ICG's Brooks: There's not much to worry about, except inflation

Paul Gruenwald, chief economist at S&P Global Ratings, discusses his 2024 fourth-quarter economic outlook, which suggests that the recent rally can continue especially as the economy transitions into what he expects will be its first soft landing in more than three decades. Gruenwald says the economy has been "super-resilient," and he expects that to continue unless the strong labor market falters and cracks, and the bond market stops absorbing U.S. debt at low interest rates. Gruenwald also agrees with some of the observations made by economists who took part in the National Association for Business Economics September 2024 Outlook Survey, which economist Mervin Jebaraj discusses with Chuck. In The NAVigator segment, Sean Feeley of the U.S. high yield investment group at Barings, talks about the impact the rate-cutting cycle will have on high-yield/junk investment, and Elysabeth Alfano, chief executive officer at VegTech — which runs the VegTech Plant-based Innovation & Climate ETF — brings her unique perspective on companies with wide-moat sustainable business models to the Money Life Market Call.

Market strategist Lawrence McDonald, creator of The Bear Traps Report, says that conditions have changed to where investors will need "an entirely different portfolio ... and an entirely different investment philosophy" than you used in the last decade to be profitable in the next 10 years. He expects a rotation from growth stocks to value stocks, and says that industrials, materials and oil and gas companies will become a much bigger part of the market -- driving returns in the process -- in the next decade.Also on the show, Todd Rosenbluth, head of research at VettaFi, turns to a new actively managed fund from Vanguard for his ETF of the Week, Sharon Epperson, senior personal finance correspondent at CNBC discusses the network's recent study showing that nearly half of American workers are “cautiously optimistic” about their ability to meet their retirement goals, and Professor David Soberman from the Rotman School of Management at the University of Toronto talks about the likely economic impacts created by the longshoremen's strike and when or if the shutdown of many U.S. ports will show up in higher prices and protracted inflation.

Brett Ewing, chief market strategist at First Franklin Financial Services, says that the rally he expected for small-cap stocks when he last appeared on the show in January, finally arrived in the third quarter and the stock market is now rotating towards smaller companies, industrials and real estate investment trusts. Ewing says that he expects the stock market to have a "decent correction" near the end of the year, if only because the market has seldom been up this much after three quarters and most years with a similar gain have seen a downturn in the fourth quarter; while he thinks the market will quickly backstop a decline, he noted that investors may also want to lean into fixed income because bonds, historically, have outperformed equities in the first 12 months after the federal reserve starts a rate-cutting cycle. Nadia Vanderhall, Financial Planner and CEO at Brands + Bands Strategy Group, discusses her recent blog post on how consumers can use gift cards as a budgeting and money-management tool — and can be a valuable accessory for teaching kids about money — and Gil Baumgarten, founder and president of Segment Wealth Management talks ETFs and stocks in the Money Life Market Call.

Nicholas Brooks, head of economic and investment research at ICG, a global alternative asset manager, says "There's nothing out there that rings major alarm bells" signalling a big recession ahead. But while he expects a soft landing, he is watching what is driving inflation, noting that while headline inflation is down, services inflation remains high and wage growth has stayed strong, factors that are good from a household income point of view but that are concerning in terms of whether inflation might come back and hurt the Federal Reserve's ability to cut rates. Josh Brown, chief executive officer at Ritholtz Wealth Management, discusses his new book, "You Weren’t Supposed to See That," which digs into the genius and the foolishness of what the public gets from financial experts, advisers and the media. Plus, Ken Berman, strategist at Gorilla Trades, talks technicals and says the signs are all pointing to the idea that the current bull market has legs to run through the election and into 2025.

Nick Elfner, co-head of research at Breckinridge Capital Advisors, says that investment-grade corporate bonds are well positioned to be the strong fixed-income play now that the Federal Reserve has started cutting interest rates. Financial counselor Kristine Stevenson, author of "How to Avoid Trouble With the IRS," chats about how so many tax and financial issues are caused by a lack of the most-basic and simple planning, and notes that taking a few simple steps and applying common sense will keep most people away from the worst of financial issues. David Trainer, founder and president at New Constructs puts Targa Resources back in The Danger Zone, noting that the stock — which showed strong gains since it was labeled the company most likely to miss second-quarter earnings — is now the stock most likely to miss third-quarter earnings, and David Rosenstrock, director of investments and financial planning at Wharton Wealth Planning, makes his debut in the Market Call talking funds and ETFs.

Christine Benz, director of personal finance and retirement planning for Morningstar Inc., returns to the show — earlier this week she discussed her book "How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement" — to talk about how inflation, rate cuts and other current events are impacting retirement planning and asset allocation decisions. She notes that after two great years for the stock market, investors often struggle to make portfolios more appropriately conservative for their age. John Cole Scott, president of Closed-End Fund Advisors and chairman of the Active Investment Company Alliance, discusses four funds to consider for what he sees ahead in the fourth quarter, and Kevin Simpson, co-founder/chief investment officer at Capital Wealth Planning, makes his debut in the Market Call, talking about great business models generation big free cash flow, and then protecting the portfolio using covered calls.

Phillip Wool, head of research at Rayliant Global Advisors, makes a strong case for investing in emerging markets — as well as for sticking with investments in China despite geopolitical risk there — noting that valuations are particularly compelling compared to a domestic stock market that is flirting with record highs. While Wool does not expect the U.S. economy to go through a hard landing, he notes that the domestic market is "pricing in a lot of good news right now," and in times when the Federal Reserve is easing into a soft landing, it typically leads to overperformance from emerging markets and international investments, which means investors are entering a time when diversification geographically should pay off.  Also on the show, Todd Rosenbluth, head of research at VettaFi, looks to a new small-cap fund that uses a covered-call strategy to protect against volatility and downside risk as his "ETF of the Week," Anthony Pompliano discusses "How to Live an Extraordinary Life," his book of 65 letters he has written to his young children, that put money, success and more into perspective amid the busy lives and hectic times all of us face today. Thad Davis, president and chief executive officer at Aureus Asset Management, talks high-quality compounders in the Money Life Market Call.

Kevin Mahn, president and chief investment officer at Hennion & Walsh, expects continued bouts of volatility for the market for the rest of the year, spurred by uncertainty around the election and the Federal Reserve's moves, but he noted that when the central bank historically has cut rates when the stock market is near all-time highs, the market moved sharply up in the following 12 months. As a result, he is increasingly optimistic about the next two years, though he says investors may want to lean into areas of the market that have lagged behind in the market's recent run. Pollster Margie Omero discusses a recent AARP study of women voters above the age of 50 — the largest bloc of swing voters in the upcoming election — in which nearly two-thirds of respondents say the current economy isn’t working for them, and that they feel less financially secure than they expected to at this age. Plus, in the Market Call, David Miller of the Catalyst Mutual Funds discusses using insider buying and selling as a signal of a stock's strength or weakness.

Amar Reganti, fixed income strategist at the Hartford Funds, says that the Federal Reserve normally starts cutting rates only when something has gone wrong, but there doesn't seem to be any portion of the U.S. economy that is so over-leveraged that it craters as/when a rate-hike cycle ends. If nothing surfaces, Reganti says this may be the generational anomaly where the central bank actually achieves a soft landing, conditions where the softening economy may go through a recession but without getting really ugly. Michael Kahn, senior market analyst at Lowry Research Corp., says that the market's technicals are all looking good, a sign that investors should keep riding this trend rather than worrying about backing away from it just because the market is in record-high territory. Christine Benz, director of personal finance and retirement planning at Morningstar Inc., discusses her new book, "How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement," and Craig Sarembock, wealth adviser at Bartlett Wealth Management, talks growing stocks trading at reasonable prices in the Market Call.

Longtime personal finance journalist Jonathan Clements — the editor at Humble Dollar, and former columnist at the Wall Street Journal — discusses how his outlook and feelings about money have mostly been reinforced since he was diagnosed in May with terminal lung cancer, and how he his focusing his time, money and energy now to make the most of his time and help his family make the most of his life savings. Clements says he is not bitter about spending a lifetime amassing retirement money for a retirement he won't get to experience, and discusses how even the best estate planning may be insufficient when it comes to helping the family move forward. Steve Sosnick, chief strategist at Interactive Brokers, says that the yield curve has uninverted with recent rate cuts, but the danger sign it was flashing remains bright because recessions never happened until the curve normalized. He questions whether the economy will be strong enough to justify double-digit earnings expectations for equities, which could lead to lower — and possibly more volatile — returns for stocks. Plus, Kyle Guske, investment analyst at New Constructs revisits three past Danger Zone picks, and kicks them out of the club, noting that conditions have changed to where the companies — while still not attractive enough to be considered buys — have changed enough that they no longer  meet the Danger Zone standard for potential trouble ahead.