Weekly Reading Recommendations
Probability of a U.S. Recession has Fallen (Goldman Sachs)
Social Security Benefits to Rise 2.5% in 2025 (Fidelity, Reuters)
Inflation Cools Slightly in September (NY Times)
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This Week's Highlight Article
3rd Quarter in Review
The third quarter was strong for risk assets and safe havens with U.S. equity markets posting an all-time closing high to finish out the quarter and bonds delivering positive returns, but not without a pickup in volatility at the start. 2024’s stock market rally was thrown off course in late July/early August as investors reacted to a weaker-than-expected jobs report, fueling concerns that a stumbling labor market implied a recession may be looming on the horizon.
Digging deeper into the performance drivers, this week's highlight article from J.P. Morgan provides a review of the third quarter.
Charts that matter
Checking in on Earnings Growth
Analysts believe the S&P 500's "earnings recession:" in 2023 has firmly come to an end. For calendar year 2024, analysts are projecting earnings growth of 10%. Furthermore, they are projecting earnings to grow by 18% in 2025. All bodes well for continued strength across equity markets.
If we equal-weight indexes by giving each constituent company the same percentage regardless of size, it becomes obvious how much a few giant US companies are changing perceptions. What comes as a surprise to many is that on an equal-weighted basis, the total return on MSCI’s index for Europe has actually outperformed its US Index since the beginning of 2023.
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