Turning the Page

It’s been just over a month since the U.S. presidential election, and financial markets continue to be influenced by anticipation for the incoming administration in Washington D.C. Whether it’s prospects for new tariffs, changes to immigration and tax policy, or simply the outlook for the U.S. economy overall, there have been no shortage of prognosticators delivering forecasts whose goal may be to inflame, not inform. We will ‘take the under’ on much of the hyperbole on offer and instead focus on the U.S. economy which in aggregate, is ending the year in a very strong position. A vibrant consumer, healthy corporate earnings, low unemployment and GDP running above trend at nearly 3% all signal that we are turning the page to the new year with a great deal of economic momentum.

**Jobs Rebound **

This morning, the Bureau of Labor Statistics reported that the U.S. economy added 227,000 jobs in November and the unemployment rate rose to 4.2% compared to 4.1% from the month prior. The October jobs report had been significantly affected by hurricanes and the Boeing strike and was artificially low, with just 36,000 jobs added in that month. This morning’s report reflected an expected rebound from October, and while that’s a welcome development, the combined average of just over 130,000 job additions per month still represents some underlying slowing in net new job additions that will catch the eye of policymakers.

The Federal Reserve has just one meeting remaining this year at which they will decide on a possible third cut to the federal funds rate since they began cutting rates in September. Today’s labor report, which can be characterized as in-line but not strong, is leading markets to view another rate cut in two weeks as very likely. Given the Fed’s dual mandate to focus on both jobs and inflation, next Wednesday’s release of the November Consumer Price Index will be their last reading on inflation and the final major economic data point they will take into their two-day meeting.

**Mr. Bessent Goes to Washington **

• One of the most important Cabinet positions in any administration is that of the Secretary of the Treasury, who essentially serves as the Chief Financial Officer for the United States. Late on the evening of Friday, November 22nd, Scott Bessent was nominated to fill this role, a longer than typical wait given the significance of the role. As the person charged with formulating our country’s fiscal and tax policy as well as managing our substantial federal debt, uncertainty surrounding several other potential candidates for this role contributed to added volatility in the interest rates of Treasury bonds, and the yield on the 10-year Treasury note hit nearly 4.50%, close to the highs of the year. Financial markets breathed a collective sigh of relief upon Mr. Bessent’s nomination, considering him the ‘safe choice’. Disruption may be good in certain areas of the economy, but when it comes to being the CFO of the $29 trillion U.S. economy and responsible for the issuance and servicing of our substantial national debt, it is important to have the market’s confidence.

Takeaways for the Week:

• Inflation in November as measured by the Consumer Price index (CPI) is expected to have increased by 2.7% versus the same month last year when it is reported next Wednesday.

The benchmark S&P 500 index set its 58th closing high of 2024 this week out of 235 total sessions this year, equating to a pace of one new all-time high every four days.

Disclosure
The views expressed represent the opinion of Ferguson Wellman. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Statements of future expectations, estimates, projections and other forward-looking statements are based on available information and Ferguson Wellman’s views as of the time of these statements. Past performance may not be indicative of future results. Ferguson Wellman, Octavia Group and West Bearing do not provide tax, legal, insurance or medical advice. This material has been prepared for general educational purposes only and not as a substitute for qualified counsel who can determine how this information applies to you. We believe the information provided is from reliable sources but should not be assumed accurate or complete.
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