Election Day jitters, plus the U.S. savings rate, defensive leadership, and 🧁 weekend sprinkles 🧁
Election Day jitters, plus the U.S. savings rate, defensive leadership, and 🧁 weekend sprinkles 🧁
The Sandbox Daily (9.13.2024)
Welcome, Sandbox friends.
Happy Friday the 13th to everyone !!
** Quick programming note before we begin. **
We’re heading out west to Huntington Beach, CA next week for Year 3 at the Future Proof Wealth Festival. We have some fun content plans while we’re away; more to come soon on that end. In the meantime, we will be lightly posting content Monday-Wednesday of next week (9/16-9/18). Expect the full newsletter to return on Thursday, September 19th.
Today’s Daily discusses:
Election Day jitters
U.S. savings rate is historically low
downside economic surprises turning a new leaf?
🧁 weekend sprinkles 🧁
Let’s dig in.
Markets in review
EQUITIES: Russell 2000 +2.49% | Dow +0.72% | S&P 500 +0.54% | Nasdaq 100 +0.47%
FIXED INCOME: Barclays Agg Bond +0.21% | High Yield +0.28% | 2yr UST 3.587% | 10yr UST 3.657%
COMMODITIES: Brent Crude +0.17% to $72.09/barrel. Gold +1.12% to $2,609.5/oz.
BITCOIN: +2.66% to $59,830
US DOLLAR INDEX: -0.25% to 101.114
CBOE EQUITY PUT/CALL RATIO: 0.57
VIX: -2.99% to 16.56
Quote of the day
“One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute.”
- William Feather
Election Day jitters
As we approach election day in the United States, investors must contend with rising volatility.
The recent spikes in realized volatility, both in early August and early September, are perfectly normal as equities underperform in the final months of an election cycle relative to non-election years.
Once the election results are clear, equities generally recover. Hence, the volatility around the day of the elections should be faded.
Source: BCA Research
U.S. savings rate is historically low
The official U.S. saving rate declined to 2.9% in July, a level that is 4.5% below its pre-pandemic average and only slightly above its historical lows observed in the 2005-2007 runup to the Global Financial Crisis.
This low level has raised concerns about the sustainability of consumer spending and, on the surface, suggests asymmetric downside risks to the outlook, since households would seem to have little room to raise spending by lowering saving.
Source: Goldman Sachs Global Investment Research
Downside economic surprises turning a new leaf?
Leadership has been decidedly defensive to begin September as investors grapple with mounting evidence of the economy slowing, from manufacturing PMIs to various employment reports to a myriad of commodity prices softening.
In fact, disappointing economic data has supported the defensive rotation over recent weeks and months.
After trending lower for most of the year, the chart below shows that the Citigroup U.S. Economic Surprise Index has been net negative since spring but recently stabilized, albeit at low levels that have historically favored defensive leadership. A reversal higher could support a leadership transition back to cyclical sectors later in the year.
Assuming the economy remains on track for a soft landing, we could see more capital shifting into higher growth / more cyclical biases as election uncertainty is lifted and seasonality turns more favorable later in the year.
Source: Ned Davis Research
🧁 Weekend sprinkles 🧁
Here are the ideas, sights, and sounds that caught my attention this week – perfect for quiet time over the weekend.
Blogs
A Wealth of Common Sense – 31 Years of Stock Market Returns (Ben Carlson)
The Alchemy of Money – Why Fortunes Are Lost (Frederik Gieschen)
No Mercy / No Malice – Doing the Minimum (Scott Galloway)
Podcasts
Facts vs. Feelings with Ryan Detrick and Sonu Varghese – Celebrating Bull Markets and Episode 100 with Fundstrat’s Tom Lee (Spotify, Apple Podcasts)
The Weekly Show with Jon Stewart – The Second First Presidential Debate and Beyond (Spotify, Apple Podcasts)
Behind the Memo by Howard Marks – The Impact of Debt with Morgan Housel (Spotify, Apple Podcasts)
Up and Vanished – The Disappearance of Tara Grinstead (Podcast Website, Spotify, Apple Podcasts)
Movies
MAXXXINE, an A24 film – Mia Goth, Kevin Bacon, Bobby Cannavale (IMDB, YouTube)
Music
Mike Posner – It’s a Beautiful Day to be Alive (Spotify, Apple Music, YouTube)
Johnny Blue Skies – Mint Tea (Spotify, Apple Music, YouTube)
Linkin Park – The Emptiness Machine (Spotify, Apple Music, YouTube)
Books
Josh Brown – You Weren’t Supposed To See That (Amazon)
Pop Culture
Untold: Sign Stealer – The Story of Michigan’s Connor Stalions (Netflix)
That’s all for today.
Blake
Welcome to The Sandbox Daily, a daily curation of relevant research at the intersection of markets, economics, and lifestyle. We are committed to delivering high-quality and timely content to help investors make sense of capital markets.
Blake Millard is the Director of Investments at Sandbox Financial Partners, a Registered Investment Advisor. All opinions expressed here are solely his opinion and do not express or reflect the opinion of Sandbox Financial Partners. This Substack channel is for informational purposes only and should not be construed as investment advice. The information and opinions provided within should not be taken as specific advice on the merits of any investment decision by the reader. Investors should conduct their own due diligence regarding the prospects of any security discussed herein based on such investors’ own review of publicly available information. Clients of Sandbox Financial Partners may maintain positions in the markets, indexes, corporations, and/or securities discussed within The Sandbox Daily. Any projections, market outlooks, or estimates stated here are forward looking statements and are inherently unreliable; they are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.