In this week’s episode of 7 Market Movers, Doug Huber covers: 

• Labor market updates and the latest unemployment reports
• Emerging markets performance
• Geopolitical updates from Iran and Greenland and the impact on commodities 

Watch the full episode for these updates and the latest news from the Q4 earnings season!

FULL TRANSCRIPT:

Hello, everybody, and welcome to this week's Wealth Enhancement 7 Market Movers video series. My name is Doug Huber, and I'm the Deputy Chief Investment officer here at Wealth Enhancement. Before we get into our market moves, we usually like to start with what's making headlines this week. A few big ticket items to to check off.

We have seen some, rise in kind of geopolitical tensions. We have continued protests and an uprising in Iran. The administration did threaten potential intervention in that and has since walked that back and that's had a moderate effect on commodity prices, which we'll touch on a little bit. We've seen rising tensions with our partners in Europe and NATO based on kind of comments the administration has made about Greenland.

Fortunately, we haven't seen too much in the way of of any of that impacting the financial markets thus far. And then finally, there's been some rhetoric around our current Fed Chair Jerome Powell. The administration has potentially brought charges against him for his deposition in front of congress and did he lie? Less on that, but what more is important is is there there's this concept of Fed independence and and what impact is that having in the market? And so we'll touch on that when we get to the fixed income markets.

From an economic news standpoint, not much this week, but this morning, we did get the most recent jobless claims numbers. They did come in better than expected, about 9,000. We saw a decrease of 9,000 to a 198,000 for the week ending last week. This is only, maybe 1 in 4, 1 in 5 times over the last several years that we've actually seen jobless claims come in under 200,000.

So that is a positive sign for the labor markets. You know, you've heard us talk a lot about the Fed's dual mandate of inflation and and full employment. And so this is a positive sign that the labor markets are are continuing to remain resilient. There's been a couple headlines around layoffs at PepsiCo and a couple others, but they're not really kind of snowballing into broader layoffs, and we're not seeing it in the jobless numbers thus far.

Continuing claims actually dropped, as well. I think they were down to 1.88 million, a decline from the prior week. So on the whole, news, out of the the labor markets. The flip side to that is is that does have an impact on the market's interpretation of what the Fed might do as it relates to cutting rates.

And and so with that, we've seen bond yields tick up a little bit higher expectations now thinking that the labor market might be better than expected and as such, potentially starting to decrease the likelihood of of additional fed cuts this year. Coming into the year, the market was pricing in roughly 2 cuts, but there's a lot of unknown there, whether we continue to see strength in the in the labor markets, what's going on with inflation, is it sticky, is it here to last, or are we gonna kind of see some moderation, from here? And so those will both have impacts on on the Fed's decision as well as, in June, Fed Chair Powell's term is up.

We know there will be a replacement. And will that replacement be more dovish, or more likely to cut rates, than chair Powell and and the other participants have been? And so all of that will have an impact, and we will have to continue to evaluate the data to see, you know, do we expect more than two, less than two? But as of right now, the market and ourselves are pricing in roughly two cuts, going forward this year.

On the equity side, markets have continued to be strong to start the year. Much of the of what we saw last year in terms of leadership continues to be the same, at least on a geographic basis. Right? We are continuing to see emerging markets in international markets outperform domestic markets.

That being said, the S&P 500, which is kind of the bellwether index we all look at, continues to hover near all time highs, break through them gradually. I think the S&P 500 through today is up roughly 1.5% to 1.7% year to date. The more tech heavy Nasdaq slightly under that, about 1.5%, maybe a little shy of that year to date. And what's important about that is we're actually seeing a little bit of rotation in terms of what's leading the markets, especially here in the US.

And so what had been a pretty tech heavy leadership throughout 2025 has broadened a little bit into other sectors, into other styles. So we're seeing cyclical names take some leadership here to start the year. We're seeing small caps outperform. They're up roughly 6% year to date.

And so you're kind of seeing more of that value in cyclical trade outpacing the tech trade. Everything continues to move up a little bit here, which is great, but broadening is good for our diversified portfolios as it's not dependent on just one sector or a handful of names.

This week in the equity space, you know, we are kicking off earnings season that typically is led with financials. We have seen a lot of the big banks report, Goldman Sachs, JPMorgan, Bank of America. And on the whole, we've seen really good earnings come out of the financial services space. That has been driven a lot by trading revenue and in the asset management side of the business, which does make sense. Q4 typically is an elevated period of higher turnover. And so the more you turn or the more you trade, the more revenue you generate.

So typically Q4 would be a higher trading revenue quarter for the banks. There's a lot of tax loss harvesting and other things that go on towards the end of the year. Asset management continues to look good in the financial services sector as well. And you know, what is to be determined here is this a harbinger for more good news across other sectors or will we see some kind of bifurcation of earnings here from Q4?

And so we'll be paying particular attention to consumer oriented names, to tech oriented names where there has been a lot of pressure behind the AI trade. We've seen good macroeconomic data starting to pull through on productivity gains. And so that has been kind of the promise of AI. Are we starting to see that matriculate to other industries?

You know, I think there's there could be some green shoots forming here, but, you know, we are going to wait to to see more hard data before we, we wave the victory flag on that. Outside of that, the only thing moving this week, we have seen oil bounce around really on the back of the kind of Iranian protests and the potential for the administration to enter into to the fray. Early in the week, Donald Trump said, you know, he might enter in. If the killings continued, you know, we were gonna come in.

I think that kind of spooked the market. Iran is the third largest oil reserve in the world. And despite embargoes and other things, they still do put a lot of oil into the system. And so if there's any conflict there, as you'd suspect, the market is pricing in a decrease in supply, drove up oil.

Actually, now fast forward to today, the administration seems to indicate that, you know, the the Iranians heard the message, the killing stopped, and and they've they've kind of softened their stance. And as such, actually, oil declined, I think, 4% today. So, that will bounce around. Commodities tend to be the most exposed to these geopolitical headlines and volatility.

But over long periods of time, we've done a lot of research that suggests geopolitics don't really drive market outcomes and the underlying fundamentals of the businesses and the economy is really what drives that. And so besides some noise, we don't see too much in the way of long term impacts there. But looking forward here, we're going to be paying a lot of attention to the inflation numbers that will be coming out this month. We'll be paying a lot of attention to earnings as we're really kind of getting into the the meat of earnings season here. And so when we follow-up with you next week, I'm sure we'll have more to to talk about as we digest some of the macroeconomic data and we digest some of the the earnings data. So thank you for tuning in. We'll talk with you next week.

This information is not intended as a recommendation. The opinions are subject to change at any time and no forecasts can be guaranteed. Investment decisions should always be made based on an investor's specific circumstances. Investing involves risk, including possible loss of principal.

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