{"id":12876,"date":"2023-12-11T15:15:25","date_gmt":"2023-12-11T15:15:25","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=12876"},"modified":"2024-01-10T17:20:08","modified_gmt":"2024-01-10T17:20:08","slug":"2024-investment-themes-inflation-spending-downshift-oil-earnings-estimates","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/2024-investment-themes-inflation-spending-downshift-oil-earnings-estimates\/","title":{"rendered":"2024 Investment Themes: Inflation\/Spending Downshift, Oil, Earnings Estimates"},"content":{"rendered":"\n

The end of the year is the perfect time for investors to start thinking about possible investment themes. In today\u2019s Steady Investor, we take a look at three to consider for 2024:<\/p>\n\n\n\n

\u2022 Current inflation ease
\u2022 OPEC+ cuts production
\u2022 Earnings estimates are falling<\/p>\n\n\n\n

Slower Spending, Softer Inflation<\/strong> \u2013 U.S. economic trends in consumer spending and inflation might be best summarized with a single word: downshifting. On the spending front, Americans bought less furniture, clothes, and vehicles in October, with consumer spending rising 0.2% in October compared to September\u2019s stout 0.7% month-over-month increase, according to the Commerce Department. October\u2019s pace of increased spending was the slowest since May, as consumers saw personal incomes rise 0.2% in October compared to September\u2019s 0.4% increase. While spending softened a bit in October, inflation also continued in a downtrend. The Federal Reserve\u2019s preferred inflation gauge, the personal consumption expenditures (PCE) price index, rose 3% year-over-year in October, a meaningful decline from the previous month and below the long-term average for inflation. Core prices rose at a 2.5% six-month annualized rate, which is a significant step down from the 4.5% rate for the six months through April. All told, it\u2019s clear to see below that inflation-adjusted consumer spending has moderated in recent quarters1<\/sup>:<\/p>\n\n\n\n

7 Secrets to Building the Ultimate Retirement Portfolio in 2024!<\/a><\/span><\/strong><\/p>\n\n\n\n

Navigating through uncertain times is difficult, but we still believe it is possible to achieve your retirement goals. However, achieving these goals involves some work: Defining your investing objectives, determining your asset allocation, and managing investments over time. Our free guide, 7 Secrets to Building the Ultimate DIY Retirement Portfolio2<\/sup><\/a><\/span><\/strong>, will help you do just that.<\/p>\n\n\n\n

You will get insight on:<\/p>\n\n\n\n

\u2022 How to accurately establish your retirement income needs
\u2022 The two phases of determining your asset allocation
\u2022 Developing an investment discipline that allows you to get good results over time
\u2022 Investing rules to help you avoid self-sabotage
\u2022 Plus, our views on key steps to create and maintain the ultimate retirement portfolio<\/p>\n\n\n\n

If you have $500,000 or more to invest, get this guide to learn our ideas on building and maintaining a retirement portfolio to potentially achieve your long-term goals.<\/p>\n\n\n\n

Get our FREE guide: 7 Secrets to Building the Ultimate DIY Retirement Portfolio2<\/sup><\/a><\/span><\/strong><\/p>\n\n\n\n

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BEA3<\/sup><\/strong><\/em><\/figcaption><\/figure>\n\n\n\n

In our view, investors should not read too much into the soft consumer spending reading. For one, it still marked growth from the previous month. But second, consumers still showed robust spending patterns in areas like travel, where spending on trips abroad rose by 5.8%. Americans also spent more on concerts, museums, healthcare, and other areas. It\u2019s also true that many Americans may have just been waiting for deals to arrive in November. Consumers spent $38 billion in the five-day Thanksgiving period through \u2018Cyber Monday,\u2019 up 7.8% from 2022 levels.<\/p>\n\n\n\n

OPEC+ Cuts Production Again, But Oil Prices Aren\u2019t Rising<\/strong> \u2013 Saudi Arabia and other OPEC+ nations have continued to pursue production cuts throughout 2023, with the latest round calling for cuts of an additional million barrels a day. Oil prices barely budged. Since late September, the global price of a barrel of oil is down around -20%, despite Saudi and Russian attempts to curb global supply. The latest announcement has a few features that have not \u2013 at least to date \u2013 had the intended effect of putting upward pressure on oil prices. For one, the cuts are voluntary, and traders do not seem to be convinced that major oil-producing nations like the United Arab Emirates, Nigeria, and Angola are going to sign on. Another factor to consider is that the U.S. is the world\u2019s largest oil producer, and other nations can also step in to add supply to the market to replace lost OPEC+ production. The final factor is global economic demand, which is expected to slow in 2024 as global growth downshifts in response to higher interest rates.4<\/sup><\/p>\n\n\n\n

How Two Companies are Largely to Blame for Falling Earnings Estimates<\/strong> \u2013 With Q3 earnings season drawing to a close, investors like to scrutinize how companies adjust their forecasts for Q4. In any given year, the expectation is that companies will lower earnings forecasts, usually as a means to lower the bar. Over the last 10 years, for instance, companies have lowered earnings estimates by 1.8%, on average. In Q3 2023, however, S&P 500 companies have cut projections by 3.9%, more than double the 10-year average. Two companies are largely to blame \u2013 pharmaceutical giants Pfizer and Merck. Pfizer made a major adjustment to earnings with revenues from the Covid-19 vaccine expected to bring in $9 billion less than anticipated, and Merck reduced forecasts due to a $5.5 billion charge related to a deal with Japanese drugmaker Daiichi Sankyo. The good news here is that if Pfizer and Merck\u2019s estimates are removed from the S&P 500 totals, earnings expectations essentially fall back to the 10-year average.5<\/sup><\/p>\n\n\n\n

Tips for Revisiting Your Retirement Portfolio<\/strong> – As we wait to see how these events will impact the market long-term, there are things you can do today to protect your investments and create a retirement portfolio that meets your financial goals.<\/p>\n\n\n\n

We recommend downloading our free guide, 7 Secrets to Building the Ultimate DIY Retirement Portfolio6<\/sup><\/a><\/span><\/strong>, which provides a step-by-step blueprint of our customized investing process to potentially help you build a sound retirement portfolio of your own and pursue long-term investing success.<\/p>\n\n\n\n

If you have $500,000 or more to invest, get this guide to learn our ideas on the step-by-step process of building and maintaining a retirement portfolio that will potentially help you reach your goals and enjoy a secure retirement.<\/p>\n","protected":false},"excerpt":{"rendered":"

This week, we look at some key themes to watch for in 2024, including slowing consumer spending, oil production cuts and prices, falling earnings and more.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-12876","post","type-post","status-publish","format-standard","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12876","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=12876"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12876\/revisions"}],"predecessor-version":[{"id":12879,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12876\/revisions\/12879"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=12876"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=12876"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=12876"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}