certainty in the stock market is that, over the long haul, over-performance turns into underperformance and vice versa. Is there a pattern to this movement? Let's apply some simple regression analysis to the question.
To sate his multibillion dollar rampant appetite for Bitcoin, Michael Saylor has tapped demand from retail investors transfixed by MicroStrategy Inc.’s more than 500% rally this year. He’s also benefited from hedge funds who care far less where the stock trades.
Quite a few observers have described the dramatic fall of the Barnier government in France not just as a political crisis but also an economic and financial crisis.
Since its enactment in 2022, the Chips and Science Act — a $280 billion splurge intended to revive US semiconductor manufacturing — has been at best a mixed success. A $7.9 billion grant to Intel Corp., announced by President Joe Biden’s administration last week, shows how this gravy train may be headed off the rails.
While the economy helped President Trump win a second term, it also created expectations that could prove difficult to meet.
Federal Reserve Chair Jerome Powell downplayed the prospects of tension with the incoming Trump administration and said he expects officials can move cautiously as they continue lowering interest rates.
A couple of weeks ago, we wrote about how the deficit had come back into focus for the U.S. financial markets.
At the 2018 Berkshire Annual Meeting, Buffett noted that “multiple times in my life, people have felt the country was more divided than ever.
The $1.8 trillion federal budget deficit in the fiscal year that ended in September was the third biggest ever in dollar terms, trailing only the pandemic deficits of the 2020 and 2021 fiscal years. As a share of gross domestic product, a better gauge for historical comparisons, it was, at 6.4%, the biggest ever outside of a large war or global crisis.
While politics garner headlines, fundamentals drive the market over the long term.
It’s the anniversary of the first-ever controlled nuclear fission chain reaction. And it’s the day that Enron filed for Chapter 11 bankruptcy in 2001.
Next year, the US Federal Reserve will undertake an exercise with global implications: the periodic monetary policy framework review, at which it rethinks its approach to managing the world’s largest economy.
International markets are expected to clear the hurdles of uncertain trade policy, tighter fiscal policy and slower than average economic growth to support solid overall returns.
With human rights regulations expanding, investors need a broader approach to assessing risk and opportunity.
As a result of the election and rate cuts, the stock market indices surged to new highs in anticipation of lower taxes & looser regulations.
As of November 29, 2024, the 10-year note was 366 basis points above its historic closing low of 0.52% reached on August 4, 2020.
The Institute for Supply Management (ISM) manufacturing purchasing managers index (PMI) increased to 48.4 in November but remains in contraction territory for an eighth straight month. The index has now contracted for 24 of the past 25 months. The latest reading was better than the forecast of 47.7.
Seven of our eight indexes on our world watch list have posted gains through December 2, 2024. The U.S. S&P 500 finished first with a year-to-date gain of 27.50%. The Hong Kong's Hang Seng finished second with a year-to-date gain of 16.45%. Germany's DAX finished in third with a year-to-date gain of 15.40%.
Governments can contribute to the progress of technology and the economy. The questions are how to do so, and how much to spend.
Expectations for solid corporate earnings drove our U.S. and Japanese equity overweights this year. They have delivered, showing that fundamentals are key. Earnings strength could matter more to equity investors in 2025 over valuations.
he best scandals are those that start when someone, somewhere, decides to say something utterly shocking: the truth! A senior official of the OPEC+ oil cartel has said publicly what many thought privately — the group has been keeping oil prices too high, effectively subsidizing its rivals.
US Treasuries fell on Monday as traders awaited a hefty week of economic data and speeches from Federal Reserve officials that will likely determine expectations for the central bank’s policy decision later this month.
Credit spreads are critical to understanding market sentiment and predicting potential stock market downturns.
The question on “everyone’s” mind, whether the back or the front, is where will the stock market be in two, three, six years?
As Germany and France head into another year of near-zero growth, it is clear that Keynesian stimulus alone cannot pull them out of their current malaise. To regain the dynamism and flexibility needed to weather US President-elect Donald Trump’s tariffs, Europe’s largest economies must pursue far-reaching structural reforms.
Valid until the market close on December 31, 2024
This article provides an update on the monthly moving averages we track for the S&P 500 and the Ivy Portfolio after the close of the last business day of the month.
The yield on the 10-year note ended November 29, 2024 at 4.18%, the 2-year note ended at 4.13%, and the 30-year at 4.36%.
The latest Chicago Purchasing Manager's Index (Chicago Business Barometer) fell to 40.2 in November from 41.6 in October. The latest reading is worse than the 44.9 forecast and keeps the index in contraction territory for a twelfth straight month.
The U.S. economy faces growing risks, from a surging Federal deficit to geopolitical uncertainty. Investors must assess how these factors could ignite market instability and take proactive steps to safeguard their portfolios.
’Tis the season for a surge in financial frauds and scams, a huge and growing problem that caused nearly $500 billion in losses globally last year, along with untold human suffering.
AI can be a powerful tool, but one that demands thoughtful, measured implementation. Taking thoughtful steps now to integrate and innovate with AI will keep you competitive. Turn your back on it and you’re probably not in business in the long run.
Personal income (excluding transfer receipts) rose 0.6% in October and is up 4.7% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, real personal income (excluding transfer receipts) was up 0.3% month-over-month and up 2.3% year-over-year.
The Conference Board's Consumer Confidence Index® rose in November to the highest level since January. The index increased to 111.7 this month from October's upwardly revised 109.6. This month's reading was slightly lower compared to the 111.8 forecasted.
Market Indicators
The Fed Can’t Ignore All of Trump’s Intentions
When US Federal Reserve Chair Jerome Powell faces the media after the central bank’s policy-making meeting next week, he’ll probably get a politically fraught question: How will the Fed incorporate president-elect Donald Trump’s stated plans — including tax cuts, tariffs and deportations — into its economic outlook and monetary policy?
Fed to Cut Once More Before Slowing Pace in 2025, Economists Say
Federal Reserve officials will lower interest rates this month for a third straight time and pare back the number of rate cuts they anticipate next year, according to economists surveyed by Bloomberg News.
The Kalecki Profit Equation And The Coming Reversion
Corporations are currently producing the highest level of profitability, as a percentage of GDP, in history.
Key Trends Driving U. S. Securitized Fixed Income in 2025
In his 2025 investment outlook, Head of U.S. Securitized Products John Kerschner shares his U.S. securitized outlook, identifying the key trends he believes will drive investment returns in the year ahead.
Should I Hire a Financial Advisor?
“Should I hire a financial advisor?” people often ask Jon Fee. The answer is never “No.” But sometimes the answer is “Maybe.”
Notes from the Desk: 3 Questions for 2025
Fixed income markets face key questions that will shape their direction in 2025. This post explores these questions & their potential impact.
Unemployment Claims as a Recession Indicator: November 2024
What does the ratio of unemployment claims tell us about where we are in the business cycle and recession risk?
Multiple Jobholders Account for 5.4% of All Employed
Multiple jobholders account for 5.4% of civilian employment. The survey captures data for four subcategories of the multi-job workforce, the relative sizes of which we've illustrated in a pie chart.
A Closer Look at Full-time and Part-time Employment
Let's take a close look at November's employment report numbers on Full and Part-Time Employment. The latest data shows that 82.8% of total employed workers are full-time (35+ hours) and 17.2% of total employed workers are part-time (<35 hours).
Producer Price Index: Wholesale Inflation Rose in November
Wholesale inflation rose 0.4% last month, above economist estimates of 0.2%. The producer price index for final demand was up 0.1% month-over-month (s.a.). On an annual basis, headline PPI accelerated from 2.6% in October to 3.0% in November.
Unemployment Claims Up 17K, Much Worse Than Expected
In the week ending December 7th, initial jobless claims were at a seasonally adjusted level of 242,000. This represents an increase of 17,000 from the previous week's figure and is worse than forecasts for 221,000.
Exxon's AI Power Play Aims to Beat Nuclear
To most of us, a power plant is a source of electricity. To Exxon Mobil Corp., it’s a machine that converts natural gas into money. And this is a propitious time for doing that.
The Future of the Inflation Reduction Act
Republicans have lashed out at the Inflation Reduction Act (IRA), a landmark package of incentives for clean energy, since it was passed two years ago.
Sector Views: Monthly Stock Sector Outlook
Our outlook on the 11 S&P 500 equity sectors.
Seeking Sterling Bond Exposure? Look Beyond the UK
To improve potential returns and mitigate risks, investors should choose from the widest range of opportunities.
Value Investing in the US and Beyond
Riverfront's stock selection team performs analysis on individual equities that provides useful insights into how we position our portfolios.
Better Than Expected Economic Data in November
Better than expected economic data in November appears to be thwarting the FOMC's efforts to engineer lower short-term interest rates.
RecessionAlert Weekly Leading Economic Index
The weekly leading economic index (WLEI) is a composite for the U.S economy that draws from over 20 time-series and groups them into the following six broad categories which are then used to construct an equally weighted average. As of November 29, the index was at 32.851, up 1.819 from the previous week, with 5 of the 6 components in expansion territory.
Middle Class Hourly Wages as of November 2024
This series has been updated to include the November release of the consumer price index as the deflator and the monthly employment update. The latest hypothetical real (inflation-adjusted) annual earnings are at $51,510, down 6.5% from over 50 years ago. After adjusting for inflation, hourly earnings are below their all-time high from April 2020.
Inside the Consumer Price Index: November 2024
Let's do some analysis of the Consumer Price Index, the best-known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.
Consumer Price Index: Inflation Edges Up to 2.75% in November
Inflation rose slightly in November. According to the Bureau of Labor Statistics, the headline figure for the Consumer Price Index rose to 2.75% year-over-year, right in line with economist expectations. Additionally, core CPI came in at 3.3% as expected.
Watching China’s Economic Miracle (and Relevance) Fade Before Our Eyes
China’s economic ascent over the past four decades has been a remarkable story of growth, driven by several factors.
Valuations Have Richened, But Areas Outside of Large-Caps Remain Attractive
There are not many attractive opportunities in the US large-cap space. History suggests the market is overdue for a correction.
2025 U.S. Stocks and Economy Outlook
The U.S. economy and stock market are entering 2025 from a position of strength, but risks of volatility—especially pertaining to policy—are much higher compared to last year.
Market Continues Record Streak: Santa Claus Rally in Full Swing
The Santa Claus rally that started a few weeks back continued as the market logged its 53rd record high for 2024. While the Scrooges bemoaned inflation and tariffs, other investors embraced the strong economic data and loaded their sleds with market returns.
India Shouldn’t Let Its Data Turn Chinese
India’s institutional strength used to be reflected in the reliability of its national accounts.
Worried About Stocks? $1 Trillion in Buybacks Will Help
December is a big month for stock buybacks, and by month’s end, companies are expected to spend more money repurchasing shares this year than ever before.
The Fed Is Still Leaning Toward a December Rate Cut
The markets sure had a lot to process this year – from surprisingly resilient economic data, to the Fed kicking off its easing cycle to an unprecedented presidential election season.
What Investors Should Know About Political Turmoil in France
On the latest edition of Market Week in Review, Investment Strategist BeiChen Lin discussed the ouster of France’s prime minister and the potential market implications. He also provided an update on the health of the U.S. economy.
European Interest Rates: How Far to R*?
When the ECB’s rate-cutting cycle ends, should the neutral rate be far higher than pre-pandemic? Not in our view.
Irresponsible and Addictive Deficits
Why hasn’t tighter monetary policy caused a recession? One reason: federal budget deficits have been huge.
Over-Exuberant Positioning for a December Rally
Last week we processed robust economic data and growing clarity on Federal Reserve policy, instilling a consensus view for a strong market that is now well reflected in positioning.
The Shifting Landscape of Commercial Real Estate
As the office buildings market faces headwinds, investors look to alternative sectors.
2025 Municipal Bond Outlook
We believe municipal bonds currently offer a compelling balance of risk and reward for investors in higher tax brackets.
Bitcoin’s Rise to $100,000 Signals Global Adoption Shift
Just a few short years (months?) ago, few would have believed it possible. But it happened: Bitcoin has traded above $100,000 for the first time ever.
The ABCs of Introducing Yourself
Do you recall the famous line from the movie Glengarry Glen Ross? “Always Be Closing.” This may be good advice later in the process of working with a prospective client, but in the first conversation, try this instead: Always Be Curious.
An Investor’s Guide to Potential U.S. Policy Changes in 2025
U.S. policies are set for a major reshaping as full Republican control takes hold in 2025.
Franklin Templeton’s 2025 Outlooks for Equities and Fixed Income Sectors
Five of Franklin Templeton’s specialist investment managers provide their annual outlooks for the global economy and key asset classes, including global equities; global fixed income; global infrastructure; the macro fixed income environment; municipal bond market; high yield bond market; small cap equities; U.S. dollar; U.S. economy; and U.S. equities.
Wall Street Banks Predict Biggest China Rate Cuts in Decade
China’s central bank will deliver the biggest interest-rate cuts in a decade next year as policymakers intensify efforts to shore up growth and arrest deflation, in the view of a number of Wall Street lenders.
The Big Four Recession Indicators
Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process.
The Big Four Recession Indicators: November Employment
There is a general belief that there are four big indicators that the NBER Business Cycle Dating Committee weighs heavily in their cycle identification process. This commentary focuses on one of those indicators, nonfarm employment. November saw a 227,000 increase in total nonfarm payrolls and the unemployment rose to 4.2%.
Employment Report: 227K Jobs Added in November, Above Expectations
The latest employment report showed 227,000 jobs were added in November, above forecasts of the expected addition of 202,000 new jobs. Meanwhile, the unemployment rate ticked up to 4.2%.
ISM Services PMI Expanded for Fifth Straight Month in November
The Institute of Supply Management (ISM) has released its November services purchasing managers' index (PMI). The headline composite index is at 52.1, worse than the forecast of 55.5. The latest reading moves the index back into expansion territory for 51st time in the past 54 months.
Bond Traders Leaning on Fed Rate Cuts Eye Payrolls for Clues
Bond traders seeking support for bets that the Federal Reserve will cut interest rates later this month will closely watch Friday’s US employment report for November.
Asness’ AI Twin Heralds End of Human Fund Managers
Hedge fund executive Cliff Asness says artificial intelligence is becoming “annoyingly better” at doing parts of his job.
2025 Treasury Bonds and Fixed Income Outlook
The bond market is caught between the Federal Reserve's plans to cut interest rates and the risk of higher inflation and federal debt levels.
European Interest Rates: How Far to R*?
When the ECB’s rate-cutting cycle ends, should the neutral rate be far higher than pre-pandemic? Not in our view.
Two Measures of Inflation: October 2024
The BEA's core Personal Consumption Expenditures (PCE) Price Index for October showed that core inflation continues to be above the Federal Reserve's 2% long-term target at 2.3%. The October core Consumer Price Index (CPI) release was higher, at 3.3%. The Fed is on record as using core PCE data as its primary inflation gauge.
Secular Market Trends: Bull and Bear Markets
The S&P 500 real monthly averages of daily closes reached a new all-time high in July 2024. Let's examine the past to broaden our understanding of the range of historical bull and bear market trends in market performance.
The Total Return Roller Coaster
Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $17,236 for an annualized real return of 10.94%.
Market Valuation, Inflation and Treasury Yields - November 2024
Our monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations for investment returns. On August 4, 2020, the 10-year Treasury yield hit its all-time low of 0.52%. As of November 29, it was 4.18%.
Buffett Valuation Indicator: November 2024
With the Q3 GDP second estimate and the November close data, we now have an updated look at the popular "Buffett Indicator" -- the ratio of corporate equities to GDP. The current reading is 194.7%, unchanged from the previous quarter.
Market Valuation: Is the Market Still Overvalued?
Here is a summary of the four market valuation indicators we update on a monthly basis.
Crestmont P/E and Market Valuation: November 2024
Based on the November S&P 500 average of daily closes, the Crestmont P/E of 41.3 is 173% above its arithmetic mean, 198% above its geometric mean, and is at the 100th percentile of this 14-plus-decade series.
P/E10 and Market Valuation: November 2024
Here is the latest update of a popular market valuation method, Price-to-Earnings (P/E) ratio, using the most recent Standard & Poor's "as reported" earnings and earnings estimates, and the index monthly average of daily closes for the past month. The latest trailing twelve months (TTM) P/E ratio is 26.6 and the latest P/E10 ratio is 37.3.
Job Openings Increase in October
The latest job openings and labor turnover summary (JOLTS) report showed that job openings increased in October, reflecting more hiring. Vacancies increased to 7.744 million in October from September's downwardly revised level of 7.372 million. The latest reading was more than the expected 7.510 million vacancies.
Q-Ratio and Market Valuation: November 2024
The Q Ratio is the total price of the market divided by the replacement cost of all its companies. The latest Q-ratio is at 1.81, unchanged from 1.81 in October.
Regression to Trend: S&P Composite 183% Above Trend in October
Quick take: At the end of November, the inflation-adjusted S&P 500 index price was 183% above its long-term trend, up from October.
About the only certainty in the stock market is that, over the long haul, over-performance turns into underperformance and vice versa. Is there a pattern to this movement? Let's apply some simple regression analysis to the question.
Hedge Funds Make MicroStrategy Wall Street’s Hottest Trade
To sate his multibillion dollar rampant appetite for Bitcoin, Michael Saylor has tapped demand from retail investors transfixed by MicroStrategy Inc.’s more than 500% rally this year. He’s also benefited from hedge funds who care far less where the stock trades.
This Is Not France’s "Truss" Moment
Quite a few observers have described the dramatic fall of the Barnier government in France not just as a political crisis but also an economic and financial crisis.
$8 Billion for Intel Won’t Fix America’s Chip Problem
Since its enactment in 2022, the Chips and Science Act — a $280 billion splurge intended to revive US semiconductor manufacturing — has been at best a mixed success. A $7.9 billion grant to Intel Corp., announced by President Joe Biden’s administration last week, shows how this gravy train may be headed off the rails.
Monthly Global Economic Report
While the economy helped President Trump win a second term, it also created expectations that could prove difficult to meet.
Fed’s Powell Expects Good Relations With Trump Administration
Federal Reserve Chair Jerome Powell downplayed the prospects of tension with the incoming Trump administration and said he expects officials can move cautiously as they continue lowering interest rates.
When Will the “Bill” Come Due?
A couple of weeks ago, we wrote about how the deficit had come back into focus for the U.S. financial markets.
Q4 2024 Strategy Letter: One More Before Year End
At the 2018 Berkshire Annual Meeting, Buffett noted that “multiple times in my life, people have felt the country was more divided than ever.
Health-Care Spending Is Sinking the Federal Budget
The $1.8 trillion federal budget deficit in the fiscal year that ended in September was the third biggest ever in dollar terms, trailing only the pandemic deficits of the 2020 and 2021 fiscal years. As a share of gross domestic product, a better gauge for historical comparisons, it was, at 6.4%, the biggest ever outside of a large war or global crisis.
Equity Markets Carried in November by Post-election Rally
While politics garner headlines, fundamentals drive the market over the long term.
Enron 2.0 — So Bad It’s Good?
It’s the anniversary of the first-ever controlled nuclear fission chain reaction. And it’s the day that Enron filed for Chapter 11 bankruptcy in 2001.
The Fed’s Next Big Policy Rethink Needs Rethinking
Next year, the US Federal Reserve will undertake an exercise with global implications: the periodic monetary policy framework review, at which it rethinks its approach to managing the world’s largest economy.
2025 Global Outlook: Clearing the Hurdles
International markets are expected to clear the hurdles of uncertain trade policy, tighter fiscal policy and slower than average economic growth to support solid overall returns.
Human Rights and Portfolio Risk: Why Investors Should Think Big
With human rights regulations expanding, investors need a broader approach to assessing risk and opportunity.
Trump Wins, Fed Cuts, Market Rips, Now What?
As a result of the election and rate cuts, the stock market indices surged to new highs in anticipation of lower taxes & looser regulations.
Treasury Yields: A Long-Term Perspective
As of November 29, 2024, the 10-year note was 366 basis points above its historic closing low of 0.52% reached on August 4, 2020.
ISM Manufacturing Index Higher Than Last Month
The Institute for Supply Management (ISM) manufacturing purchasing managers index (PMI) increased to 48.4 in November but remains in contraction territory for an eighth straight month. The index has now contracted for 24 of the past 25 months. The latest reading was better than the forecast of 47.7.
World Markets Watchlist: December 2, 2024
Seven of our eight indexes on our world watch list have posted gains through December 2, 2024. The U.S. S&P 500 finished first with a year-to-date gain of 27.50%. The Hong Kong's Hang Seng finished second with a year-to-date gain of 16.45%. Germany's DAX finished in third with a year-to-date gain of 15.40%.
The 2024 Economics Nobel
Governments can contribute to the progress of technology and the economy. The questions are how to do so, and how much to spend.
Uneven Earnings Call for Granularity
Expectations for solid corporate earnings drove our U.S. and Japanese equity overweights this year. They have delivered, showing that fundamentals are key. Earnings strength could matter more to equity investors in 2025 over valuations.
The Wrong Oil Price Is Truthfully a Problem for OPEC+
he best scandals are those that start when someone, somewhere, decides to say something utterly shocking: the truth! A senior official of the OPEC+ oil cartel has said publicly what many thought privately — the group has been keeping oil prices too high, effectively subsidizing its rivals.
Treasuries Drop as Market Braces for Big Data Week, Fed Speakers
US Treasuries fell on Monday as traders awaited a hefty week of economic data and speeches from Federal Reserve officials that will likely determine expectations for the central bank’s policy decision later this month.
Credit Spreads: The Markets Early Warning Indicators
Credit spreads are critical to understanding market sentiment and predicting potential stock market downturns.
The Changing Nature of the Stock Market
The question on “everyone’s” mind, whether the back or the front, is where will the stock market be in two, three, six years?
Europe’s Economy Is Stalling Out
As Germany and France head into another year of near-zero growth, it is clear that Keynesian stimulus alone cannot pull them out of their current malaise. To regain the dynamism and flexibility needed to weather US President-elect Donald Trump’s tariffs, Europe’s largest economies must pursue far-reaching structural reforms.
Moving Averages: S&P Finishes November 2024 Up 5.7%
Valid until the market close on December 31, 2024
This article provides an update on the monthly moving averages we track for the S&P 500 and the Ivy Portfolio after the close of the last business day of the month.
Treasury Yields Snapshot: November 29, 2024
The yield on the 10-year note ended November 29, 2024 at 4.18%, the 2-year note ended at 4.13%, and the 30-year at 4.36%.
Chicago PMI Edged Lower in November
The latest Chicago Purchasing Manager's Index (Chicago Business Barometer) fell to 40.2 in November from 41.6 in October. The latest reading is worse than the 44.9 forecast and keeps the index in contraction territory for a twelfth straight month.
One Spark Away from Ignition
The U.S. economy faces growing risks, from a surging Federal deficit to geopolitical uncertainty. Investors must assess how these factors could ignite market instability and take proactive steps to safeguard their portfolios.
Payment Scams Are Surging. Banks Need Help
’Tis the season for a surge in financial frauds and scams, a huge and growing problem that caused nearly $500 billion in losses globally last year, along with untold human suffering.
AI in Asset and Wealth Management: Going Beyond the Hype
AI can be a powerful tool, but one that demands thoughtful, measured implementation. Taking thoughtful steps now to integrate and innovate with AI will keep you competitive. Turn your back on it and you’re probably not in business in the long run.
The Big Four Recession Indicators: Real Personal Income Up 0.6% in October
Personal income (excluding transfer receipts) rose 0.6% in October and is up 4.7% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, real personal income (excluding transfer receipts) was up 0.3% month-over-month and up 2.3% year-over-year.
Consumer Confidence Rises in November
The Conference Board's Consumer Confidence Index® rose in November to the highest level since January. The index increased to 111.7 this month from October's upwardly revised 109.6. This month's reading was slightly lower compared to the 111.8 forecasted.