To The Moon

Now that both inflation reports (the CPI and PPI) are out, an overall assessment seems timely and appropriate.

CPI - November 2024.

The consumer price index (CPI) was released on Wed, 11 Dec 2024. (see above)

The data largely fell in lined with Wall Street consensus.

That is considered “good” as there are no surprises.

However, it is not exactly a sight because overall consumer goods’ prices are not falling but stalling for time.

Very quickly:

Headline inflation.

• Monthly: CPI increased +0.3% for the month after rising 0.2% in October.

• Annual: CPI increased +2.7% YoY, after increasing by 2.6% the prior month.

Core inflation.

• Monthly: Core CPI climbed +0.3%, status quo as October inflation monthly number.

• Annual: Core CPI rose +3.3% YoY, status quo as October inflation number.

Although core inflation was marginally above the Fed’s 2% target, it represents a plateau in core inflation, suggesting that underlying price pressures are stabilizing.

PPI - November 2024.

Unfortunately, the same could not be said for the producer inflation report.

The data caught US market by surprise when it was released on Thu, 12 Dec 2024. (see above, purple line)

Headline inflation.

• Monthly: CPI increased +0.4% for the month after revised higher 0.3% in October. It is higher than Wall Street’s expectations of 0.2%.

• Annual: CPI increased +3.0% YoY, after increasing by 2.6% the prior month. It is higher than Wall Street’s iexpectations of 2.6%.

Core inflation.

• Monthly: Core CPI climbed +0.2%, lower than October monthly inflation of 0.3% and in lined with Wall Street’s expectations.

• Annual: Core CPI rose +3.4% YoY, in lined with revised October inflation number of 3.4%. It is +0.2% higher than Wall Street expectations of +3.2%.

With wholesale prices rose more than expected, questions are percolating over whether progress to bring down inflation has slowed or worse, stalled.

This is believed to be the main catalyst that spooked US market on Thursday.

US Weekly Jobless Claims.

Thursday also saw the release of US weekly jobless claims for week ending 07 Dec 2024.

Initial jobless claims climbed to 242,000.

This was an increase of +17,000 from previous week's revised level of 225,000 vs economists’ expectations of a dip to 220,000 originally reported for the previous week.

Statistically, jobless claims have increased for the 2nd consecutive week after hitting their lowest level in over 6 months.

Last's week spike in claims likely reflected volatility after the Thanksgiving holiday.

Experts believed it (likely) does not mark an abrupt shift in labour market conditions.

Claims are likely to remain volatile in the coming weeks. That could make it difficult to get a clear read of US labour market.

Question remains whether November inflation data, along with the latest weekly jobless claims — will ignite a contentious debate in the Fed’s December FOMC meeting, on whether to cut rates ?

What do you think ?

CME FedWatch Analysis.

According to the latest CME FedWatch Tool (as of 12 Dec 2024):

• Even after a strong November jobs report and sticky inflation data, investors are expecting the Fed to cut interest rates, later this month. (see above)

• They see a 96.4% chance of a -0.25% cut next week.

• Should it materialize, that would bring the target federal funds rate down to a range of 4.25%-4.50%.

• This will result in a full 1.0% percentage point lower than its peak in July 2023.

Morningstar, Chief US economist, Preston Caldwell best sums it up succinctly :

• Markets still seem to be pricing in an overwhelming probability of a cut, but we see the outcome as more of a coin flip, meaning 50-50.

Is it any wonder with the negatively charged sentiments in the air, that the US market trended down ?

By the time 4pm came around: (see above)

• DJIA: -0.53% (-234.44 to 43,914.12).

• S&P 500: -0.54% (-32.94 to 6,051.25). Index closed out its 9th consecutive day where number of constituents falling outnumbers those rising.

• Nasdaq: -0.66% (-132.05 to 19,902.84).

Bitcoin 100K Frontier.

It finally happened.

On 05 Dec 2024, bitcoin finally broke through the $100,000 resistant ceiling, for the very first time after over many failed predictions, in the past. (see above)

The whales definitely have a hand in it, all thanks to the “positive” vibes that US incoming president has been emitting since he hit the campaign trail.

Now, there is even reference made about Bitcoin being “digital gold”.

While I reserve my thoughts and comments on it, all those reading my posts are encourage to share your views in the comments section.

Bitcoin aside, what I wanted to look at in particular is $Riot Platforms(RIOT)$, why is it faring weaker than its peers ( $MARA Holdings(MARA)$ or $Hut 8 Mining Corp(HUT)$) ; especially when Bitcoin has soared in “value” to its all-time-high recently. (see above)

On Thursday when most stocks were languishing, shares of Riot Platforms jumped by +4.76%, after Wall Street Journal reported activist investor, Starboard Value has taken a “significant position” in the bitcoin miner.

At the same time, the American hedge fund is also pushing Riot to convert some of its bitcoin mining facilities into space for big data-center users.

Unfortunately, the WSJ report did not disclose the size of Starboard’s stake.

The stock was last higher by +7%. Earlier, it spiked as much as +12% intraday.

In 2024, pure-play bitcoin mining stocks like Riot and its peers, have come under pressure as bitcoin exchange-traded funds (ETFs) gave investors a new way to get exposure to bitcoin.

On 19 Apr 2024, miner revenue was slashed during the halving exercise.

With bitcoin prices stuck in a tight range for several months (after halving), did not help Riot’s stock price at all.

During that period, other miners such as $Iris Energy Ltd(IREN)$, Core Scientific, Inc (CORZ)$ and TeraWulf (WULF)$ made pivots to artificial intelligence and outperformed.

Riot did not follow suit and missed the opportunity in the process.

Fortunately, Riot is up more than +30% since the November 2024 election.

President-elect Trump’s victory served as a positive catalyst that sent pure-play miners on a catch-up rally.

Unfortunately, it is still down -17% for 2024.

My viewpoints: (mine only)

In August 2024, Starboard Value was shortlisted as 1 of 15 most feared Activist Hedge Funds by Insider Monkey.

Activist investors stand apart from normal investors, in buying large stakes in publicly traded companies to effect changes that they believe will unlock additional value.

One of Starboard value's notable activist targets was $Salesforce.com(CRM)$, happening in October 2022.

And just like that, CRM stock price has soared +223.53% from then until now.

With Starboard value on board, it is hope that Riot’s management team collaborates with the hedge funds with opened mind to reap the best benefits for the company.

Riot in its heydays was worth $71.33 a pop versus its $12.33 current price tag.

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