Markets Daily: Insiders sell

Corporate executives cash out

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Markets Snapshot S&P 500 Futures 5,896.75 -0.16% WTI Crude Oil Futures 70.47 +1.81% Gold Futures 2,745.8 +0.58% Shanghai Shenzhen CSI 300 3,935.2 +0.25% US 10-Year Treasury Yield 4.122% +0.039 Market data as of 06:29 am EST. View or Create your Watchlist Market data may be delayed depending on provider agreements.

Five things you need to know

Goldman Sachs says the S&P 500's decade of big gains is over. A Bloomberg survey shows participants believe stocks will keep rallying into yearend, though the market is off to a slow start this week. Meanwhile, Carson Block says retirement flows will support equities. In other markets, gold set a fresh record, oil is higher and Bitcoin is flirting with $70,000.  T. Rowe Price sees 10-year Treasury yields reaching 5% in six months on higher inflation expectations. China's big banks cut lending rates, adding fuel to the government's stimulus efforts. The CSI 300 Index edged higher. Asia is gearing up for its busiest week of IPOs in more than two years with deals that may raise as much as $8.3 billion.   Boeing and the union representing 33,000 striking workers reached a tentative agreement over the weekend to end a five-week impasse. Union members vote on Wednesday, the same day the company reports earnings. Boeing shares are up 3.9% in premarket trading. Perplexity AI, which is building a search product to compete with Google, is in early talks to raise funding at a valuation of about $9 billion.

The insider indicator

Risk assets have had no shortage of buyers lately. US stocks just capped their sixth straight up week, retail sentiment is sky high, and Bank of America's fund manager survey showed bullishness rules the institutional set, too. One place the euphoric spirit is far less pronounced is among corporate insiders, people worth watching given their privileged view into the workings of the companies they run. While business leaders were busy last week offering reassuring earnings guidance, underneath the rosy outlook was a different trend: They were selling stock. A gauge of insider sentiment, one that tallies the number of sellers versus buyers, is poised to hit the highest monthly reading in more than three years, data compiled by the Washington Service show. The figures chime with various high-profile sales that have made headlines recently, including Warren Buffett's unloading of Apple and Bank of America stock, and retreats by Nvidia insiders, including CEO Jensen Huang. Granted, some of the exits no doubt have nothing to do with the business outlook, driven instead by the need for cash to buy a house or pay for kids' tuition. And the stock rally has been mostly invulnerable for months amid Federal Reserve interest rate cuts and generally good tidings on the economy and earnings. Still, the last time the insider indicator shot up, in July, it was a precursor to market pain, with the S&P 500 subsequently falling 8%. With equities up nine of the last 10 weeks and benchmarks flirting with valuations rarely seen since the dot-com era, bulls may want to consider whether the people in charge know something they don't. —Lu Wang

The week ahead

Investors are bracing for a busy week of earnings that could make or break the global stock rally. Tesla releases results on Wednesday and its outlook for vehicle deliveries will be in the spotlight after sales figures earlier this year disappointed investors. In Europe, British banks including Lloyds, NatWest and Barclays will be reporting. And in Asia, results Friday from Chinese liquor giant Kweichow Moutai will serve as a barometer for consumer sentiment amid all the stimulus. The IMF and World Bank host their annual meetings of economic policymakers in Washington amid intensifying calls to address mounting debt burdens. The IMF updates its economic outlook on Tuesday and its fiscal monitor on Wednesday. With France and the UK already worrying about what they owe, data released Friday revealed the US's debt interest-cost burden climbed to the highest since the 1990s in the financial year that's just ended.  Also this week, Canada may cut interest rates on Wednesday, while a pair of home sales reports in the US on Wednesday and Thursday will draw eyes. Regional Fed officials due to speak include Jeffrey Schmid, Mary Daly and Lorie Logan. For more on what's ahead, check out Bloomberg's economics diary.

On the move

Kenvue, the maker of Band-Aids and Tylenol, is jumping 5% in premarket trading. The Wall Street Journal reported that activist investor Starboard Value has built a stake in the company and is agitating for change to boost the stock price. The company, a spinoff from Johnson & Johnson, went public in May 2023 at $22 a share and the stock has gone nowhere since then. It finished last week at $21.72.

Goldman's bold call

The unstoppable American stock market is part of the reason that the US has become a richer country than almost anywhere in the world. But as any fund literature will tell you: past performance is no guarantee of future results. Indeed, in the view of Goldman Sachs strategists led by David Kostin, the next decade will be drastically different to the current one. The firm published a range of long-run forecasts that would upend a lot of commonly held assumptions, if they come true. Here's a look at what they predict:  The S&P 500 returns just 3% a year for the next 10 years. That compares with a long-term average of 11%. After adjusting for inflation, their long-term forecast is just 1% annually— a paltry return for anyone counting on stocks to fund their retirement.  Stocks face stiff competition from other assets. Equities have trounced other assets in recent years, but Goldman says that won't continue. By their math, the S&P 500 has a roughly 72% chance of trailing bonds and a 33% likelihood of lagging inflation through 2034. Check out today's column by John Authers for a deep dive into the view of stock market strategists. —Sagarika Jaisinghani

Word from Wall Street "It probably pays to not think too much, just close your eyes and buy probably Magnificent Seven."  Carson Block Chief investment officer, Muddy Waters Watch the Bloomberg Television interview here

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