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Good morning, Heroes!
Here’s your Morning Market Preview for September 27th, 2024
Read, or listen relaxingly for a few minutes – whichever you prefer!
Key Economic Reports
- Many economic reports again today. Let’s dive in:
- At 8:30am Personal Income and Personal Spending reports drop, previously 0.3% and 0.5%, respectively, with Personal Income expected to increase to 0.4% and Personal Spending to decrease to 0.3%.
- Also at 8:30am the PCE Index reports, previously 0.2%, expected to be down to 0.1%.
- At 8:30 the PCE Year-Over-Year reports as well, previously 2.6%, expected to be up to 2.7%.
- Continuing with the 8:30am reports, Wholesale Inventories reports, previously 0.2%, with no expectations set.
- Along those lines, Retail Inventories also reports, previous 0.8%, with no expectations set.
- At 10:00am, Consumer Sentiment reports, previously 69.0, expecting a small improvement to 69.3.
Key Earnings Reports & Events Today
- No key Earnings Reports for Friday.
- Boeing’s strike continues, and the Union expects talks to resume today. The strike began on September 13th.
The Fed
- “Conversations with Governor Bowman” begins at 1:15pm from Birmingham, Alabama.
Stocks
Year-to-Date Performance:
- Up Most: Tech is up once again, now up 28.99% this year. Utilities passes Communications as second-best on the year, up 26.55%.
- Down Most: Important to know, no sectors are negative on the year. The smallest gain has been in Energy, down 2% yesterday, up overall to 4.74% this year. Second-to-last is now Materials, up 11.36%.
5 Day Moving Average, Percent of Large Caps above their 5 day average:
- Up Most: Materials are up most at 93%. Communications is second now at 82%.
- Down Most: Real Estate has had a bad 5 days, down now to 13%. Energy is down second-most, now at 18%.
Crypto
- Bitcoin: Bitcoin up significantly in the last 24 hours, now about $65k, which puts it at a staggering 50.2% gain on the year.
- Ethereum: Ethereum up significantly in the last day too, now over $2,600, which means an 14.5% gain on the year.
- Top Gainers Recently: Shiba Inu zorched upwards an astounding 20.9% in the last day.
- Important to note: Crypto markets are always open and prices change constantly.
Bonds
- 2-Year Treasury: Yields are up, now at 3.627%.
- 10-Year Treasury: Up a smidge again to 3.796%, but overall it’s been coming down this year too.
- The “spread” is opening, and the yield curve is no longer inverted, having un-inverted in late August, 2024.
Gold
- Price: Gold prices remain elevated, now up to $2670, and it’s up 29% on the year.
Real Estate
- 30-Year Fixed Mortgage Rate: Up just a bit, now to 6.21%. The mortgage rate has dropped about 6.9% this year.
Geopolitical Aspects
- Market sentiment appears bullish, with equities gaining from Chinese stimulus and positive earnings, notably from MU.
- Investors are keenly watching for the PCE data, expecting a decline in headline PCE to 2.3% YoY, signaling potential dovish signals for monetary policy.
- Treasury Secretary Yellen's comments on banking liquidity and the Fed's stance provide a backdrop of stability amidst market volatility dynamics.
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P.S.
Continue reading, if you would enjoy some simple explanations of key concepts to level up your financial education
Each of these elements interacts, creating the dynamic we call 'the market'.
Understanding these aspects of the investing arena can help investors in making informed investment decisions.
You’re the Hero.
We’re the Guide.
- PCE (Personal Consumption Expenditures Price Index): A key measure of U.S. inflation, reflecting changes in the prices paid by consumers for goods and services.
- "The Yield Spread" or just “The Spread”: The difference between yields on differing debt instruments, typically the 2-year and the 10-year Treasuries, often used to predict economic trends or assess risk.
- Initial Jobless Claims: The report measures the number of people who filed for unemployment benefits for the first time during the past week, indicating labor market strength or weakness.
- Consumer Confidence: The Consumer Confidence report measures how optimistic consumers are about the economy's short-term future, influencing spending and investment decisions. It's based on surveys about income, business, and employment conditions.
- PMI (Purchasing Managers' Index): This is like a health check for businesses. A number above 50 means more growth, below 50 indicates contraction. It's crucial because it shows if companies are buying more stuff, which suggests they're confident about future sales.
- Economic Reports: Data like jobless claims help predict economic health. For instance, rising claims might suggest economic slowdown.
- Jobless Claims: These are weekly reports that show the number of people filing for unemployment benefits. Higher numbers can indicate a weakening labor market.
- Housing Starts: This measures the number of new residential construction projects and is a key indicator of real estate market health.
- The University of Michigan's Consumer Sentiment Index measures consumer confidence through surveys, reflecting optimism or pessimism about personal finances and business conditions.
- Federal Reserve Rate Decisions: The Fed adjusts interest rates to either stimulate the economy (by lowering rates) or control inflation (by raising rates). Rate cuts can make borrowing cheaper, while rate hikes aim to curb inflation.
- Treasury Yields: The return on U.S. government bonds, often used as a measure of investor sentiment about future inflation and economic growth.
- Stock Sectors: Different sectors thrive in different economic conditions. Tech might boom during innovation, while energy could struggle with green shifts.
- Bonds and Yields: Bonds are safer than stocks but yield reflects risk or inflation expectations. Higher yields could mean investors demand more return.
- Cryptocurrency: Digital currencies like Bitcoin and Ethereum have been volatile but offer significant returns in 2024.
- Gold: A traditional safe-haven investment that often rises during times of uncertainty or when inflation is high.
- Real Estate: Influenced by rates, economic health, and demographic trends. Lower rates can inflate home prices due to increased buying power.
- Mortgage Rates: Higher rates make borrowing more expensive, which can cool down housing demand and affect real estate prices.
- 1 Basis Point (BPS) equals 0.01%. It’s easier to say “5 bips” than it is to say “zero point zero five percent.”
Data Sources
Key Economic Reports: https://www.marketwatch.com/economy-politics/calendarConsumer Surveys: https://data.sca.isr.umich.edu/reports.phpKey Earnings Reports: https://www.earningswhispers.com/calendar/Key Events: https://x.com/i/grok and fact-checkingThe Fed: https://www.federalreserve.gov/newsevents.htmStocks, Year-to-date Performance: https://digital.fidelity.com/prgw/digital/research/sectorStocks, 5 Day Moving Averages: https://www.barchart.com/stocks/market-performance#google_vignetteCrypto, Bitcoin: https://www.cnbc.com/quotes/BTC.CM=Crypto, Ethereum: https://www.cnbc.com/quotes/ETH.CM=Crypto, Top Gainers: https://www.cnbc.com/cryptocurrency/Bonds, 2 Year: https://www.cnbc.com/quotes/US2YBonds, 10 Year: https://www.cnbc.com/quotes/US10YGold: https://www.cnbc.com/quotes/XAU=US 30-Year Fixed Mortgage Rate: https://www.cnbc.com/quotes/US30YFRMGeopolitical Aspects: https://x.com/i/grok, https://chatgpt.com, and fact-checkingSimple Explanations: https://x.com/i/grok, https://chatgpt.com, and fact-checkingThe article itself is written by Arena Investor humans, not AIThe article audio is generated by https://elevenlabs.ioThe article images are generated by https://chatgpt.com using DALL-E
Classical Economics #2: Growth
Note: Growth in a national economy is measured in Gross Domestic Product (GDP). If GDP goes up 3%, then the economy grew 3%. When GDP is adjusted for the effects of inflation it is called Real GDP. So, Real GDP is the better measure of whether or not a country's economy is growing.
It wasn’t going well in Europe for a while
In Europe, there was little to no quality of life improvements economically for the general population for hundreds of years between the collapse of the Roman Empire and the formation of capitalist nations in the 1800s.
Since capitalism and the Industrial Revolution, a 1-2% Real GDP growth rate has occurred in most countries. But, before the formation of capitalist nations institutions of many types were formed, which were essential in developing and sustaining market economies. For instance, printing and the press became an institution after Gutenberg's press was invented; this allowed the promotion of ideas further and more consistently than by voice alone.
The spreading of good ideas and best practices was critical to the world economy.
Real GDP growth enables increased standards of living for masses of people
Note: This has historically been true for those individuals and states (countries) that have been able to fully participate.
To determine a country’s standard of living, Real GDP is divided by the number of people in a country to get Real GDP/person. There is an index of goods and services used to calculate Real GDP, and the population of a nation is determined during the census by counting everyone.
There are other economic ways to measure standard of living too, but they correlate highly (match closely) with Real GDP/person, so economists continue to use Real GDP and make decisions with it.
Since Real GDP/person is good and useful, but not perfect, it is important to add in additional measurements to determine the healthiness and desirability of an economy. The number of measurements is really endless. Perhaps we will write more about them in the future.
There are economic trade-offs
In economics, there are trade-offs like there are in health care. For instance, there are “side effects” that are observed in economics.
Healthy economies are not simple. But remember, it is within the complexities and inconsistencies that opportunities live — so if you want investment opportunities you need an environment you can trust (the market goes up over time), but is also dynamic (but it is an up-and-down climb along the way).
What is Nominal GDP?
Aside from Real GDP economists also use Nominal GDP, which is a measure of the dollar value of goods (such as iPhones) and services (such as Apple Music) sold.
Nominal GDP does not consider inflation. If you want inflation considered you use Real GDP.
Note: When you see or hear “Real” used in economic terms it means that inflation has been considered in that number or statistic.
So how do economists do their work?
One way they do their work is by measuring GDP in two consecutive years. The first year they consider “a basket of items” or “a basket of goods” (maybe it’s milk, eggs, coffee, rent, sweaters, etc.) and add them up. This basket helps economists calculate the CPI (Consumer Price Index). This is then called the base year.
The next year they evaluate a basket of goods and see if it costs more or less. If it costs more then there is inflation. (If it costs less then there is deflation.) If it costs 2% more then there is 2% inflation. So when economists measure current prices it is called Nominal GDP, and when they measure versus base year prices it is called Real GDP since it considers inflation. This process can get complicated, but those are the basics.
Economists don’t stop there
They don’t just want to know if we had a good year of growth, and an increase in standard of living. They want to compare it against many countries and across time. After all, if you had 2% growth and Mantanistan (a made up country) had 5% growth, you should evaluate why. You may have felt good about your 2% until you realized you missed a lot of growth that others were experiencing. This is a major concept to understand as an investor:
Putting it into perspective
It is not simply about if you are up or down, but moreso it’s about whether or not you maximize your gains without exceeding your comfort level.
Similarly, economists look around to see if the economy maximized its performance relative. In the US, it is also important to do so because the US economy is so dynamic, global, and intertwined that looking around helps you see opportunity or avoid economic problems.
Measuring GDP across countries
Measuring GDP across time is done by using Real GDP, as mentioned. Measuring GDP across countries is done by comparing Real GDPs with each other. To do so you would need to determine if that other country is presenting an accurate Real GDP. Remember, there is a basket of items to be measured.
When looking at data from another country are there items that were not counted in the base year, but then counted in the next year? That could present the world with a Real GDP that is higher than it really is. For this reason and others, investors get shy about investing around the world, and if they do they set limits on how much of their money they will invest abroad. That’s wise.
Investors (and economists) need accurate data
If they feel like the data is questionable, they invest less in those countries – or they’d be wise to use much more caution. Heck, there are investors that only invest in one industry! Maybe they are experts in that industry and only feel comfortable investing there.
With standard of living the increases compound
Even small differences in Real GDP make a big difference in standards of living because the increased standards of living compound. So it turns into gains on top of gains on top of gains. Countries that have even 5% Real GDP growth will double the size of their economy in 14 years. Wow. Now investors start looking abroad again. Ensure the associated risk (Is their data accurate?) versus reward (Their economy will be 2x’d in just 14 years!) is suitable for your financial situation though.
The Penn World Tables
economically.
Historically, there have been shifts in which countries and regions have had the biggest and most powerful economies. After the fall of the Roman Empire, China became the economic leader; during the 1600s Europe transitioned to becoming the economic leader; during the 1800s the UK became the economic leader; and during the 1900s the US became the economic leader. Nowadays, the US, China, and the EU are the 3 biggest economies, but India is set to pass the EU by 2030.
If you go abroad as an investor, do so in a suitable way for your financial situation – and perhaps keep India in view as you look.
Built for The One in the Arena
Arena Investor is on a mission not only to help with financial planning, and investment management, but also with education. Keep reading, watching, following, and sharing great Arena Investor content. And as always if you want professional advice, we are glad to be your teammate – along a financial journey you can actually enjoy.
You’re the Hero.
We’re the Guide.
Announcement: Arena Investor Partners with Stripe
We are excited to announce our latest integration with Stripe, a global leader in payment processing, to further enhance the security, reliability, and ease of transactions on ArenaInvestor.com. This partnership is a key addition to our tech stack, ensuring that every transaction our clients make is handled with the highest standards of security and efficiency.
Why Stripe?
Stripe is renowned for its industry-leading payment solutions, offering secure and seamless transaction processing for businesses around the world. With a reputation for innovation and reliability, Stripe is trusted by millions of companies to handle their financial transactions securely and efficiently. By integrating Stripe into Arena Investor’s platform, we are providing our clients with a trusted and modern payment experience that aligns perfectly with our commitment to delivering cutting-edge financial services.
Secure and Seamless Transactions
The integration of Stripe into Arena Investor’s tech-stack means that all transactions you make—whether purchasing Financial Planning services, Financial Health Monitoring & Alerts services, Portfolio Checkup services, or receiving any necessary refunds—are processed with the utmost security. Stripe’s advanced fraud prevention tools, encryption protocols, and secure payment methods ensure that your financial information is always protected. This partnership allows us to offer you a seamless, hassle-free experience when managing your investments or making payments through our platform.
Trusted by Millions, Now at Arena Investor
Stripe’s technology is trusted by some of the largest companies in the world, and we are proud to bring that same level of trust to our clients at Arena Investor. Whether you’re a new client or a long-time client, you can now enjoy the peace of mind that comes with using a secure, globally recognized payment processor. The buying experience on ArenaInvestor.com is now more streamlined than ever, making it easier for you to focus on what truly matters—your financial growth and success.
A Modern Advisory Experience
At Arena Investor, we believe that a modern advisory should be built on a foundation of technology that people know, love, and trust. The integration of Stripe into our platform is a reflection of this belief. We are committed to using the best tools available to create an experience that is efficient and secure. With Stripe, we are not only enhancing the quality of our services but also ensuring that our clients have access to the most reliable and modern financial tools available.
Looking Ahead
We are thrilled about the benefits this partnership with Stripe will bring to our clients and are excited to continue innovating and improving the services we offer. As always, our goal is to provide you with the best possible experience, and we believe that this integration is a significant step in that direction.
Thank you for trusting Arena Investor with your financial needs. If you have any questions about how Stripe will enhance your experience, please don’t hesitate to reach out to us.
Truly,
The Arena Investor Team
Built for The One in the Arena
Arena Investor is on a mission not only to help with financial planning, and investment management, but also with education. Keep reading, watching, following, and sharing great Arena Investor content. And as always if you want professional advice, we are glad to be your teammate – along a financial journey you can actually enjoy.
You’re the Hero.
We’re the Guide.
Announcement: Arena Investor Partners with Elements
We are thrilled to announce that Arena Investor is expanding our service offerings with a cutting-edge integration into our tech stack: Elements (getElements.com). This addition is set to transform the way we serve our clients in financial planning, investment management, and through our unique "Financial Health Monitoring and Alerts" service.
Why Elements?
Elements is a leading financial monitoring and planning tool designed to simplify the complexities of managing wealth. It provides a streamlined and user-friendly experience, enabling clients to see the bigger picture of their financial health at a glance. With Elements, you gain a comprehensive view of your financial status, making it easier to make informed decisions and track progress toward your financial goals.
Value for Financial Planning Clients
For our financial planning clients, Elements offers a robust platform to track your progress in real-time. Whether you're focused on building wealth, planning for retirement, or managing day-to-day finances, Elements helps you stay on top of your financial goals. The tool allows you to monitor key financial indicators, such as liquidity, net worth, and debt levels, ensuring that you always know where you stand. By leveraging Elements, Arena Investor can provide more personalized and proactive advice, helping you navigate life's financial milestones with confidence.
Enhancing Investment Management
For our investment management clients, Elements provides an additional layer of insight into how your investments align with your overall financial health. The integration allows us to seamlessly connect your investment portfolio with other aspects of your financial life, ensuring that your investment strategy is aligned with your broader financial goals. With Elements, we can more effectively manage risk, optimize your asset allocation, and keep you on track toward achieving long-term growth.
Financial Health Monitoring and Alerts
One of the most innovative features of Elements is its ability to deliver timely and actionable insights through our "Financial Health Monitoring and Alerts" service. This integration enables us to keep a close eye on your financial health, alerting you to potential issues before they become problems. Whether it's identifying opportunities to optimize your cash flow or providing early warnings about financial risks, Elements empowers you to take control of your financial future.
Looking Ahead
At Arena Investor, our mission is to provide you with the best tools and advice to achieve financial success. The integration of Elements into our tech stack is a significant step forward in fulfilling this mission. We believe that by combining the power of Elements with our expert financial planning and investment management services, we can offer an unparalleled client experience that supports your financial journey every step of the way.
We are excited about the enhanced value this integration will bring to your financial planning and investment management needs. If you have any questions or would like to learn more about how Elements can benefit you, please don’t hesitate to reach out to us.
Thank you for your continued trust in Arena Investor.
Truly,
The Arena Investor Team
Built for The One in the Arena
Arena Investor is on a mission not only to help with financial planning, and investment management, but also with education. Keep reading, watching, following, and sharing great Arena Investor content. And as always if you want professional advice, we are glad to be your teammate – along a financial journey you can actually enjoy.
You’re the Hero.
We’re the Guide.
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