Monster Week Ahead-Earnings, Data, & Jobs-But No Need To Be Afraid…

As weeks go this is a monster week, but Halloween notwithstanding, there is no need to be afraid. Yet… There is plenty of action with Apple, Microsoft, Amazon, Google & Meta announcing earnings, a PCE report (Fed favorite) and ending the week with a jobs report. All of this is coming just a few days before a close, contentious election that may be contested for days/weeks/months/years into the future. But at the end of the day, inflation is dropping, the economy is rising (slightly), major companies are making money, interest rates are stabilizing and the sun will be shining in most places. The rest of the world, on a relative basis, is nowhere near the strength of the US (on either a military or economic basis).

This should not suggest that there are no concerns or worries on the horizon. There is always something that we, as humans, or, as investors, can worry about. The long-term treasury bonds (10 year) have increased 50 basis points (past month), some company somewhere will have horrific earnings, and a member of the Federal Reserve will say something to make us all think that the Fed meeting post election or pre Xmas, will fall short of 2 additional rate cuts. Also, on balance, a week from today, at least 1/2 the country and much of the outside world, will be mourning some likely US election result. These are all things that investors could potentially worry about.

However, from a macro point of view, things are not so bad. Interest rates are currently low (historical perspective) and very likely going to get lower. Most companies are still beating earnings expectations and the Mag Seven are likely going to continue to show evidence that they continue to perform well growing both revenues and profits. Moreover, the companies just below the Mag Seven ($10B to $100B in market cap) are likely to perform even better. Oil prices are dropping (owing to the easing of tensions in the Middle East) and the jobs report will likely show that we are still a nation hiring a bunch of government, social service and health care workers. This latter is a longer term problem, but most investors will ignore these issues until after the election. And irrespective of whoever wins November 5th, people in California, our most populous state, will likely be celebrating an LA Dodgers World Series victory.

Yes, the next week of late October through the first week of November will probably be the most impactful of the remaining days in 2024. But there is no need to worry. The stock markets are enjoying a strong year and are headed to higher highs in the future. Other markets throughout the world are suffering or as in the case of China rising 35% in a month and then dropping in half 10 days later. The US is much more stable and, at least for the foreseeable future, a better place to be. Sure, investors can fret and complain, but taking all things into consideration, as Dorothy would say in the Wizard of Oz, “there is no place like home”.