US Market Report (September 7, 2024) - GrowthBusinessTemplates.com.pdf

The "US Market Report" presentation dated September 7, 2024, from GrowthBusinessTemplates.com offers a comprehensive analysis of current economic trends that investors should be aware of as they navigate through a complex financial landscape. This presentation highlights the key economic indicators that suggest we are at the end of a business cycle, with the Federal Reserve’s restrictive monetary policy starting to impact the economy. Inflation persists at 3.8%, remaining above the Federal Reserve's target, indicating potential economic challenges【4:2†source】. Additionally, the unemployment rate has risen to 4.2% as of August 2024, suggesting a tipping point towards potential economic downturn【4:3†source】.

The report underscores the importance of assessing investment portfolio risk, suggesting a shift towards cautious investment strategies tailored to individual financial goals. It advises reducing risk exposure for short-term goals while maintaining a balanced or aggressive approach for long-term horizons【4:3†source】. Moreover, the Fed is signaling a potential rate reduction, which marks a shift in policy aimed at mitigating economic stagnation【4:2†source】.

Investors are cautioned about the historically high Shiller Price-to-Earnings (PE) ratio, currently at 35x, which could precede market corrections【4:4†source】. The presentation also discusses the CBOE Volatility Index (VIX), reflecting heightened investor anxiety amidst evolving economic conditions【4:7†source】. As consumer sentiment weakens and corporate earnings show a downward trend, this report provides a crucial guide for assessing current market risk and strategizing for the future

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US Market Report
September 7, 2024

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Disclaimer
All information provided herein is for informational purposes only and should not be deemed as a recommendation to buy or sell any security mentioned.
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without limitation, the manner or type of any GBT Education investment.
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the transactions or investments discussed herein were or will prove to be profitable, or that the investment recommendations or decisions we make in the future
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past performance.
The analyses and conclusions of GBT Education contained in this presentation are based on publicly available information. GBT Education recognizes that there
may be confidential or otherwise non-public information in the possession of the companies discussed in the presentation and others that could lead these
companies to disagree with GBT Education’s conclusions. The analyses provided include certain statements, assumptions, estimates and projections prepared
with respect to, among other things, the historical and anticipated operating performance of the companies. Such statements, assumptions, estimates, and
projections reflect various assumptions by GBT Education concerning anticipated results that are inherently subject to significant economic, competitive, legal,
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SEE ADDITIONAL DISCLAIMERS AND NOTES AT THE END OF THIS PRESENTATION FOR ADDITIONAL IMPORTANT INFORMATION.

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➔We are approaching the end of a business cycle as the Fed’s restrictive monetary policy is
beginning to reveal signs of strain on the economy.
➔Inflation, volatile markets, rising recession fears, and declining corporate earnings indicate
that this may be a turning point for investors.
➔It is crucial to assess your investment portfolio's risk profile and ensure it aligns with your
financial goals. Whether you have short, medium, or long-term needs, now is the time to
evaluate your strategy for the road ahead.
➔Consider reducing risk for shorter-term goals and maintaining a balanced or aggressive
approach for longer-term horizons.
➔Proactively managing your risk will help you weather potential downturns and position
yourself for future growth.
The Time to Be Cautious is at the End of a Business Cycle

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Market Data

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US Unemployment Rate Sits at 4.2% as of August 2024
This chart illustrates the US unemployment rate, overlaid with periods of US economic recessions. Historically, recessions have coincided with
sharp increases in unemployment, as seen during the early 1980s, 1990s, the Dotcom Bubble, the Great Recession of 2008, and the COVID-19
pandemic. The recent increase to 4.2% signals we may be nearing the end of this business cycle and approaching a more prolonged
downturn.
Source: U.S. Bureau of Labor Statistics. Unemployment Rate 1/1/1948 - 8/1/2024.
4.2%

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US Inflation Remains Sticky at 3.8% as of July 2024
Source: Federal Reserve Bank of Cleveland. Median Consumer Price Index 1/1/1983 - 7/1/2024.
This chart illustrates the Median Consumer Price Index (CPI) overlaid with periods of US economic recessions. While inflation surged in recent
years as a result of Covid-era stimulus and global supply chain interruptions, it has moderated to 3.8%. However, it remains "sticky,"
consistently above the Federal Reserve's target of 2%. The persistence of inflation at elevated levels suggests continued economic strength,
posing challenges for the Fed in achieving its inflation goals.
3.8%

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Fed Signals for a Rate Reduction in September 2024
This chart highlights the Federal Funds Effective Rate, with shaded areas indicating US recessions. The Fed began aggressive rate hikes in early
2022 aimed at curbing inflation, and has maintained a restrictive monetary policy for over a year now. As a result, borrowing costs have risen
sharply, dampening economic activity. The Fed is now signaling a potential rate reduction in September 2024, marking a shift in policy.
Source: U.S. Bureau of Labor Statistics. Federal Funds Effective Rate 7/1/1954 - 9/6/2024.
5.3%

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Yield Curve Retraces After Being Inverted for 796 Days
Source: Federal Reserve Bank of St. Louis. T10Y2Y 6/1/1976 - 9/5/2024.
This chart displays the spread between the 10-year and 2-year Treasury yields, with shaded areas representing recessions. There have been
six major US recessions since 1976, per the National Bureau of Economic Research’s definition (NBER). Represented by gray panels in the below
chart, all six recessions were preceded by an inverted 10-2 spread lasting longer than two months, and each recession occurred less than two
years after the 10-2 spread first inverted.
-0.02

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US ISM Manufacturing PMI Drops to 47.2 in August 2024
Source: Institute for Supply Management. US ISM Manufacturing PMI 9/30/1999 - 8/31/2024.
This chart tracks the US ISM Manufacturing Purchasing Managers' Index (PMI) overlaid with periods of US economic recessions. Businesses are
becoming more cautious in their purchasing activities as consumer spending slows, global tensions escalate, and uncertainty surrounding the
upcoming election grows. The PMI has declined to 47.2, signaling reduced manufacturing activity and weaker business confidence. Historically,
a PMI below 50 suggests contraction in the manufacturing sector, a key indicator of broader economic health.
47.2

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Consumer Sentiment Lowers to 66.4 in July 2024
Source: University of Michigan. Consumer Sentiment 9/1/1999 - 7/31/2024.
This chart tracks the University of Michigan's Consumer Sentiment Index. Consumer sentiment has remained low, reflecting ongoing concerns
about inflation, economic stability, and future growth prospects. Despite some recovery since the pandemic lows, the index remains
significantly below historical norms, indicating that consumers are cautious in their outlook. Weak consumer confidence typically correlates
with reduced spending, which can further slow economic activity.
66.4

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Source: U.S. Energy Information Administration. Crude Oil 9/1/1999 - 8/1/2024.
This chart tracks the price of West Texas Intermediate (WTI) crude oil. Crude oil is a fundamental driver of inflation, as it influences the cost of
transportation, manufacturing, and energy. High oil prices typically lead to increased production costs for companies, which can reduce
profitability and slow economic growth. Conversely, stable or lower oil prices can support consumer spending and broader economic stability
by reducing inflationary pressures.
$76.68
Crude Oil Prices Remain Stable at $76/Barrel in August 2024

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Corporate Earnings Turn Lower at $192 EPS in March 2024
Source: S&P Global. S&P 500 EPS 1/31/2000 - 3/31/2024.
This chart tracks the S&P 500's 12-month real earnings per share (EPS), adjusted for inflation. After a period of rapid earnings growth fueled by
COVID-era stimulus, corporate earnings have begun to decline, with EPS falling to $192.74. As recession fears mount and companies face rising
costs, the decrease in EPS suggests that businesses are struggling to maintain higher profits. The Q2 2024 EPS report will be released this
month for the S&P 500 companies, which is expected to continue its trend lower.
$192.74

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S&P 500 Index Near All-Time Highs at 5,405
Source: Yahoo Finance. S&P 500 Index 1/4/1999 - 9/6/2024.
This is a chart of the S&P 500 Index. It highlights the remarkable 15 year long bull run we have experienced, propelled most recently by COVID
era stimulus spending. However, the market is now showing signs of instability as investors become increasingly cautious about the
macroeconomic picture. After the Dotcom Bubble popped, the S&P 500 dropped 49% from its peak in March 2000 to its trough in October 2002.
The Great Recession, brought about a 57% decline in the S&P 500 from its peak in October 2007 to its low point in March 2009.
5,405
Dotcom
Bubble
Great
Recession
Covid
Stimulus

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Shiller PE Ratio is 35x as of September 2024
Source: S&P. Shiller PE Ratio 1/1/1999 - 9/1/2024.
This chart tracks the Shiller Price-to-Earnings (PE) ratio for the S&P 500. The Shiller PE ratio, also known as the cyclically adjusted PE (CAPE) ratio,
measures stock market valuations by averaging inflation-adjusted earnings over the past 10 years. At 35x, the current Shiller PE ratio is well
above its historical average of around 16-17x. Similar high readings have historically preceded market corrections or slower growth, suggesting
that investors should be cautious about potential volatility or downward pressure in the stock market moving forward.
35.55

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VIX Volatility Index Spikes to 38 on August 5, 2024
Source: Yahoo Finance. CBOE Volatility Index (^VIX) 1/4/1999 - 9/5/2024.
This chart tracks the CBOE Volatility Index (VIX). The VIX, often referred to as the 'fear gauge,' measures investor sentiment around future
volatility. Investors are increasingly reacting to evolving macroeconomic conditions, including inflation, interest rate policy, and potential
recession risks. These spikes signal that markets are on edge, with volatility rising in response to perceived instability and unpredictability in the
economic outlook.
38.57

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Portfolio Allocation

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Highest risk. Long-term time
horizon. You don’t need to touch
the money for 10+ years. Stick to
your retirement plan and don’t
try to time the market.
Medium risk. Medium-term time
horizon. You need the money in
3-5 years. If you lost 50% of what
you have now, you’d be in
trouble. Reduce your risk.
Lowest risk. Short-term time
horizon. You need the money in
12-24 months. You’re saving for a
home or an emergency fund.
Think US treasuries = cash.
Assess Your Current Holdings and Determine Your Risk Profile
for Optimal Investment Allocation
This slide is intended to help you evaluate your current investment portfolio and risk tolerance to align with your financial goals. Understanding
your risk profile is crucial to determining the right asset allocation between stocks and bonds. During times of economic uncertainty, you may
want to be more conservative in your approach to be able to take advantage of investment opportunities during an economic downturn.

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What Happens to Your $500K Portfolio If the Market Crashes
This chart shows you what $500K would
be 2 years from now if:

● Stocks decline by 25% each
year for the next 2 years
● US Treasuries (bonds) return
an average of 5% per year

The following portfolios would deliver a
total return of:

● 100% Stocks = -43.75%
● 50/50 = -19%
● 100% Bonds = 10.25%

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Investment Vehicles You Can Use to Manage Risk
Stocks
(more risk)
VOO The Vanguard S&P 500 ETF invests in stocks in the S&P 500 Index, representing 500 of the largest U.S. companies. Its goal is to
closely track the index’s return, which is considered a gauge of overall U.S. stock returns.
Bonds
(less risk)
VGSH The Vanguard Short-Term Treasury ETF Seeks to provide current income with modest price fluctuation. Invests primarily in
high-quality (investment-grade) U.S. Treasury bonds. Maintains a dollar-weighted average maturity of 1 to 3 years.
VTIP The Vanguard Short-Term Inflation-Protected Securities ETF. Seeks to track an index that measures the performance of
inflation-protected public obligations of the U.S. Treasury that have a remaining maturity of less than five years.
This presentation is not intended to provide you with investment advice, but rather share current market data with you, so that you have
greater visibility into the current state of the US economy. It’s also intended to help you consider your current market risk and take action to
reallocate your portfolio based on your risk profile. We are at a unique phase in the business cycle. It’s better to be prepared than surprised.
These are a few examples of stock and bond ETFs you can use to diversify your risk. While these are Vanguard funds, this is by no means a
recommendation or an endorsement, merely a guide to help you along your way. Fidelity, Schwab, iShares, etc. have comparable offerings.
VIG The Vanguard Vanguard Dividend Appreciation ETF seeks to track the performance of the S&P U.S. Dividend Growers Index.
Large-cap equity, emphasizing stocks with a record of growing their dividends year over year.
VCSH The Vanguard Vanguard Short-Term Corporate Bond ETF seeks to provide current income with modest price fluctuation.
Invests primarily in high-quality (investment-grade) corporate bonds.

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1.Write down your financial goals over the next 1 year, 5 year and 10+ year periods.
2.Assess the level of risk in your portfolio by understanding your mix of assets (stocks vs bonds).
3.Reallocate assets based on your risk profile.
4.Consider the tax implications before you take action (tax efficient accounts, capital
gains/loss).
5.Stick to your plan. Market timing is a fools game. If any one of us knew where the market was
going with certainty, then there would be no risk. But we don’t. The market could continue to
go up longer. This is about protecting our downside in nearer-term time horizons.
6.Note: Keeping large amounts of actual cash in a bank account right now is most certainly a
losing strategy because you will lose 3% of your purchasing power every year. At minimum,
keep your cash in a high-yield savings account, money-market fund, short-term CD or
purchase US treasuries directly.
Steps You Can Take to Protect Your Assets

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About Us

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We Grow B2B SaaS Startups from $1M to $10M ARR
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Disclaimer
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