January 4, 2025
What You Need to Know Today:
Here comes Santa Claus?
Trading was thin for Christmas weeK. So time for Santa to put in an appearance on Wall Street? The Standard & Poor’s 500 finished near session highs, up O.79% to 5974. And Nvidia (NVDA), up 3.69%, and Meta Platforms (META), up 2.49%, helped drive an index of the “Magnificent Seven” megacaps up almost 1.5%.
As expected, the Federal Reserve cuts interest rates by another 25 basis points
Today, December 18, the Federal Reserve lowered its benchmark interest rate for a third consecutive time.The Open Market Committee voted 11-1 to cut the federal funds rate to a range of 4.25%-4.5%. Cleveland Fed President Beth Hammack voted against the action, preferring to hold rates steady.
Please watch my new YouTube video: Hot Money Moves NOW! The dollar
Today’s Hot Money Moves NOW is U.S. Dollar. The dollar has been on a good run and is up 7% in the last three months, 2% in the last month. I expect this to continue with higher tariffs, and a Fed that will remain steady while other currencies are seeing more volatility. To get in on this you can buy an ETF like Invesco DB US Dollar Index (UUP), currently up 10.19% YTD with a 75 basis point expense ratio. Another option would be the WisdomTree Bloomberg U.S. Dollar Bullish Fund (USDU), up about 11% YTD with a 50 basis point expense ratio. WisdomTree buys Treasuries while Invesco uses futures but both are similarly sized ETFs and good ways to play the US dollar.
Trade war with Canada could be really nasty
Canada is looking at imposing taxes on major commodities it exports to the United States-—including uranium, oil and potash—if the incoming Trump Administration carries out a threat to impose 25% tariffs on Canadian exports.
So much for that easy fix to China’s consumer economy
China’s retail sales growth unexpectedly weakened in November. Retail sales rose 3% from a year ago. That was the the slowest annual growth rate in three months and it was well below even the most bearish forecast.
Just last week Chinese policymakers elevated boosting consumption to the top priority for next year. That marked , only the second time in a decade that the consumer economy was the focus of official policy.
Special Report: Buys and sells–and other money moves for Trump’s first 100 days. The complete 100 Days
What you need as an investor and what your portfolio needs is a road map to the likely events of the beginning of this new administration. And a take on what those events are likely to mean for the financial markets–and the prices of stocks and bonds. And recommendations on what moves to make to respond to the events of the first 100 days of a Trump Administration. Which is what this Special Report is all about. Here /i’ll give you an investor’s calendar to the first 100 days of Trump; a run-down of the likely effects on the financial markets of the events in the first 100 days; and recommendations for moves that you should make with your portfolio.
Special Report “10 Trump and 10 Harris winners (and 5 losers)–first 3 Trump picks and first 3 Harris picks
I don’t know which candidate will win the election. Right now the polls are within the margin of error on the national level–and even tighter in the seven battleground states that will likely decide the electionm. But I do know the results on November 5 will move stocks. Some right off the bat even before the results are certified. Ans more significantly as a new administration clarifies its policy views and takes office.The results will move the stock market in general
And they will move individual stocks and sectors in particular.
Live Market Report (20 minute delay)
At 2.8%, GDP growth misses estimates but maintains strong trend for the economy
The U.S. economy grew at a 2.8% annualized rate in the third quarter, the Bureau of Economic Analysis reported today. The growth rate was down slightly from 3.0% in the second quarter. Economists had projected 3.1% growth. GDP has now climbed for 10 straight quarters.
No consumer slowdown visible as confidence numbers blast through projections
The Conference Board’s gauge of confidence jumped 9.5 points to 108.7, the highest level since the start of the year, data released Tuesday showed. The median estimate in a Bloomberg survey of economists called for a reading of 99.5. The month to month increase was the biggest since March 2021.
Another bad day for bonds–10-year Treasury yield hits 4.28%
Yields rose and bond prices dropped again today as weak demand in a pair of Treasury note auctions suggested investors are anxious about supply on the eve of the next financing quarter. For the day, the yield on the benchmark 10-year Treasury rose 4 basis points to a yield of 4.28%. The yield on the 10-year Treasury is now up 53 basis points in the last month.
This is a crucial week for earnings from the Magnificent 7–and for market leadership
Right now the Magnificent 7 stocks that have provided so much of the leadership in this huge rally look like they will show slowing earnings growth when they–Amazon, Apple, Alphabet, Meta Platforms, and Microsoft are up this week–report in the next few days.
A new pick–TSM–for my Special Report “10 Trump and 10 Harris winners”
Last night I added a third potential Harris election victory winner to my Special Report “10 trump and 10 Harris winners. Here’s what I wrote about Taiwan Semiconductor Manufacturing (TSM) in that post.
Saturday Night Quarterback (on a Sunday) says, For the week ahead expect…
The week will bring Big Tech earnings reports and more earnings reports. All capped on Friday with the October jobs report, the last one before the November 7 meeting of the Federal Reserve on interest rates. (Which means that the Fed will be in its blackout period before the meeting–so no Fed speeches.) And, just for good measure, third quarter GDP figures are due Wednesday, October 30, and PCE inflation numbers are scheduled for Thursday, October 31.
Is a guidance cut from Texas Instruments another sign of a top?
One indicator that I’m carefully monitoring is the guidance in third quarter earnings conference calls about the fourth quarter. I’m checking to see if the cuts to guidance and that Wall Street disappointment might set in a quarter early. If that looks like the case then I’d think about selling now instead of in January 2025.
Starbucks, caught in a hard place between sugar and caffeine, slumps again
Starbucks (SBUX) today pulled revenue and earnings guidance for 2025 after fiscal forth quarter sales fell. It is the third consecutive quarterly sales decline.
Climb in yield on 2-year Treasury says bond market is rethinking rate-cut trajectory
Two-year Treasury yields have climbed 34 basis points since the Federal Reserve reduced interest rates on September 18 for the first time since 2020. Rising yields “reflect the reduced probability of recession risks,” Steven Zeng, an interest rate strategist at Deutsche Bank told Bloomberg. “Data has come in pretty strong. The Fed may slow the pace of rate cuts.” We’ve read this story before
Making West Pharmaceutical Pick #5 in my Special Report 10 New Ideas for an Old Rally
Here’s what I wrote today when I added this stock to my Special Report.
What’s an AI search company startup worth? How about $9 billion? Or maybe $157 billion?
Perplexity AI, an artificial intelligence company building a search product to compete with Google search, is in early talks to raise private-round venture capital at a valuation of about $9 billion, Bloomberg reports.
Pick #4 in my Special Report 10 New Stock Ideas for an Old Rally–AAL
Today I added American Airlines Group as Pick #4 in my Special Report 10 New Stock Ideas for an Old Rally. Here’s what I wrote.
Saturday Night Quarterback (on a Sunday) says, For the week ahead expect…
Amazon’s (AMZN) earnings report on Thursday, October 24, will start the Big Tech Earnings Parade off with a bang. Wall Street analysts are expecting the company to report earnings of $1.14 a share for the third quarter. That would be up from 85 cents a share in the third quarter of 2023. That would be a 34% jump in year over year earnings. Which would certainly be a great lead in to earnings from Alphabet (GOOG), Apple (AAPL), Microsoft (MSFT) and Meta Platforms (META) the following week.
Tesla has more self-driving problems
The National Highway Traffic Safety Administration (NHTSA) has opened a new investigation into Tesla’s (TSLA) self-driving (FSD) technology over reports of four crashes where FSD software was engaged in an “area of reduced roadway visibility conditions.” Reduced roadway visibility includes conditions like sun glare, fog, or airborne dust.
China tries same old medicine again to address sluggish growth
Minutes after the release of government data that showed the economy grew at just a 4.6% year over year rate in the third quarter (the official target is 5% growth), the People’s Bank of China announced new measures to support the country’s financial markets. People’s Bank Governor Pan Gongsheng flagged the real estate and stock markets as key challenges in the economy that require targeted policy support. the 4.6% growth rate is the slowest pace in six quarters.
Taiwan Semiconductor Manufacturing beats on earnings and raises forecast
Shares of global chipmaking powerhouse rose 9.79% today to hit a record high after the chipmaker topped quarterly estimates and raised its target for 2024 revenue growth. The company—-the main chip manufacturer for Nvidia (NVDA) and Apple (AAPL)–expects sales to climb roughly 30% in U.S. dollar terms this year, up from previous projections for an increase in the mid-20% range. Taiwan’s largest company had raised its outlook for 2024 revenue just a few months ago in July.
Retail sales stronger than expected in September
U.S. retail sales strengthened in September by more than forecast. The U.S. economy continues to show solid growth. And the economic strength continues to say that there’s less need for the Federal Reserve to cut interest rates by a larger-than-usual 50 basis points at its November 7 meeting. The value of retail purchases, unadjusted for inflation, increased 0.4% in the month after a 0.1% gain in August, the Commerce Department reported today. Excluding autos and gasoline sales, retail sales climbed 0.7%.
Good news: What we now know about this coming earnings season
It’s still very early in third quarter earnings season, but I think we can already see a pattern.
Investors decide China stimulus isn’t enough
Chinese stocks fell to the verge of a correction in a sign of growing disappointment over the pace of stimulus rollout.The CSI 300 Index ended the day 0.6% lower, bringing its declines from an October 8 high to nearly 10%. Chinese stocks first rallied strongly on stimulus measures announced by the central bank. The CSI 300 soared more than 30% in about three weeks since mid-September before losing momentum. But they’ve fallen hard on growing skepticism about the power of measures proposed so far to restore growth to China’s economy.
Now that’s volatility! Nvidia was up 2.4% on Monday and down 4.82% Tuesday
I think the only important investing question for Nvidia (NVDA) is whether you want to buy it on the dip for along-term score or whether you want to sell when the stock bounces to a record high and then re-buy on the next dip? In my portfolios I’ve got both a one-term position in my 50 Stocks Portfolio, up 182% since December 7, 2023, and a more trading oriented position in my 12-18 month Jubak Picks Portfolio, where the position is up 22% since September 6 even with today’s loss. The stock was up 16% in the last month as of the October 14 close
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