The Weekly Update 9/13/2024
Read This One!
We have just hit “air pocket” number one, and I would bet there are a few more to go, as noted in The Weekly Update on 8/30/2024 (Read it Here).
Perhaps I should just trademark “Fear Pockets” ™ since for the most part the price volatility we are likely to experience between now and say, November 5th, 2024, appears to be fear driven!
I say fear driven because the independent fact based, and source cited data doesn’t suggest a reason to be fearful. Emotion does that.
Let’s look at the fact-based daisy chain!
People are working the most hours since 2007!
Which means they have more earned income to pay taxes, save and spend on
“Stuff”!
And those earners quickly become consumers! The Personal Consumption Expenditures (PCE) is up +2.50% over last year. Per J.P. Morgan Guide to The Markets, 6-30-2024, update the consumer is 68.3% of our economy, so the PCE is Sign #1 of The Seven Signs monthly update for a reason. I detailed this in The Weekly Update 9/6/2024 (Read it Here)
When the consumer spends, Corporate America earns more profits.
Per Yardeni Research, Updated Earnings Estimates for Corporate America as measured by the S&P 500 are:
- 2020 $138
- 2021 $208
- 2022 $219
- 2023 $239
- 2024 Estimate $261.37
- 2025 Estimate $290.99
- 2026 Estimate $349.44
- 2027 Estimate $”4” handle
When Corporate America makes more sales and profits the U.S. Economy grows and expands!
And one reason is there are more consumers in our country than ever before, and they are hitting their peak spending years by the millions! There are 92 million Millennials born between 1980-1995. Those born in1980 are now 42 years old and consuming and spending at an even larger level than their Baby Boomer parents…. Who are consuming and spending so their Millennial kids don’t inherit it to spend on themselves. There were “only” 77 million boomers born between 1945-1965. Put the two generations of spending together and this economy has legs for decades to come!
I did not say market valuations go straight up, and I did not say without volatility, yet the data flow suggests the good old USA is just waking up from the post Covid hangover. The outlook is that this could be a 10 ticket ride up the net worth curve.
Don’t fret, panic or worry if the “normal” back and fill comes knocking. It will not be as scary as the business news will tell you. Instead, I think the knocking will be an opportunity and here at TWSG, we will pounce on that, for now just pray that it comes!
At TWSG, we are well allocated for this and have our well thought out Investment Selection Matrix™, investment menu working in our collective TWSG family’s asset allocations.
I’m interested in your thoughts, comments and observations. Feel welcome to call, email, or stop by the office and say Hi.
Respectfully,
James O. Lunney, CFP®
CERTIFIED FINANCIAL PLANNER™ Professional
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested in directly. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Stock investing includes risks, including fluctuating prices and loss of principal.
Asset allocation does not ensure a profit or protect against a loss. Value investments can perform differently from the market as a whole. They can remain undervalued by the market for long periods of time.