Within the weeks main as much as the Nov. 5 election that will sweep Donald Trump again into workplace, monetary advisor sentiment round each the economic system and the inventory market rose, practically matching year-to-date highs, based on Wealthmanagement.com’s month-to-month Advisor Sentiment Index.
Sentiment over the economic system climbed seven factors larger to 110, indicating a broadly optimistic view of the well being of the job market, enterprise exercise and different financial drivers. (A studying of 100 equals a totally impartial view.) The extent of optimistic sentiment on the economic system, whereas nonetheless extra muted than emotions across the fairness market, has not been larger since March of this 12 months.
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Virtually half (45%) of surveyed advisors mentioned the economic system was “good” or “wonderful”, with solely 19% holding a contrarian view. (37% had been impartial.)
Curiously, given the survey’s recorded sentiment earlier than the end result of the current election was recognized, extra advisors predicted the well being of the economic system would enhance over the subsequent 12 months. Over half (52%) imagine they’ll maintain a optimistic view of the economic system by this time subsequent 12 months, in comparison with one-in-four (26%) who predict a extra pessimistic view.
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When requested to broaden on their views, advisors appeared to base their reply partly on inflation’s trajectory. Many are apprehensive a few re-acceleration, whereas others are extra optimistic about its management. Whereas the current flip towards rate of interest cuts are seen as a stimulus, persistent cost-of-living pressures (e.g., meals and vitality costs) proceed to pressure customers.
Advisors highlighted persistent authorities deficits and rising debt as warning indicators muting their optimism concerning the economic system.
Confidence within the fairness markets additionally climbed throughout the month, up three factors to 121. Most respondents (70%) take into account the present state of the inventory market to be optimistic. Solely 6% expressed a destructive sentiment.
That displays a sustained optimistic view on the present state of markets amongst advisors held all through a lot of the previous 12 months, with solely a minor downturn over the summer season. Whereas the S&P 500 hovered flat for many of October, the broad fairness index was up 25% year-to-date headed into the November election.
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Advisors could also be starting to sense some froth within the markets, nonetheless.
Trying ahead six months, respondents are divided: 34% anticipate an enchancment within the markets, whereas 29% anticipate no change, and 37% anticipate a decline. They’re extra optimistic when trying ahead 12 months, with 56% anticipating an enchancment.
The inventory market’s resilience and excessive valuations spark debate. Advisors anticipate elevated reliance on earnings for future efficiency, with warnings of overvaluation and potential corrections in 2025.
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Methodology, information assortment and evaluation by WealthManagement.com and Informa Interact. Methodology conforms to accepted advertising analysis strategies, practices and procedures. Starting in January 2024, WealthManagement.com started selling a quick month-to-month survey to lively customers. Knowledge will likely be collected throughout the last ten days of every month going ahead, with a aim of a minimum of 100 monetary advisor respondents per thirty days. Respondents are requested for his or her view on the economic system and the inventory markets each at present, in six months and in a single 12 months. Responses are weighted and used to create an index tied to a impartial worth of 100. Over time, the ASI will present directional sentiment of retail-facing monetary advisors.
