Election Shine Fading?

By Scott Poore, AIF, AWMA, APMA
Chief Investment Officer, Eudaimonia Group

Equities and bonds dropped last week as inflation moved higher and uncertainty about tariffs, et. al. hit markets.  Small Cap stocks and Healthcare took it on the chin over the possibility of regulations in the food and drug industry under a new administration.  While Retail Sales were up more than expected in October (+0.4% vs +0.3%), if food and autos were backed out, the number would have been closer to -0.1%.  Inflation, while it came in as expected (+0.2% for both PPI & CPI), the year-over-year number revealed that producer prices inched higher and close to equaling or exceeding consumer prices, which is not a good sign for lower inflation moving forward.  Fed funds futures dropped last week from an 85% probability to just a 58% probability of a rate cut in December.

Meanwhile, the 10-year Treasury Yield is rising despite 75 basis points worth of Fed rate cuts.  The yield curve continues to steepen as the 10-year Treasury Yield is approaching the 3mth T-bill yield.  CEOs, as a whole, do not seem confident as more chief executives are sellers of the stock of their respective companies.  And yet, investor sentiment is at all-time-highs.  The Euphoriameter is at a peak higher than 2000 and the National Association of Active Investment Managers shows equity exposure at 4-month highs.  There are plenty of Fed speakers this week to muddy the waters.

___________________________________________________________________________________________________________

Disclosures

The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.

Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general. 

Past Performance does not guarantee future results.