Hey everyone, buckle up because it has been a crazy week on Wall Street and we are diving deep into all the latest market reports.It's been wild for sure.So to kick things off, the S&P 500 almost hit a major milestone this week.
I know, right?We were all watching that.
But close, but no cigar, as they say.
But hey, it's still up, along with every other major index.
It is, yeah.Every major index saw gains this week.And I think that really points to just a broad sense of optimism in the market.
OK, so optimism.What's driving that?Is it the election results?
Well, you know, the election results definitely played a role, especially for certain sectors like consumer discretionary and energy.
They tend to be very sensitive to these kinds of shifts and they're responding well, it seems, to a Republican controlled Senate and White House.
Yeah.And it makes sense.People are feeling good.They're spending money, which is great for those industries.
But it's not all about politics, is it?
No, it's not.The Fed's recent rate cut also injected some fuel into the market.
Right.The Fed cut rates again.Can you remind us what happened there?
Sure, so they cut rates by 25 basis points, which brings the target range down to between 4.5% and 4.75%.
OK, so essentially they're trying to stimulate the economy.
Right, exactly.Trying to make it cheaper for businesses to borrow money, which should lead to more investment.
Didn't the report also mention a couple of other factors, like falling treasury yields?
Yes, falling long-term treasury yields.That is definitely a positive sign for the market.
And lower volatility, right?
Yes, lower volatility.You know, this really tends to make investors feel more confident, less risk, makes them a little more willing to put their money to work.
Oh, yeah.Can't forget about that.Lower crude oil prices.And that, of course, has a ripple effect, right?Lower costs for businesses, lower costs for consumers.
So it's like we've got this perfect storm of positive news right now.Election results, rate cuts, lower volatility, cheaper oil.
It feels that way, doesn't it?
So it sounds like a recipe for a market boom.
Yeah, a lot of people are feeling pretty bullish.
But I know there's always a but, right?There's got to be a catch.What is it?
Well, you're right.There is a catch, and it's the one we've been talking about for months.Inflation.
The inflation elephant in the room.
It's always lurking in the background.
So what's the latest?Fill us in.
Well, the latest is that we're all on the edge of our seats waiting for two crucial inflation reports coming out next week.The Consumer Price Index, CPI, and the Producer Price Index, PPI.
These reports are going to give us a much clearer picture of whether inflation is truly cooling down or if it's going to stick around.
Yeah, if it's going to rain on our parade.
Now I always get a little lost with all the jargon.The report mentioned the October CPI and said it's expected at 0.2 percent for headline and 0.3 percent for core.What does all that even mean?
Yeah.So good question.Headline CPI includes the prices of everything.Everything.Okay. While core CPI strips out the more volatile food and energy prices to give us a clearer look at underlying inflation trends.
And these numbers are really important because if they come in higher than expected, it could really spook the market, making investors worried that the Fed might have to start raising rates again.
So it's like, OK, the market's feeling good right now, but everyone's kind of holding their breath.
I think that's a great way to put it.
To see what happens with inflation.
Right.The Fed is definitely in a tricky spot right now.They want to keep the economy going strong, but they also need to keep inflation under control.
And those upcoming CPI and PPI reports are going to be really important in determining their next move.
OK, so stay tuned, because next week is going to be interesting.
So much going on, it feels like we're just getting started.
Right.It's a lot to cover.
So we've got this rally going, but inflation could still throw a wrench in the works.
Right.And don't forget, there are always other factors to consider, too.
That's true.It's like a giant puzzle.
Speaking of puzzles, the report also mentioned something about China's budget meeting.Did you catch that?
I did, yeah.It seems that China has decided against major economic stimulus measures, which kind of sent their stock market lower on Friday.They were still up for the week overall.
But, you know, it's a reminder that what happens in China doesn't stay in China.
Right.We're all connected.
Exactly.It can have ripple effects on markets all over the world.
Speaking of connections, there was another thing in the report that I wanted to ask you about.It said that shorter term Treasury yields gained on longer term yields this week.What does that even mean?
Yeah.So think of shorter term yields as kind of like the market's temperature check for near term rate policy.OK.
When they rise faster than longer term yields, it basically suggests that investors are betting on the Fed to keep interest rates higher for longer.
So even though the Fed just cut rates, the market isn't convinced that they'll keep cutting.
Yeah, that's one way to look at it.It's like the market is saying, OK, we appreciate the cut, but we're not sure you're done yet.
It's got a mind of its own.Speaking of upcoming events, besides the CPI and PPI reports that we already talked about, we also have the October retail sales data coming out next Friday.
And retail sales is a pretty good indicator of how consumers are feeling about the economy, right?Like how much they're spending.
Absolutely.And remember, September's retail sales were really strong.So it'll be interesting to see if that momentum continued into October.
If it does, it would definitely support the current market optimism.
All right.So we've talked about the big picture, the Fed, even China.Now let's zoom in on some specific companies.
I know you've been following the Airbnb story closely.What's the latest?
Yeah, Airbnb had a bit of a rough week, actually.Their earnings fell short of analysts' expectations, even though the revenue was up.
So they're making more money, but they're still missing earnings targets?What's happening there?
Well, it seems like investors are getting worried about Airbnb's profitability.Even though they're generating more revenue, their expenses might be rising faster, which could squeeze those profit margins.
That makes sense.It's not just about how much you make.It's about how much you keep.
Now, on the flip side, we have Tesla, who seems to be defying gravity lately.They just keep hitting new highs.
What do you think is driving that?
Well there's definitely excitement around the electric vehicle market of course.
But some investors are also speculating about potential synergies between Elon Musk and the new administration.
You know potential partnerships favorable policies.It all adds to the buzz.
It's not just about the cars anymore.
It's not.It's about the bigger picture, the political landscape, and how that's going to shape the electric vehicle industry in the future.
Speaking of other companies making headlines, Home Depot got an upgrade this week.
They did from the Telsey advisory group.
Home Depot has been around forever.It seems like they're always doing well.What was the reason for the upgrade?
Well, Telsey believes that Home Depot is well positioned to capture even more market share in the coming months. They cite things like their strong execution, their robust supply chain, and their increasingly popular digital platform.
So even in a crazy market like this, there are still some companies that are considered safe bets.
It seems so.The companies with really strong fundamentals, they're the ones that weather the storms.
OK, so let's not forget about the good news we got on the consumer sentiment front this week.The University of Michigan's data showed consumer sentiment actually hit a seven-month high.
That's right.A seven month high.
So despite all the economic uncertainty that we've been talking about, consumers are feeling good.
Well, it seems that way.You know, this could be due to a lot of things.The recent stock market rally, falling gas prices, maybe even just a sense of relief after the election.
Whatever it is, it's a positive sign because when consumers are feeling confident, they spend more money, right?
Right.Which is good for everybody.
It is good for businesses, good for the economy.
That's right, like a giant web.When one part vibrates, the whole thing feels it.
We did see some technical analysis in the report, too.They talked about the S&P 500's Relative Strength Index.
Oh, yes, the RSI.That's a momentum indicator.
Helps investors understand whether an index is overbought or oversold.
And it can help spot turning points in the market.
So what is the RSI saying about the S&P 500 right now?
Well, it's not flashing a full blown overbought signal yet.That's usually anything above 70.OK.But it has been climbing steadily since Monday.Went from the mid 40s to 69 today.
Whoa, OK.That's a big jump.Are we in trouble?
It could be a sign that the market is getting a little ahead of itself.We have had this massive rally since the election.
It's possible some investors are getting a little too excited.
Yeah, too euphoric.When sentiment gets too extreme like that, it can set us up for a correction.
Oh, no.So you think we might see a pullback soon?
It's possible.But you have to remember, the market doesn't always follow a predictable pattern.Sometimes it can stay irrational longer than you can stay solent.
That's a great point.It's unpredictable.We can analyze it all we want, but we can never know for sure what's going to happen.So much to think about.I feel like we're at a crossroads.
Yeah, I think that's a good way to put it.The market's optimistic, but there are still some challenges ahead.
OK, so for investors like us listening, what are the key takeaways here?What should we be focusing on?
Well, I think it's crucial to remember that the market is always looking ahead.You know, it's not just reacting to what's happening today.
It's trying to predict the future.
Right.It's trying to anticipate what will happen tomorrow, next week, next year.
So even with the inflation worries and everything else, it's feeling good because it's betting on a brighter future.
Exactly.Investors are always weighing the potential rewards against the risks.And right now, the scales seem to be tipping toward optimism.
But that could change, right?
Oh, absolutely.Things can change quickly.If the economic data starts to look bad or something unexpected happens, that could shake things up.
Right, like a sudden spike in oil prices or some kind of global event.
Exactly.Those are the kinds of things that can really rattle the market.
So we need to stay informed.
Always stay informed and be ready to adapt.
So no matter how good things seem, always have a backup plan.
Exactly.Diversification, risk management, and a long term perspective.Those are your best tools in any market.
Don't put all your eggs in one basket.
Right.And don't panic if things take a dip.
Stay focused on those long term goals.
Exactly.Investing is a marathon, not a sprint.
Great advice.Well, I think we've given our listeners a lot to digest today.
We have covered a lot of ground.
From the big economic picture down to specific companies.
It's been great unpacking it all with you.
So to wrap things up, I want to go back to something you said earlier.If the market keeps climbing, even with the inflation worries, what does that say about investor confidence?
Are we in for a period of sustained growth or is this just a blip before a correction?
That's the big question, isn't it?And unfortunately, we don't have a crystal ball.Only time will tell.
I guess we'll just have to wait and see.
We will.But it's definitely something to think about as we watch things unfold.
Well, that's all the time we have for today's deep dives into the stock market.Thanks for joining us.And we'll be back soon with more insights to help you stay ahead of the curve.
Sign in
