Ep 61: Stock Market MakeHER Update: (11.04.24 AI Series)

Jess: You're listening to Market MakeHer, the self-directed investing education podcast that breaks down the stock market in an easy to understand manner.

Jessie: We've been trying something new and taken our weekly stock market newsletter and given it to AI to create this episode.

Jess: The voices you are about to hear are all AI, and it's how AI interprets our newsletter.

Jessie: This is experimental, which means your feedback is important to us.

Jess: Let us know if you want to hear this weekly.

Jessie: And of course, subscribe to the weekly newsletter.

Jess: There are visuals included in that.

Jessie: In that newsletter, we cover the focus of the coming week, major highlights from the previous week, and major economic events that have potential to move the market.

Jess: We say, what is this? And what does this mean for you as a self-directed investor? So without further ado, here is your stock market update as interpreted by AI, all sourced from our newsletter.

Jessie: Enjoy.

Jess: Welcome back, everybody, for another deep dive into market trends.

Jessie: Today we are going to be taking a look at the Market MakeHer podcast.

Jess: They had some interesting points about Q3 earnings, last week's market recap, and what's coming up on the economic calendar.

Jessie: Yeah, they do a really good job of sort of breaking down what can be really complex topics and making it a little bit more approachable for the everyday investor.

Jess: Absolutely.

Jessie: And I think that's what we try to do here, too.

Jess: So with that in mind, let's dive right into the first topic here.

Jessie: They talk about earnings season and the S&P 500 having its fifth straight quarter of growth, which on the surface sounds fantastic, but they do mention some things that we need to watch out for.

Jess: Yeah, they say that although a 5.1% increase is generally a positive sign, it's interesting to note that fewer companies are exceeding earnings estimates this quarter.

Jessie: So we're seeing around 75% beating estimates compared to the typical five-year average closer to 80%.

Jess: And then that earnings surprise is lower than usual as well, sitting at 4.6%.

Jessie: So companies are performing well, just not as exceeding expectations by as much as we've seen in the past.

Jess: Yeah, exactly.

Jessie: It's a subtle shift, but one that savvy investors will pay attention to.

Jess: And then also adding to that, some big players in the information technology sector, like Apple and Intel, haven't performed as well as many anticipated.

Jessie: And a higher-than-usual number of companies are issuing what they call negative guidance for Q4, meaning they're predicting a potential slowdown.

Jess: Okay, so not a market meltdown, but definitely some signals to keep an eye on.

Jessie: Now beyond earnings, Market MakeHer also pointed to the upcoming election as a source of uncertainty in the market.

Jess: So how are businesses sort of reacting to this? Well, think of it this way.

Jessie: Businesses are acting like someone who's planning a move.

Jess: They're holding back on big decisions and spending cautiously because potential changes to tax policy after the election could significantly impact their bottom line.

Jessie: That makes sense.

Jess: It's like putting big purchases on hold when you're anticipating, you know, a major life change.

Jessie: A perfect analogy.

Jess: And here's where it gets interesting.

Jessie: Despite this cautionary tale, analysts are still forecasting earnings growth through 2025.

Jess: However, the current forward P-E ratio for the S&P 500, which sits at 21.3, suggests the market might be a bit overvalued.

Jessie: This doesn't necessarily signal a crash, but it's a metric to watch closely.

Jess: It's like that moment when you find a used car you love, but the price seems a little steep.

Jessie: You know, you start wondering if it's really worth that much.

Jess: Exactly.

Jessie: Now shifting gears to last week's market action, there was a big surprise in the jobs report.

Jess: The economy added a mere 12,000 jobs in October, far below the anticipated 113,000.

Jessie: Wow, that does sound like a significant miss, what contributed to this unexpected number.

Jess: Well, the report cites hurricanes and labor strikes as potential factors.

Jessie: And we also saw downward revisions to previous job growth numbers, which is a normal part of the data collection process.

Jess: But it does paint a slightly less rosy mixture than initially reported.

Jessie: The silver lining is that the unemployment rate held steady at 4.1%.

Jess: November's data will hopefully offer more clarity.

Jessie: So one data point doesn't tell the whole story.

Jess: It's like trying to judge a book by its cover.

Jessie: Precisely.

Jess: It's about looking at the trends and the broader context.

Jessie: Now let's talk about the Federal Reserve and their potential response to this jobs news.

Jess: It's intriguing because despite the weaker-than-expected report, investors seem convinced that the Fed will cut interest rates by 0.25% at their upcoming meeting.

Jessie: In fact, futures trading indicates a 98% chance of a rate cut.

Jess: That's a strong vote of confidence from the market.

Jessie: What's driving this expectation, especially in light of the less-than-stellar jobs report? Well, the decline in treasury yields, which are essentially interest rates on U.S.

Jess: government bonds, offers a clue.

Jessie: This drop suggests that investors are anticipating lower rates from the Fed.

Jess: It highlights the Fed's delicate balancing act, stimulating growth without fueling inflation.

Jessie: It's like walking a tightrope, too much of a push in either direction and you risk losing your balance.

Jess: Exactly.

Jessie: It's about finding that sweet spot.

Jess: Now, Market MakeHer also highlighted some key economic data releases coming up this week.

Jessie: So what should we be paying attention to? Well, think of these economic indicators as, you know, puzzle pieces, each offering a glimpse into the overall economic picture.

Jess: So first up is factory orders, which provides insights into the health of the manufacturing sector.

Jessie: A rise in orders often signifies, you know, business and consumer confidence, indicating potential economic growth.

Jess: Conversely, a decline might signal a flowdown.

Jessie: So it's not just about what's being produced, but also about anticipating future demand.

Jess: What else is on the economic agenda this week? On Tuesday, which is also Election Day, we'll get the International Trade and Goods and Services report.

Jessie: This report sheds light on the U.S.

Jess: trade balance, indicating whether we're exporting more than we import, a surplus, or vice versa, a deficit.

Jessie: A large trade deficit can hinder economic growth, so a healthy balance is desirable.

Jess: It's interesting to consider how, you know, global trade dynamics play into our domestic economy.

Jessie: It's all interconnected, isn't it? Absolutely.

Jess: And then on Wednesday, we get the PMI composite final, which is kind of like a report card for the entire economy.

Jessie: This report combines data from both manufacturing and services sectors to provide a comprehensive overview of economic performance.

Jess: A score above 50 suggests growth, while below 50 indicates contraction.

Jessie: OK, that's a pretty straightforward indicator to grasp.

Jess: Anything else we should be watching for midweek? Wednesday also brings the Consumer Confidence Index, which is a gauge of consumer sentiment about the economy.

Jessie: It's based on surveys that ask people about their current financial situation and future expectations.

Jess: This is crucial because consumer spending is a major driver of economic growth.

Jessie: So it's about gauging the mood of the consumers, those of us who drive a lot of the economic activity.

Jess: What does Thursday hold for us on the economic front? Thursday is a busy day, starting with the Jobless Claims Report, which tracks the number of people filing for unemployment benefits.

Jessie: This report provides insights into layoff trends and overall job market health.

Jess: A spike in claims can be a warning sign for the economy.

Jessie: Got it.

Jess: So we want to see those jobless claims staying low and steady.

Jessie: What else is on the docket for Thursday? We also get the Productivity and Cost Report, which is a measure of the U.S.

Jess: economy's efficiency in producing goods and services.

Jessie: It tracks labor productivity and labor costs, essentially asking, are we getting more output for our input? So it's about understanding how effectively we're using our resources.

Jess: What else can we expect on this jam-packed Thursday? Thursday afternoon brings us the main event, the FOMC announcement.

Jessie: This is when the Federal Reserve, the central bank of the U.S., unveils its latest decision on interest rates.

Jess: They meet regularly to assess the economy and determine whether to adjust rates.

Jessie: This is what Market MakeHer called a market-moving event.

Jess: Interest rates have a ripple effect across the entire economy, don't they? Absolutely.

Jessie: Raising rates makes borrowing more expensive, which can curb spending and help manage inflation.

Jess: Lowering rates, on the other hand, makes borrowing cheaper, encouraging spending and investment, which can stimulate economic growth.

Jessie: This is a delicate balancing act, just like that tightrope analogy we used earlier.

Jess: The Fed has to weigh the risks of inflation against the need to support economic growth.

Jessie: Precisely.

Jess: This offers insight into potential price increases that might eventually be passed along to consumers.

Jessie: So it's like a sneak peek into potential future inflation trends.

Jess: We've certainly covered a lot of ground here with this economic calendar.

Jessie: It's fascinating to see how all these different indicators intertwine to tell the story of our economy.

Jess: It is like a tapestry, with each thread contributing to the overall picture.

Jessie: And remember, Market MakeHer emphasizes the importance of ongoing learning and consulting a financial advisor for personalized advice.

Jess: Absolutely.

Jessie: It's about empowering ourselves with knowledge and making informed financial decisions.

Jess: Yeah, it really is amazing how all these reports kind of give us a glimpse into this complex machinery of our financial system.

Jessie: But let's shift gears a little bit and talk about some of the specific companies that Market MakeHer highlighted.

Jess: They specifically mention Amazon and Apple, two tech giants who recently reported earnings.

Jessie: So what stood out to you about their performances? Well, it's fascinating to see how these two industry leaders are navigating the current market dynamics.

Jess: Amazon, for example, saw its stock soar after projecting a really robust holiday quarter.

Jessie: Their optimism seems to be resonating with investors, even amidst the economic uncertainties that we've been talking about.

Jess: Yeah, it seems like they're really tapping into that persistent consumer demand, especially during the holiday season.

Jessie: What do you think is driving this confidence in their outlook? Well, Amazon's aggressive growth strategy, particularly in cloud computing and advertising, seems to be fueling investor enthusiasm.

Jess: You know, they're constantly diversifying and innovating, which is a key factor in their continued success.

Jessie: Yeah, it's like they're not content with conquering one market.

Jess: They're always looking for the next frontier.

Jessie: Now, in contrast to Amazon's exuberance, Apple's earnings report, while positive, was met with a more muted response from investors.

Jess: What factors do you think contributed to this more cautious reaction? Well, Apple did exceed earnings expectations.

Jessie: Their guidance for future quarters was more subdued.

Jess: And that kind of temperate investor excitement.

Jessie: Remember, guidance is a company's prediction for future performance, and it holds a lot of weight in the market.

Jess: It's like getting a good grade on a test, but then hearing your teacher say, but I expect even better next time.

Jessie: The pressure is on.

Jess: So what's behind Apple's more cautious outlook? Are they facing any specific challenges? Well, Apple's grappling with a few headwinds, including slowing iPhone sales and increasing competition in the services market.

Jessie: You know, the smartphone market is becoming increasingly saturated, and Apple needs to find new avenues for growth.

Jess: It's a reminder that even tech giants aren't immune to, you know, market pressures and evolving consumer trends.

Jessie: What's your take on Apple's ability to navigate these challenges? Well, Apple remains a powerhouse in the tech world, and they have a long history of innovation.

Jess: So it'll be interesting to see how they adapt and evolve their product lines and services to address these challenges and maintain their competitive edge.

Jessie: So we've got Amazon, the seemingly unstoppable force, and Apple, the tech titan, facing some hurdles.

Jess: You know, these contrasting stories offer valuable insights, I think, into the dynamics of the market.

Jessie: As we wrap up this deep dive, what key takeaway would you leave our listeners with today? Well, I think these stories underscore the importance of delving deeper than just the headline earnings numbers.

Jess: It's crucial to understand a company's overall strategy, their growth potential, and the challenges they face.

Jessie: Investing is not just about picking winners and losers.

Jess: It's about understanding the nuances of their stories.

Jessie: It's about looking beyond the surface and understanding those forces that are really driving these companies.

Jess: Well, thank you for joining us on this deep dive into market trends.

Jessie: We hope you've gained some valuable insights and knowledge to help you on your investing journey.

Jess: Remember, investing involves risk.

Jessie: There is always potential to lose money when investing in securities.

Jess: Market MakeHer provides educational content and resources for informational purposes only.

Jessie: We are not registered financial advisors and do not provide personalized investment advice.

Jess: Any information provided by Market MakeHer on our website or podcast is not intended to be a substitute for professional financial advice.

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