MARKET RECAP

• S&P 500 +1%
• The VIX is at its lowest level since January 2020, 12.46, this is in the midst of a possible recession next year and a war between Israel and Hamas.
• A survey by the NY Fed showed that 66% of US households have enough reserves to cover a surprise $2,000 expense, the lowest level in a decade.
• Initial jobless claims were only 209,000 last week.

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MARKET RECAP

The S&P 500 continues to tear higher, up 10% since the October low. For the week, US stocks advanced by 2.60%, international stocks by 3.52%, and bonds by 1.37%. The yield on the 10-year treasury fell by 13 basis points to 4.44%.

Investors figure that inflation is sinking, interest rates have dropped, and Fed cuts are coming. The CME Fed-Watch site says the market is pricing in four 25-basis point cuts by the end of next year. That seems contrary to the “higher for longer” theme that Fed officials preach.

MARKET RECAP

MARKET RECAP

• US stocks up by 0.95%, international stocks fall by 0.70%, bonds down by 0.23%.
• Stocks were up every day except Thursday when they fell due to a weak bond auction.
• Earnings will be up this quarter. So far, S&P 500 earnings are up 3.7% for Q3 over the previous year. This would break a three-quarter losing streak.
• Leading Economic Indicators are negative and the odds of a recession are slowly increasing.
• Moody’s kept the US credit rating at Aaa but adjusted their outlook to negative. Rising interest rates could result in interest payments representing 26% of revenue by 2033 from 9.7% in 2022.
• Oil has been falling and is now down by 14% since October 19th.

US STOCK MARKET (VTI)

SCOREBOARD

MARKET RECAP

Equities had a monster rally worldwide; US markets jumped by 6.05% and international stocks by 5.78%. Bonds rallied by 2.02% as the 10-year yield fell by 27 basis points. Markets rallied when the Treasury announced that long-term debt auctions would be smaller than anticipated. In addition, economic data came in softer than expected. Interest rates dropped like a rock in response.

During the week, the Fed announced they would hold interest rates steady. Investors are assuming that interest rates are near their peak. Also, job growth was only +150,000 in October, half of the September gain. All of this news combined set up a “Goldilocks” scenario, at least that is the way the market reacted.

SCOREBOARD

MARKET RECAP

US stocks fell by 2.57% and international stocks by 1.10%. US stocks are now in correction territory, down 11.05% from their July high. Bonds managed a 0.64% rally. The US economy grew at a robust 4.9% in Q3, up from 2.1% the quarter prior. The GOP elected a speaker, Mike Johnson, after a couple of weeks of going through a series of nominees.

SCOREBOARD

MARKET RECAP

US stocks fell by 2.37% and international stocks by 2.75%. Bonds dropped by 1.75%. The yield on the treasury hit 4.98% this week, the highest level since July 2007. The yield has had a steep rise since the Fed last increased interest rates in late July (up over one percentage point). Stocks are now down by 7.5% since July 26th.

86 S&P 500 companies have reported earnings, recording a 4.9% increase over last year. Almost 3/4 have topped estimates.

The Fed seems like it will hold off on interest rate increases for the time being but is sticking with the higher for longer theme.

SCOREBOARD

MARKET RECAP

US stocks etched out a small 0.27% gain on the week despite the aftermath of the Hamas terrorist attacks on Israel. Oil, gold, defensive stocks, and the US dollar increased as beneficiaries of the Hamas terrorist attacks. Some investors are thinking that the Fed pivot on interest rates might be in sight. Several Fed officials said that the big increases in bond yields have tightened financial conditions, in other words, the market may have already done a lot of the Fed’s anticipated future work.

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RECENT MARKET NEWS

• US markets down by 2.98% for the week and are now down 4.24% for the month, international stocks fall by 1.99%. Bonds were down by 0.46% and down by 1.54% for the month. The 10-year bond hit a 16-year high.
• The CPI was up by 0.6% month over month and 3.7% year over year, mainly due to higher energy prices.
• There is still hope for a soft landing, but inflation, fed policy, and higher interest rates all present challenges.
• The US budget deficit was $1.5 trillion as of the end of August, up by $577 billion from last year. And, of course, higher interest rates will make the situation that much more unmanageable.

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