Good mornings and welcome you're listening to Let's Talk Money here in eight ten and
one of three one WGY. I'm Ryan Bouschett and I will be your host
this morning. I hope everyone out there staying warm, enjoying the weekend and
in what's left and what's ahead of us. But it's great to be here
and appreciate all the listeners that are tuning in. You can give me a
call today. You can reach us at one eight hundred Talk WGY. That's
one eight hundred eight two five five nine four nine. Always love hearing from
all the listeners out there getting calls and uh, you know, whether it's
something we can help in your own financial life or just a you know,
general question about markets or retirement and planning topic that we can help give guidance
to or maybe help punch in the right direction. Always great to hear from
you. So again, if you do have any questions, please feel free
to give me a call one eight hundred Talk WGI. That's one eight hundred
eight two five five nine four nine. So we have a great show today.
It was a great week in the markets, or maybe a great day
in the markets on Friday to bring us home, and we'll spend a lot
of time as to just what this week kind of meant for the markets.
I actually think this past week was really you know, you never know how
long a trend or or change in market dynamics are going to last, and
you know when it's when it happens. You know, you see sort of
a change in theme or change in trend, you always want to see it.
You know, it happened for longer periods of time. But we had
a really really interesting week in the markets this week, and I think it
was a good thing for the markets to see. And I'll talk about that
more later in the show, but really, you know, I think some
promising themes that that we're seeing, you know, as we ended a great
obviously twenty twenty three and whoever would have thought how how great it turned out
to be, but really strong twenty twenty three. But you know, the
market dynamic I think was really based on certain factors, right interest rates,
the FED. We've talked about it for a long time and the impact that
the FED has had. But this week, you know, maybe some some
changing dynamics in the markets. And again get into some good detail on that,
but I think it's uh, it's promising, especially you know for those
long term investors, those who are have been patient and have been invested,
and for those who who may be worried and maybe sitting on the sidelines,
not sure what to do or not ready to make a move. We'll talk
a little bit about just the market themes and trends ahead, talk about earning
season. I think this earning season it's going to be really really important for
the market. We had some we saw Taiwan Summer Conductor on Friday with some
good results that helped drive the market and again I think could be a further
catalyst of what's to come and to keep this kind of market momentum going.
We had a lot of economic data that came back this week that was really
positive, really really positive economic data. Midweek, we saw strength in consumers.
We had some consumer data from December, so the holiday shopping season,
and it wasn't just strong because it was a holiday shopping season. You know,
it's always adjusted based on time of year, but both month over month
and year over year numbers for consumer spending, we're really really strong for December.
And again we saw a change in market dynamics around this and I'll talk
about that as well. But again, just really good strength that we're seeing
and you know, things that we you know for this potential of a soft
landing, right this kind of lower rate environment, lower inflationary environment, with
continued strength, I think, I think we're seeing good things here. We
continue to see jobless claims come in lower than expectations. Again, the labor
market's so critical to our overall economy. Seeing strength there, and we'll talk
about just the impact that may have. We can get into some other topics.
You know, we've seen some consumer sentiment changing over the last couple of
weeks, you know, and some of the shifts have been the most dramatic
we've seen in close to twenty years, which is which is interesting and when
you look at the history of it, it's actually a really good sign I
think to the overall markets. We can talk about that, and we can
talk a little bit about obviously, I said interest rate. We've been talking
about interest rates for the last two years. You know, We've we've seen
some pretty big expectations shift. We have a FED meeting coming up at the
end of the month, you know, I think the last two days of
the month for January, then the next meeting is in March. For the
you know, the last couple months, right heading back to October November when
we really started to see interest rates sort of plummet at that time, not
that the FED did anything, but we saw interest rates start to plummet.
The expectations were for the FED to start cutting rates in the first half of
twenty twenty four, and expectations really high. The markets are pricing in almost
six rate cuts for this year. But with some of this latest data,
with some of you know FED commentary that they've been putting out, that futures
market, especially for a rate cut in March, has has shifted and come
down pretty strongly over the last month or so. So we'll talk about that
and just what that means. Like I said, I like to focus high
level, you know, talk about the economy, talk about the markets,
but definitely add in some of the themes we're seeing. Again, if you
do have any questions, feel free to give me a call one eight hundred
talk WGY. That's one eight hundred eight two five five nine four nine.
So I'm putting together some information and data for a presentation this week, and
you know it's you know, that's one of the market themes I'm looking at
is you know, reasons to be optimistic. And doesn't mean that hey,
this is going to be a you know, straight shop bull market or you
know, there's none we're not going to experience any volatility, but just looking
at some of the market dynamics that are out there today, some of the
you know, catalysts if you will, to to keep the strength that we
saw last year, to keep that going, and I know there's you know,
there's always so many negative headlines. It's always difficult to you know,
feel optimistic. It feels like at times because you know, so much,
as I always say this, so much is stacked against us as investors,
whether it's headlines, you know, kind of that that constant news cycle in
your face. It's not always the most uplifting news cycle, especially in business
and investing news cycles. Always trying to find reasons to be fearful, and
there always is right and and not only that, but there's always the risk
of the unknown, right. The biggest risks that we typically see are those
that we never see in front of us. So there's always there's always you
know, a cost or a risk to be invested in the markets. But
we do like to just take a really you know, objective view as to
what's going on and the data that's in front of us. And you know,
our goal is to help keep clients invested, not trying to time the
markets, trying to find reason to be comfortable with our allocation. And and
it'll be you know, it varies from client to client, but being confident
and optimistic and comfortable, you know, having that peace of mind with with
how we're invested. So you know, part of the presentation that that I've
been looking at and working on is reasons for for that optimism right now,
reasons to be invested, reasons why you know this market strength can continue and
and maybe we are in the earlier stages of a bull market versus you know,
what many people thought for most of last year at least was some sort
of you know, bear market rally that never really turned around. We really
kept things going through the end of the year, and uh, you know,
this past week again we we had some some great strength. So again
phone lines are open one eight hundred talk w g Y that's one eight hundred,
eight two five, five, nine four nine. So for the week
we had you know, really the it was really up and down week right
earlier in the week. Markets started the shortened week on Tuesday pretty pretty poorly,
right, the markets were down, but we had really really strong end
to the week on Friday. SMP for the week was up a little over
one percent one point two percent, the Dow up point seven to two and
NASAC leading the charge. We had some uh you know, again I spoke
about some of the earnings with Taiwan Semiconductor really sort of led the the kind
of the spark for the rally on Friday with the Nazac cup, Like I
said, two point twenty five percent for the week, and uh, you
know, we're we're we're seeing and I talked about in the opening, we're
seeing a little bit of a shift in in dynamic right now. And what
I mean by that is we had a good week in the markets, good
especially good clothes to the week in the markets, while also seeing interest rates
go up. And you know, we've talked about interest rates in what that
means, you know, it's not just about what the Fed is doing,
right. There's more to it than the Fed saying they're holding cutting raising rates
right, that's just impacting the short term, you know, the the overnight
lending rate, the Fed funds rate, and obviously that does have an impact,
right, I'm not trying to diminish that, but it's not the whole
story when it comes to interest rates. And you know, on the flip
side, this week we saw as stocks went up, we actually saw interest
rates on the ten year go up. They were hovering a little bit below
four percent at the start of the week. They had some big, big
up days midweek and ended up closing the week at about four point one three
percent on the ten years, so you know, up about you know,
give or take about zero point two percent in the interest rate world for the
week, which isn't huge, but it's it's a little bit different than what
we've been accustomed to this past year. Twenty twenty three was all about you
know, really, when you saw the trend of what the ten year was
doing, could almost dictate exactly what the equities markets were doing. So we
saw high correlation, which isn't always the case, but we saw high high
correlation between stocks and bonds. Now it turned out to be a good thing
for the year, but you know, really what was happening is as you
know, those times where rates were coming down, and again it didn't mean
just what the FED was doing. You know, if you look at the
ten year treasury yield and that went from anywhere from about three point two to
over five percent during twenty twenty three. But what you saw was if rates
were coming down, stocks were going up. If rates were going up,
stocks were coming down, and it was all about what the interest rate environment
was doing. It was really really you know, strongly based on Fed expectation.
What we were seeing the ten year doing in this week sort of reversed
that. And again it's just one week, it's only one week, but
we've been so accustomed to this, and again going back to twenty twenty three,
how much of the year was in, how much of the market was
kind of based on what the Fed's expectation was all about. But we had
some really strong economic data this week, and that lately has actually been a
bad thing for the markets. Right. Strong economic data probably means, you
know, inflationary numbers could still be high. Probably means the Fed is going
to keep rates where they're at, you know in the past year, even
increase rates. But you know, maybe at this point, thinking Fed's going
to keep rates where they're at. That hasn't been a good thing for markets.
The market has been yearning for a reversal and interest rates as sort of
that catalyst to spring forward, and I think we saw that at the end
of twenty twenty three. I think that's what really had that big impact over
the last two months of the year was rates came down from that five percent
that we saw in October came down to under four percent at a certain point,
so huge movements in the ten year treasury rates, and that really started
to propel the markets forward. So, you know, fast forward to this
past week, you know, are we getting to a point where hey,
maybe some of that FED expectation is baked into the stock prices right because we
had that you know, thirteen fourteen percent growth to close the year in those
last two months with the expectation that the FED was going to start cutting.
Is some of that you know, FED reversal and some of that FED rate
cuts now priced into the market, where the markets more looking at economic data,
The market's looking at more fundamentals in earnings, and based on this week's
market dynamics that we could start we could be starting to see sort of that
theme or that trend in the market right now, right where it's not gonna
all be about the Fed, and who knows what happens over these next couple
of weeks. Like I said, I mean, this is this is a
short window that we're looking into right now. Hard to kind of make you
know, broad market sort of changes or expectation changes over just a short period
of data. But again, if this is something that we continue to see,
if we continue to see you know, economic data coming back really strong
and really positive while the markets continue to move forward in a positive manner,
again, I think that brings home more of this sentiment that hey, you
know, earnings are more at the forefront, Hey, you know, strengthen
the economies more at the forefront, versus this fear of inflation, this fear
of higher rates. Because again, you know, we've been seeing sort of
a good news that is bad news for the market and vice versa over the
last few months. Right we were when we were seeing a little bit of
a slowdown in job growth numbers towards the end of the year, that was
always viewed as a good thing for the market because you know, maybe that
was going to be a catalyst for the FED to cut rates, and you
know, maybe that wasn't going to keep inflation as high as it was.
You know, we we continue to want to see inflation coming down, right,
That's that's that's a good thing. And I think some of that inflationary
numbers coming down is reflected in that strong December consumer report that I was talking
about earlier, and and that's really a good thing for the economy and for
consumers like you and I who are out there and looking at kind of what
the price changes have been over the last few years. But again, I
think we're seeing a small sliver of a change in dynamic and for us to
see really really positive economic data come back this week while the market continues to
hum along, and for rates to go up, and for the markets to
have a positive week, that's different than what we've been seeing. And you
know, to me, I think that could be a really really good thing
moving forward. Again. Phone lines are open. Give me a call one
eight hundred talk WGY. That's one eight hundred eight two five, five nine
four nine. I'm going to go to a just a quick commercial break,
and when we come back, we'll talk a little bit more about again the
markets, what we're seeing sort of the change in dynamic. We'll talk a
little bit about earning season and why that's going to be, you know,
in our minds so important as we enter we've already entered, but you know,
as we get more and more that it coming back and more and more
earnings reports coming back, and we'll talk about just economic strength and what it
means for the FED, and again, as I said earlier, talk a
little bit about the what I feel are the catalysts for sort of an optimistic
approach to the markets for this year. So again you're listening to Let's Talk
Money here on eight ten one O three one WGY. We'll be right back
and welcome back to Let's Talk Money here in a ten and one of three
one W g Y. I'm Ryan Bousche and I'm your host today. Thank
you all the listeners that are tuning in, and whether you're a longtime listener
or newer to the show, we appreciate you both tuning in and you know,
as we always say, being part of the program, being part of
the show and calling in and asking questions, it's always great to hear what
you're thinking about here, what's on your mind because oftentimes again, you know,
and we see it with clients, and we see it with the callers
out there. You know, similar topics, similar discussion points, similar questions
that that you may have, that that other listeners may be wondering the same
thing or asking themselves the same question. So give us a call if you
have any questions. One eight hundred talk WGY. That's one eight hundred eight
two five, five, nine four nine. So we talked about the change
a little, you know, short term change and in market dynamics this week.
Why I think that actually could be a really good thing for the markets
moving forward. You know, part of the discussion points I'm putting together for
this week is talking about valuations and earning season. Right. You know,
when we think back to the beginning of twenty twenty three, amidst all the
fears of recession of continued bear market, right, we remember SMP was was
starting to recover by then, but was you know, for for twenty twenty
two was down over twenty percent, was down about twenty five percent for the
year. The DASS act was really at its lows to start twenty twenty three,
was down you know, mid thirty percent. I think thirty four to
thirty five percent, So we had a lot you know to overcome at that
point. But you looked at valuations, valuations were right in line with so
the twenty year average, twenty twenty five year average. At that point,
valuations looked really good. Tends to be a good thing, right. But
as we always talk about it, and we talk about this often too within
our investment committee meetings that we have every week, you know, there's there's
different there's different ways to look at the market, right, especially in real
time. Uh, you know, fundamentals are huge. I think you know,
fundamentals will never go away. Valuations are so important, but it's not
everything, right, It's not everything. There's more to it, you know,
whether you take a little bit of a technical announce says a little bit
of a fundamental analysis, or even just you know, human behavior analysis,
right, especially in some of those most extreme cases, right, extreme bull
markets or extreme bear markets, so much of the market movements during that time
is more to do with human behavior and human sentiment than anything else, and
valuations than technicals whatever it may be. But you know, valuations and fundamentals
again I think are really important to keep in mind, especially you know,
as longer term investors. But it's not everything you know, you even think
about, you know, value versus growth, right, Growth companies tend to
be more expensive, tend to have, you know, higher valuations, maybe
worse fundamentals, depending on how you view fundamentals. But you know, we've
also had the last fifteen years or so ginormous outperformance of growth versus value,
right, So it's not all about valuations and fundamentals. At times we have
to take other things into account. But when we do look at valuations,
right at the beginning of the year, beginning of twenty twenty three, valuations
we're kind of right in line. Right now, valuations are pushed a little
bit higher than I would say that twenty to twenty five year average. We
were at about sixteen and a half times forward earnings back at the start of
twenty twenty three. We're now over nineteen times forward earnings, which again is
a little frothy, it's a little expensive. But with that said, I
think it brings into account the importance of earnings, right, And that's what
we were talking about with the strength in the market on Friday, was that
we had really strong earnings numbers on the tech side, coming from Taiwan Semiconductors,
and that's you know, I think it'd be a big catalyst along the
whole you know ai theme, right, And we can talk about that after
the news break that's coming up shortly. Been thinking about that a lot in
terms of our investment committee and what we're looking at. But there is you
know, when we see valuations again start to creep up a little bit,
we do want to make sure that you know, they can be supported and
right now again a strong consumer like we saw in December, and remember that
makes up the consumer makes up about two thirds of our overall economic GDP.
Strong consumers, strong earnings, that's what's going to move us forward. That's
going to be the catalyst to keep this strength in the market, to continue
this bull market run. And so I think earning season is really so important
at this juncture and as we head into twenty twenty four. So we're going
to continue that conversation. We're going to continue about why I think valuations and
fundamentals are more important right now than they have been over the last couple of
years, and we'll talk a little bit more about just the FED expectation where
we're at. So again you're listening to Let's Talk Money here in eight ten
one O three one WGY. We'll be back right after the news and welcome
back, and thank you for tuning in. You're listening to Let's Talk Money
here in eight ten and one O three one WGY. I'm Ryan Bouchet and
I am here with you for the next half hour or so on this cold
Sunday morning. I hope you're all having a great weekend. And as always
we we appreciate you tuning in means a lot to us. And uh again
for the longtime listeners or those newer to the program, always great to have
you be part of the show. Our phone lines are open one eight hundred
talk WGY. That's one eight hundred, eight two, five, five,
nine, four nine. I'm actually gonna go to the phone lines now.
We have Alan in Glenville. Good morning, Alan, Hey, good morning,
great great show. Thank you listening to your entry into the show this
morning. And I think you may have had a well called the Trump effect
this past week with bond yields rising and maybe the market's anticipating his presidency with
with growth and the market going up that the same time, I just wanted
to get your feedback on that, and then I have one other point I'd
like to make. Yes, certainly, you know, you know, you
take a step back. I do think so so, and I'm talking about
my part of my presentation I'm working on. You know, I really think
and maybe you see it in the short term and you maybe see it,
you know, really really you know, shorter time periods. I do feel
like there's there's less impact on what's going on in the political sphere, on
what's happening to the stock market and investments. I really do feel that way.
You know, there could be some catalysts there. I truly feel this
week had more to do with the fact of the matter is Hey, expectations
for for FED rate cuts they're here, right we you know, the market's
going to move well ahead of you know, current events and current news.
The markets always, especially when you see you know, economic ups and downs
and market ups and downs, the markets always, you know, we always
say probably six to nine months ahead of that. And so I think when
we saw the strength of last year ending to the year, especially November December,
in the markets being up in the you know, double digit returns for
the short period of time, a lot of that was predicated on inflation was
coming down, interest rates are coming down, in the expectation that the Fed
was going to change. I do think this this week's market growth, and
really, I mean most of the growth was on Friday, because earlier in
the week the markets had sold off and most of the gains really were accounted
for on Friday. You know, we were seeing it. We were seeing
in the earnings numbers, we were seeing it in the economic data, and
I think that's going to be a little bit bigger of a push as we
move forward for the rest of this year. Now, there's there's no question
that there's different viewpoints and dynamics when you see you know, the expectations of
you know, potentially Trump coming into office versus you know what else has been
out there. But you know, frankly, if you if any you know
in the markets following this data, I mean, Trump is well had at
any poll and obviously it was big news for him to come in and win
Iowa like he did. But you know, I think most of that sentiment
was probably if it was built into the market, probably already built into the
market. So I do think probably less of those headlines from this week having
the impact and really more of the economic data and earnings data that we saw.
And the other point I did want to make, and these are all
hypotheticals. Of course, if the market's already priced in let's say, three
discounts going into the year and maybe the S and P hits five thousand to
get the S and P moving well north of that, do you think the
market has to price in six cuts or are we on a growth expectation to
get us there. I'll let you answer that and thanks and have a great
weekend all, and thank you for the call, and thank you for the
questions. This is this is a great question because I think this sort of
helps paint the picture of the market themes and market expects. And to your
point, right now, the you know, the futures market is pricing in
about six rate cuts for twenty twenty four. The Fed, on the other
hand, is their consensus is they're gonna maybe have three rate cuts for twenty
twenty four. So there is a disconnect between what the Fed is saying and
what the market is expecting. And you know, to me, at this
point and at this juncture in the market, as I said, the rate
you know, the end of year twenty twenty three end of year run up
in the markets, I think that catalyst was all about again, inflation was
coming down, expectation was that the Fed was, you know, now could
could cut rates, and we were seeing some slowing economic data coming out and
that could be even further catalysts for rate cuts, and so I think the
market really like that really propelled, especially when you see areas of the market
like technology and growth through really well because they're they're going to do better in
a low interest rate environment or lower interest rate environment. So so I think
that was that was a huge catalyst there. Now with the expectations that we're
seeing today in terms of twenty twenty four rate cuts, again, I think
I always say the market is forward looking, so I do think a lot
of those expectations are baked into stock prices. It may not be fully baked
into stock prices, but you know, to someone that maybe is sitting on
the sideline waiting for the FED to actually cut rates before they get invested,
as we always say, that tends to be you know, tend to be
kind of late doing that. That tends to be kind of the worst time
to do it, because because the market's already expecting that. Our market's already
pricing that in. So now as we as we move forward and you know,
to your point out and kind of like this hypothetical of what we see
moving forward. Historically, you know, to be honest, when the Fed
actually starts to cut rates, historically that's been actually a negative for stocks,
right because if you think about it, the FED is usually cutting rates because
we're seeing a slow down in the economy. They're trying to stimulate the economy.
So a cut is actually historically sort of been bad for stocks. Right
now, what we're seeing rate today this sort of what I would call holding
pattern, because I do think the Fed has done hiking interest rates. But
this holding pattern that we're seeing between when the FED stops raising rates and when
they start cutting rates, it's actually one of the best time periods for both
stocks and bonds. This is again historically a great time to be invested in
stocks. Now. The difference moving forward, I think versus times in the
past is this whole point of a soft landing, right you know, right
now, the whole purpose of cutting rates is that the Fed has gotten inflation
under control. We can now sort of bring rates down without overstimulating again the
economy, because again, the last thing the FED wants to do is increase
inflation again, right, They want to make sure inflation is under control.
And that's really why I think I'm not on the March. I don't think.
I don't think we're going to see six rate cuts in twenty twenty four,
and I'm not in the camp that we're going to see rate cuts by
March. I think rate cuts are going to happen a little bit later in
the year because I think the economy is too strong right now, and I
think the last thing the FED wants to do is is create an environment where
inflation ticks back up because they brought rates down. But what's different this time,
right, So I talked about usually in interest rate cut environments, that
tends to not be great for stocks because usually usually that means you're in a
slowing economic environment. However, coming out of COVID, in all the disruption
with COVID, in this notion of a soft landing, if in fact we
can get a little bit slowing growth but lower inflation, slower growth but not
necessarily a recession, which I think is entirely possible. I mean there's so
much that has been changed because of COVID, and I mean, in some
instances we've almost you know, and I don't get too far into this because
there's too much data and too much to kind of cover with it, but
you know, at a high level, we may have seen sort of like
a rolling recession where certain pockets of the economy has seen Right up front,
we saw the service industry get crushed that now has been in a recovery mode.
We've seen sort of different patterns of areas of the market that have done
really well at times and really poorly over these last few years. So if
we've maybe been in sort of a rolling recession due to COVID and coming out
of that and now we're we're stabilized, inflations coming down, we could kind
of have this slower growth but still strengthen the economy, which we're kind of
on trend still for then that just means when the Fed is cutting rates,
they could just be cutting based on the fact that again, because inflation's down,
we don't need rates as high as they are. They're kind of creating
a little bit of a cushion. If we can get to that point and
earnings in market growth supports current valuations, then I think we could be on
track. That could be the catalyst for the stocks could to continue to do
well. But I think at this point, moving forward, for the rest
of twenty twenty four, Allen, I do think it's probably going to be
a little bit less to do with interest rates and maybe a little bit more
to do with fundamentals and to do with earnings and to do with the economy.
And that's why, you know, going to the point of this week,
that's why I think this week was so important, because we had good
economic numbers, we had strength in earnings, so we're having these these strong
fundamental support of the market in the market responded accordingly. The stocks went up
and interest rates went up, and again we have not seen that typically when
we see a week where we have really strong economic data, we've actually seen
the markets pull back. We've actually seen the markets react negatively because that has
meant well, you know, now we're going to have rates higher for longer.
Now, the Fed's not gonna pivot. We didn't see that this week,
and I think that's important, and I think that's where the catalyst moving
forward is going to be. You know, we're seeing more breadth in the
market, we're seeing low vix, we're seeing you know, more participation,
we're seeing strong earnings. This is what's gonna drive the market forward. And
that's why I think, you know, if we're going to see strength for
twenty twenty four, I do think it's gonna be predicated on, you know,
earnings. I think earnings are going to play a big role. Doesn't
mean we're going to diminish what's going on with the Fed and interest rates.
Obviously that's gonna have an impact. You know, the old saying you don't
want to fight the Fed, never want to fight the Fed. Certainly don't
want to start doing that today. But I do think from what we've seen
the last two years in particular, where the market was so so much impact
from the FED and interest rates on the market, I do think, you
know, we could potentially be seeing a little bit different dynamic moving forward.
So again, Alan, hopefully that answers your question. That's sort of how
we're thinking about the markets, and you know, what's going on with the
Fed, what's going on with valuations, and just a real big picture overview
of where we see the stock market today. So again, thank you for
the call, great questions and really good talking points for us to get into.
So aget. Our phone lines are open one eight hundred talk WGY.
That's one eight hundred eight two five five nine four nine. As we approach,
you know, the last ten or twelve minutes of the show. Again,
if this sparked any questions, if you have any thoughts on what's going
on, if you uh, you know, again, whether it's market related,
economic related, or something more particular to retirement planning, financial planning,
you name it, give me a call. Phone line's open one eight hundred
talk WGY. That's one eight hundred eight two five five nine four nine.
So before we enter the home stretch, we were able to cover a lot.
That was actually a really nice call from Alan because I was able to
cover a lot of the talking points I wanted to get into and in some
of the like I said, market themes and the way we're thinking about the
market. It was gave us a good opportunity to discuss that. But well,
we're going to go to just a short commercial break before we come back
for the final stage of today's show. And again, appreciate all the listeners
out there. You're listening to Let's Talk Money here in eight ten in one
o three one WGY and welcome back to the show. You're listening to Let's
Talk money here in eight ten, one oh three one WGY. We're in
the home stretch today. We got about ten minutes to go and happy to
answer any questions that you may have. We had a great question from Alan
earlier, was able to really set the stage for a lot of what we're
talking about in the markets today and how we're thinking about the portfolios in particular.
But there's a lot out there's a lot of information, there's a lot
differing viewpoints, a lot of headlines that may be out there. So again,
if you have any questions, I want to give us all one eight
hundred talk WGY. That's one eight hundred, eight two, five, five,
nine four nine. So able to talk a little bit about you know
what I felt was a huge week this week in the markets. I really
again it was only markets were up between one and two percent. Wasn't wasn't
a huge up week? You know, No, you know, crazy data
coming out something that really kind of shifted the d dynamics. But I do
think sort of the theme of what we've been seeing and sort of the market
reactions to data. It certainly changed this week, And again, is it
maybe just a one off. Maybe you know, earnings outweighed the economic data
from earlier in the week, and maybe that's all it was. Maybe it
was just a blip in the radar and we don't see that continued trend.
But we certainly have not been seeing a good news is good news for the
market, right, meaning good good economic data is good news for the market.
We've actually kind of seen more of the opposite based on FED expectations,
inflationary expectations. You know, good economic data has kind of been bad for
the market because that meant, you know, higher for longer rates. The
market has been yearning for lower rates. And you know, when we've seen
kind of softer and weaker economic data over the last few months, that's actually
been better for the market. So this week was definitely a change there.
If it continues, which which I think it could, I really do.
I do think you know where we stand today. I think you know I've
said it earlier, but I do think earnings and having a catalyst for growth
is going to be really key to furthering what I would say is is you
know, maybe early stages of a bull market, valuations are getting a little
bit more expensive. That's okay that that can happen. You know, some
of the earnings expectations for last year been coming down, which which kind of
impacted those valuations as well. But if we start seeing some catalysts for growth,
and you know, we're seeing it, really we saw it mostly in
the technology side this past year, that's been good. If we continue to
see strong consumer data again, spending for December was great, Jobs reports have
been solid, jobless claims have been really strong, meaning less people continuing to
look for work and file for unemployment. We're seeing a lot of this this
strength and labor market's going to be key. You know, we always say
labor market is going to be so critical to the economic strength moving forward.
And you know, towards the end of twenty twenty three, we were seeing
a little bit slowing down of numbers there. But you know, it's almost
I think it's stabilized. I think it's we're not seeing a downward trend as
much so much as things have stabilized and continue to see strength there. Again,
those initial jobless claims are a good sign for the overall labor market.
We're seeing a lot of a lot of positive signs right now. And so
that's why, you know, not only with FED expectations, and as I
spoke about earlier, the market expectations and what the FED is saying is pretty
big disconnect right now. You know, six cuts versus three cuts. You
know, last month, the expectations was about a seventy percent chance that the
FED was going to cut rates in March. Those numbers are down under fifty
percent now it's down closer to forty eight percent. That's closer to what we've
been saying. What we think. We think that there's less likely of a
chance for cut early in March, because again, the labor market's still so
strong, wages are increasing, Inflation has come down. But you know,
there is a there is a little bit of a sentiment that the last the
final phase of inflation getting to two percent is probably going to be the heart
artists, right There's still a lot of upward pressure throughout the market and throughout
the economy. So I think that last phase is going to be difficult,
but not impossible, but maybe a little bit more difficult. But I'm just
more in the camp that I think we're seeing you know, a strong economy,
We're seeing a strong consumer stream, seeing a strong labor market. So
with that said, you know, would we see rate cuts by March?
I don't know. I think it's going to be you know, challenge because
I do think you know, as much of a risk of higher rates,
but you know, the FED can kind of see the impact of higher rates.
What the biggest, bigger risk is going to be is if they cut
rates too soon and that reignites the inflation trigger. That's not going to be
a good thing. That would be a really really negative sign for for the
FED. And I think that's the last thing they want to do. So
I'm in the camp that I think they're going to be a little bit more
cautious for the next you know, for any you know, not the next,
but for the first rate cuts. And so I think there is a
little bit of a you know, disconnect between the market expectation and what the
FED would actually do. And and so we've we've kind of you know,
positioned the portfolios around that you know, sentiment of a little bit higher for
longer and and we're seeing it, right And I talked about it with the
ten year treasury rates went up this week. I think they could continue to
go up if if we see you know, strength in the economic numbers,
and you know, the tenuere is not you know, the Fed funds rate.
It is going to move yep, a little bit separately. It's it's
not you know, not impacted by what the Fed is doing by any means,
but it is certainly moving a little bit separate from from what the market
expectation is. So just interesting, dynamic and interesting theme to continue to watch
and continue to see. Again, we talk about it all the time in
our investment can MANI meetings because it's been so important to the equity markets over
the last two years, and there's just been so high of a correlation between
what that number is doing and what stocks are doing that you know, you
don't want to discount it, you don't want to dismiss it, but I
do think, you know, in this past week showed it. We may
be seeing a little bit of a change in overall market sentiment and dynamics and
even talk about market sentiment, you know, consumer sentiment all of a sudden,
it was low for so so long and still you know, below average,
but consumer sentiment has risen over the last two months, higher than it
has any time over the last twenty years or so. So again, we're
seeing some catalysts for growth right now in the market. We're seeing strong earnings,
We're seeing a strong economy. We're seeing this consumer becoming more optimistic.
And when things are really bad, and I wish it could show you this
chart to the listener out there, when consumer sentiment is really bad and finally
bottoms out and continues to build strength, that historically is a again a catalyst
for long term market growth. And so these are the things we're looking at.
I think these are the things that are gonna be really really important moving
this market forward. I think there's a lot to be optimistic about. I
think, you know, there's a lot of trends and themes that can continue
moving this market forward. You know, are we going to get another twenty
five percent return like we saw on the S and P another forty to fifty
plus percent return like we saw on the NASDEC. I don't know if that's
possible. Again, you know, that's gonna be a little bit harder.
And it goes without saying, you know, there's no doubt that we could
continue to see volatility in the market. You know, the first couple of
weeks of this year has been a little bit violatiled. We hit all time
high so it's been over five hundred trading sessions since our last all time high
in the s and P five hundred, So that's great, that's phenomenal news.
We love seeing all time highs. All time highs again, shouldn't scare
you from being in the market. When the market's hitting all time highs,
that tends again tends to be a catalyst for more all time highs. Continues
that trend. I mean, if you look at the long term market,
you know it tends to go up into the right. So all time highs
shouldn't, you know, create fear of being in the market, shouldn't cause
you alarm. These are all really, really good things. So I appreciate
the listeners who joined us today. We are coming up to the end of
the show. You know, great calls. Alan appreciate you calling in a
lot of good to discuss big week this past week. Let's see what this
week ahead brings for us. And as always, you can catch us on
Saturdays at ten am, Sunday at eight am. Thank you again for listening
to Let's Talk Money here on eight ten in one O three one WGY have
a great weekend.