Remy Blaire engages in a comprehensive discussion with Katy Kaminski, Chief Research Strategist and Portfolio Manager at AlphaSimplex. The segment opens with an overview of the current state of the U.S. stock market, where major stock averages are striving to maintain gains despite recent fluctuations. Remy highlights the midweek slide in stocks, which is attributed to new developments in U.S.-China trade relations, particularly following Treasury Secretary Besson’s confirmation of potential export restrictions on U.S. software to China. This uncertainty is compounded by President Trump’s comments regarding possible restrictions taking effect by November 1st.
As the third quarter earnings season unfolds, Remy notes that 86% of companies have exceeded Wall Street estimates, leading analysts to revise their expectations for S&P 500 earnings growth to over 9% compared to the previous year. Katy joins the conversation to provide her insights on the significance of macroeconomic risks in the current market environment. She emphasizes that these risks are crucial, especially as the market is focused on potential rate cuts from the Federal Reserve. The upcoming Consumer Price Index (CPI) data is identified as a key indicator that could influence policy decisions, with Katy expressing concern that the ongoing government shutdown and lack of data could trigger a short-term sell-off if the anticipated rate cuts do not materialize.
The discussion then shifts to the currency markets, where Remy points out that the U.S. dollar index is hovering just above the 99 level. Katy explains that the recent strengthening of the dollar may be a temporary reaction to rate policy uncertainty, but it could also indicate a potential shift in the longer-term trend. She notes that strong U.S. growth numbers are supportive of the dollar, while policy uncertainty could further bolster its value.
Next, the conversation turns to precious metals, particularly gold, which has seen a significant increase of about 50% year-to-date. Remy highlights gold’s recent rise of approximately 2.5% and its role as a safe haven amid geopolitical tensions and a weak dollar. Katy discusses the implications of the recent reversal in gold prices, suggesting that while gold remains a popular hedge against uncertainty, there may be limits to future demand, particularly in light of rate uncertainty.