Macro market analysis playlist

October 2024 highlights

Beautiful: Despite the strength and resilience of the US economy over the past few years, the doubters have persisted, relying increasingly on fewer and fewer data points as support. With the annual revisions to the National Economic Accounts, all hopes that GDP would be revised down to the more tepid pace of growth suggested by GDI evaporated as the unusually large gap between the two measures of economic activity disappeared as GDI was revised up to GDP. The economy has been even stronger than we had previously thought. Another bear narrative bites the dust.

Disarm: Adding insult to injury, the consumer now looks to be on even firmer footing as the saving rate was revised meaningfully higher as a part of those revisions as well. Whereas a low saving rate had been a key part of the cracking consumer narrative, the saving rate now sits closer to the elevated pre-pandemic range, providing a continued buffer to support healthy consumption in the months and quarters to come.

1979: While the market has assumed that labor markets were destined to continue weakening with the unemployment rate set to march steadily higher, those arguments have lacked compelling logic other than to point to prior cycles. But as has been apparent for years now, this is not a typical cycle. And what had been assumed to be the early stages of labor market deterioration now looks increasingly like a story of normalization.

Take Me Down: The spotlight may be shining brightest on the Fed, but the synchronized tightening cycle of the past few years is now giving way to a synchronized easing cycle, as the Fed simply joins the growing ranks of global central banks that are recalibrating policy as inflation returns to target. Strong growth, resilient labor markets, and synchronized policy easing are forming a very constructive backdrop for the economy and markets alike.

Bye June: While tech and the AI trade may have been the story of the first half of 2024, that’s given way to the long-awaited broadening in market participation since the midpoint of the year. Whereas the Magnificent 7 generated nearly 60% of the return of the S&P 500^® in the first half of the year, the S&P 493 has now picked up the leadership flag, driving over 93% of the return since June 30, as over 60% of issues have outperformed the index. There’s plenty of room for that broad participation to continue against the constructive economic backdrop.