At TM3 Wealth, it is important that you are well-informed about what is happening in the markets. Here are a few of the key topics of conversation that deserve the most attention this month. If you have any questions or would like to continue the conversation, please reach out.
Inflation continued its slow and challenging decline in October, showing only modest changes from recent months1. The consumer price index (CPI) rose 0.2% from September and 2.6% over the past year, marking the first rise in the inflation rate since March1. Core inflation, which excludes food and energy, rose 0.3% for the third consecutive month, suggesting that underlying inflationary pressures have not changed significantly1. High mortgage rates and stubbornly limited supply continue to make housing costs one of the primary drivers of inflation, making up over half of the monthly increase1. With prices for goods starting to rise after a year of steady declines, the gradual decline in inflation may face more hurdles ahead1.
Hiring slowed to its weakest pace since 2020, with only 12K jobs added in October, though the unemployment rate held at 4.1% and average hourly earnings saw a modest 4% yearly increase2. Although severe hurricanes and the Boeing strike disrupted hiring in some industries, the broader data showed that the labor market continues to gradually cool2. Job losses rose2, but initial jobless claims through mid-November have stayed relatively low3, indicating there has not been any material uptick in layoffs.
On the positive side of things, retail sales rose 0.4% in October, building on an upwardly revised 0.8% increase in September, suggesting consumer spending remains resilient4. The upward revision to September suggests consumers are entering the holidays on strong footing, supporting expectations for solid spending this holiday season. However, stubborn inflation and fewer shopping days between Thanksgiving and Christmas could negatively impact sales. In addition, some retailers have already signaled potential price hikes in anticipation of higher tariffs on imported goods5. Consumer spending continues to benefit from stable income growth and access to credit, but financial pressures may limit spending as we move into the new year.
The bottom line: While inflation isn’t rising sharply, it’s also not declining as quickly as hoped. This may keep the Federal Reserve more cautious about lowering rates amid steady consumer spending and a labor market that is cooling, yet resilient. Several Federal Reserve officials have indicated a preference for gradually lowering borrowing costs, with Chair Powell emphasizing that the strong economy shows no urgency for rapid rate cuts. Amid firm inflation data and the cautious tone from Fed officials, traders have tempered their expectations for a quarter of a percentage point December rate cut6. Clarity on the Fed’s policy path, including potential cuts projected for 2025, is expected when officials release their updated economic projections following their December meeting.
Sources:
- Bureau of Labor Statistics, https://www.bls.gov/news.release/cpi.nr0.htm
- Bureau of Labor Statistics, https://www.bls.gov/news.release/empsit.nr0.htm
- Department of Labor, https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20242342.pdf
- Census Bureau, https://www.census.gov/retail/sales.html
- Bloomberg News, https://www.bloomberg.com/news/articles/2024-11-07/steven-madden-targets-40-cut-to-china-imports-to-avoid-tariffs
- CME Fed Watch Tool, as of November 15, 2024, https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
Disclosures
The material presented includes information and opinions provided by a party not related to Thrivent Advisor Network. It has been obtained from sources deemed reliable; but no independent verification has been made, nor is its accuracy or completeness guaranteed. The opinions expressed may not necessarily represent those of Thrivent Advisor Network or its affiliates. They are provided solely for information purposes and are not to be construed as solicitations or offers to buy or sell any products, securities, or services. They also do not include all fees or expenses that may be incurred by investing in specific products. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. You cannot invest directly in an index. The opinions expressed are subject to change as subsequent conditions vary. Thrivent Advisor Network and its affiliates accept no liability for loss or damage of any kind arising from the use of this information.
Investment advisory services offered through Thrivent Advisor Network, LLC., a registered investment adviser and a subsidiary of Thrivent. Clients will separately engage a broker-dealer or custodian to safeguard their investment advisory assets. Review the Thrivent Advisor Network ADV Disclosure Brochure and Wrap-Fee Program Brochure for a full description of services, fees, and expenses. Thrivent Advisor Network LLC advisors may also be registered representatives of a broker-dealer to offer securities products.
Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The reader should not assume that investments in the securities identified and discussed were or will be profitable. A summary description of the principal risks of investing in a particular model is available upon request. There can be no assurance that a model will achieve its investment objectives. Investment strategies employed by the advisor in selecting investments for the model portfolio may not result in an increase in the value of your investment or in overall performance equal to other investments. The model portfolio’s investment objectives may be changed at any time without prior notice. Portfolio allocations are based on a model portfolio, which may not be suitable for all investors. Clients should also consider the transactions costs and/or tax consequences that might result from rebalancing a model portfolio. Frequent rebalancing may incur additional costs and/or tax consequences versus less rebalancing. Please notify us if there have been any changes to your financial situation or your investment objectives, or if you would like to place or modify any reasonable restrictions on the management of your account.
Advisory Persons of Thrivent Advisor Network provide advisory services under a “doing business as” name or may have their own legal business entities. However, advisory services are engaged exclusively through Thrivent Advisor Network, LLC, a registered investment adviser. TM3 Wealth and Thrivent Advisor Network, LLC are not affiliated companies. Information in this message is for the intended recipient[s] only. Please visit our website www.tm3wealth.com for important disclosures.
Securities offered through Thrivent Investment Management Inc. (“TIMI”), member FINRA and SIPC, and a subsidiary of Thrivent, the marketing name for Thrivent Financial for Lutherans. Thrivent.com/disclosures. TIMI and TM3 Wealth are not affiliated companies.
This communication may include forward looking statements. Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” “seeks,” “could’” or the negative of such terms or other variations on such terms or comparable terminology. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to differ materially.
Index Benchmarks presented within this report may not reflect factors relevant for your portfolio or your unique risks, goals or investment objectives. Past performance of an index is not an indication or guarantee of future results. It is not possible to invest directly in an index.
The CSI 300 (China Securities Index 300) is a capitalization-weighted stock market index designed to replicate the performance of the top 300 stocks traded on the Shanghai Stock Exchange and the Shenzhen Stock Exchange. It has two sub-indexes: the CSI 100 Index and the CSI 200 Index.
The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
The Bureau of Labor Statistics (BLS) is an agency of the United States Department of Labor. It is the principal fact-finding agency in the broad field of labor economics and statistics and serves as part of the U.S. Federal Statistical System. BLS collects, calculates, analyzes, and publishes data essential to the public, employers, researchers, and government organizations.
The CME FedWatch Tool is a tool created by the CME Group (Chicago Mercantile Exchange Group) to act as a barometer for the market’s expectation of potential changes to the fed funds target rate while assessing potential Fed movements around Federal Open Market Committee (FOMC) meetings.
The Magnificent 7 stocks are a group of mega-cap stocks that drive the market’s performance due to their heavy weighting in major stock indexes such as the Standard & Poor’s 500 and the Nasdaq 100. The group’s seven stocks earned their name in 2023 due to their strong performance and ability to power indexes higher seemingly without help from smaller stocks. The Magnificent 7 includes the following: Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG and GOOGL), Amazon (AMZN), NVIDIA (NVDA), Tesla (TSLA), and Meta Platforms (META).
