Market Pulse With Dan Sheehan
Dan Sheehan, MBA, MS
Financial Markets Strategist / Financial Advisor | PhD Candidate in Business-Finance | MS in Data Analytics | MBA | Former D1 Collegiate Golfer at Augusta University | dansheehan.beehiiv.com
Good morning investors,
We enter what promises to be the most consequential week for U.S. markets in 2024. The convergence of Tuesday's presidential election, Thursday's Federal Reserve decision, and earnings from 100 companies in the S&P 500, which creates an unusually complex backdrop for market participants.
Market Landscape
Global markets begin the week with measured optimism as investors position for multiple catalysts. Domestic futures suggest modest gains, with S&P 500 and Nasdaq futures advancing 0.2% and 0.1% respectively. Friday's session demonstrated market resilience despite surprisingly weak employment data, with major indices posting solid gains as investors interpreted labor softness as supporting monetary easing.
The morning's narrative includes both symbolic and substantial shifts in market leadership. Nvidia's elevation to the Dow Jones Industrial Average, replacing Intel, represents more than index rebalancing - it exemplifies the market's growing discrimination between AI leaders and followers. Nvidia's 173% year-to-date appreciation against Intel's 50%+ decline tells a broader story about technological transformation and market valuation.
Global Context
International markets reflect pre-election caution, though sector rotation continues favoring energy and resource companies over technology names. The CBOE Volatility Index trades above its 30-day moving average of 19.45, though notably below the 34-41 range seen before the 2020 election. European markets demonstrate similar restraint, while Asian exchanges showed mixed results with Chinese stocks advancing amid stimulus speculation.
Election Implications
Corporate America's focus on election implications has reached unprecedented levels. The frequency of election discussions in earnings calls has surpassed any period since 2004, with over 100 companies addressing potential policy shifts between mid-September and October's end. This attention reflects growing recognition that fiscal policy decisions could significantly impact inflation trajectories and corporate planning.
Federal Reserve Crossroads
Thursday's Federal Reserve meeting represents a crucial test of monetary policy calibration. While markets have fully priced a 25-basis point cut, strengthened by Friday's employment data showing just 12,000 new jobs - the weakest since December 2020 - the path forward requires delicate balance. However, I don't think this number should be completely taken at face value with the impacts of the hurricane on the number. The previous 50-basis point move, while addressing concerns about falling behind the curve, may have been overly aggressive. The Fed was reactionary and, I feel, acted with a little emotion, similar to the behavior I try to keep clients away from. I believe the Federal Reserve must remain on a consistent path in the cutting cycle and not be reactionary to every data point that comes out. They need to be forward-thinking and learn from past mistakes. The Fed must be aware of the signals that the bond market is giving them.
Both presidential candidates' spending proposals suggest potential inflationary pressures, requiring careful coordination between fiscal and monetary policy. The challenge lies in maintaining economic momentum while preventing inflation from reaccelerating toward recent peaks.
Economic Calendar for the Week
Tuesday, November 5
Thursday, November 7
Friday, November 8
Corporate Developments
Warren Buffett's strategic repositioning deserves careful attention. Berkshire Hathaway's third-quarter moves included $36.1 billion in stock sales and no share repurchases - the first such pause since 2018. The reduction of Apple holdings by approximately 25% and cash position growth to $325.2 billion suggests both caution and preparation for future opportunities.
Boeing approaches a potential resolution to its seven-week labor dispute, with Monday's vote on a 38% wage increase over four years. The outcome carries implications beyond aerospace, potentially influencing labor negotiations across manufacturing sectors.
Blackstone's expansion plans in European private wealth markets signal growing institutional focus on retail investor access to alternative investments. The strategic push into at least two new European markets in 2024 reflects broader evolution in wealth management distribution.
The European Union's examination of Apple's iPad operating system compliance adds another dimension to global technology regulation. This scrutiny, combined with Indonesia's restrictions on certain smartphone sales, highlights increasing complexity in international technology markets.
Earnings Calendar
Monday, November 4
Tuesday, November 5
Wednesday, November 6
Thursday, November 7
Friday, November 8
Strategic Outlook
The week ahead presents an unusual confluence of market-moving events. While election uncertainty typically drives defensive positioning, the combination of anticipated monetary easing and crucial earnings creates a more nuanced environment. Particular attention should focus on how fiscal and monetary policy coordination might evolve under various election scenarios.
There will be increased volatility and noise around the election and both candidates. I will release a post tomorrow on the election, but the US economy is far more than a president. Just avoid the doom and gloom and remember that the prospects of the United States are far greater than the negative that can come with any presidential candidate.
As always, feel free to reach out with any questions about these market developments.
Dan Sheehan
This newsletter is for informational purposes only and should not be considered as investment advice. Always consult with your financial advisor about your specific situation.