MLD Market Update – October 2024

Join Chad Larson, Senior Portfolio Manager, as he gives his thoughts on the market for October 2024.

Navigating Market Highs: Insights from October’s Economic Landscape

00:00:00 – Introduction and Overview
00:01:32 – September Market Recap
00:02:57 – Interest Rate Cuts and Economic Outlook
00:04:54 – S&P 500 Performance and Valuation
00:06:56 – Earnings Growth and Profit Margins
00:08:56 – Sector Performance and Shareholder Yield
00:10:54 – Value vs. Growth Investing
00:12:56 – Concentration of Top Stocks in the S&P 500
00:14:53 – Earnings Growth of the Magnificent 7
00:16:18 – Consumer Balance Sheet and Economic Drivers
00:19:52 – Inflation Trends and Economic Health
00:20:22 – Oil Market Volatility and Global Factors
00:22:00 – High-Yield Bonds and Default Rates
00:23:40 – Global Market Capitalization and U.S. Dominance
00:24:57 – Investing at All-Time Highs
00:27:52 – Conclusion and Closing Remarks

In this episode of MLD Wealth Money Matters, I, Chad Larson, provide an overview of the financial landscape as we enter October. After a brief delay in releasing this episode due to travel, I reflect on a recent meeting with a client that left me pondering the current market dynamics.

September saw significant developments, particularly with the U.S. Federal Reserve’s decision to cut interest rates by 50 basis points, marking the first cut since 2020. This move, aimed at recalibrating monetary policy amidst stable inflation and a resilient labor market, contributed to a positive performance in equity markets, with the S&P 500 achieving its first positive September since 2019.

I discuss the tug-of-war between the prospects of a soft landing versus a recession for the U.S. economy, noting that investor optimism has surged, raising the probability of a soft landing to 65%. I also touch on the performance of various indices, highlighting the S&P’s significant year-to-date gains, while the bond market remains cautious with elevated long-term yields.

The episode delves into the sources of earnings growth, emphasizing the importance of profit margins and revenue, and how the current market dynamics differ from previous years. I analyze the performance of different sectors, particularly the energy sector, which leads in total shareholder yield, and the ongoing struggles in real estate.

I also explore the value versus growth debate, noting the current market’s tilt towards value stocks as growth stocks appear expensive. The concentration of returns among the top 10 stocks in the S&P 500 is discussed, along with the implications for investors.

Towards the end, I address concerns about investing at all-time highs, reassuring listeners that historical data shows investing at these peaks can still yield positive returns over time, especially when the underlying economic conditions are favorable.

As always, I encourage listeners to reach out with questions or comments, and I express my gratitude to clients and potential clients for their continued support. I look forward to connecting again next month!