To The Moon

Quick Summary.

Last Wed, 04 Dec 2024’s tech rally pushed the major indexes to new highs. (see below)

Friday’s latest US Non-farm payroll economic data did little to shake investors’ confidence that the Fed will cut interest rates at its final meeting of 2024.

In the first week of December: (see above)

• DJIA: fell -0.63% (-283.34 to 44,642.45). It was the lone index in the red.

• S&P 500: rose +0.83% (+50.16 to 6,090.27).

• Nasdaq: rose +3.14% (+604.35 to 19,859.77).

Non Farm Payroll - November.

• Jobs payroll roared to 227,000 jobs from revised October’s paltry 36,000 jobs.

• This is 25,000 more than Wall Street expectations.

• Job gains centred around the following sectors: Health care (54,000), Leisure & hospitality (53,000), and Government (33,000).

• Based on past three months’ average of 145,000 jobs, economists polled said that this is consistent with a healthy but slowing labour market.

Unemployment Rate.

• At the same time, unemployment rate (again) edged higher to 4.2%, in lined with expectations.

• The anticipated increase in the jobless rate was seen driven by a snap back in labour supply after declining in October, blamed on people being displaced by the hurricanes.

• Jobless numbers rose as labour force participation rate declined and the labour force (itself) declined.

Morgan Stanley Wealth Management, Chief economic strategist, Ellen Zentner summed up:

• US economy continues to produce a healthy number of jobs and income gains.

• But the marginal month-to-month increase in unemployment rate tempered some of the shine in the labour market.

• And gives the Fed, what it needs to cut rates in December 2024.

CPI Inflation.

For the week beginning 09 Dec 2024, a crucial reading of inflation, the Consumer Price Index (CPI), is scheduled for release on Wed, 11 Dec 2024.

This will be followed by wholesale inflation report, the Producer Price Index (PPI) on Thu, 12 Dec 2024.

Market watchers will be very keen about November inflation data, as they will be closely examined by the Fed, ahead of the upcoming FOMC meeting on Dec 17-18, with focus on the interest cut.

CPI Forecast.

Headline inflation.

• Annual: Expected to increase by +0.1% to 2.7%.

• Month: Expected to rise by +0.1% to 0.3%.

Core Inflation.

• Annual : Expected to remain status quo at 3.3%; marking the 4th consecutive of core CPI data.

• Month: Also expected to remain status quo at 0.3%.

PPI Forecast.

Producer Price Index (PPI) for November, will show how inflation is affecting wholesalers.

• Annual: Expected to rise by +0.1% to 2.4%.

• Month: Expected to rise by +0.1% to 0.3%.

$Wells Fargo(WFC)$, Economics team led by Jay Bryson summarized:

• Overall, the disinflationary momentum is fading.

• New headwinds (ie.(a) potential for tariffs and (b) tax cuts) have emerged, making the final leg of inflation's journey back to Fed's 2% target look increasingly difficult.

• If inflation comes in stronger than expected, the Fed could leave its key Federal Funds rate at 4.5% to 4.75% and skip rate cut until the next meeting on Jan 28-29.

Magnificent Seven Performances.

Last week also saw the Magnificent Seven tech stocks roared.

All seven stocks — AAPL, GOOG, MSFT, AMZN, META, TSLA, and NVDA outperformed the S&P 500.

$Meta Platforms, Inc.(META)$, $Amazon.com(AMZN)$ and $Apple(AAPL)$ closed at record highs on Fri, 06 Dec 2024.

$The Magnificent Seven ETF(MAGS)$ that tracks all seven stocks, also closed at an all-time high. (see above)

Although many Wall Street strategists have been calling for a broadening out of stock market performance in 2025.

But as noted last week, the near-term fundamental story has been favouring the Magnificent Seven, where earnings estimates have been holding up better than the rest of the market.

There is no denying the Magnificent Seven’s magic. Betting against them is futile. So don’t bother !

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