Weekend Update, December 2nd, 2024
Index, Sector & Asset Performance
US stocks were up last week to new all-time highs with the S&P500 gaining over 5% in November and the Russell 2000 leading domestic indexes higher up +12% on the month. This was the best monthly return of 2024. So much for waiting on the election outcome to buy stocks?
The only negative sector on the week was energy. Consumer discretionary led the weeks gains with TSLA and AMZN leading the way higher.
Stock returns for the month of November:
Fixed income markets rallied last week on less concerns over the Trump 2.0 agenda.
Economic Indicators and Earnings Commentary
A week ago, President elect Trump picked former hedge fund manager, Scott Bessent to head the Treasury Department. Wall Street collectively exhaled removing a source of uncertainty from the markets. Bessent advocates a market friendly “3-3-3” policy of cutting the budget deficit to 3% of GDP by 2028, spurring GDP growth of +3% through deregulation, and adding 3 million more barrels of oil equivalent a day.
October core PCE came in last week at +0.27% MoM, slightly better than consensus of +0.28%. Behind the scenes, the report shows inflation to be even weaker than the core PCE number suggests. Why? A large part of the PCE gain came from the rising in October of the “Magazines & Stationary” component, contributing 0.04% to the core PCE number. Another big upward mover in the month was “financial and advisory fees” which of course was driven by the equity markets hitting new all-time highs quickly in the month.
Global Market Trends/Commodities/Currencies
According to Tom Lee of Fund Strat, in the 31 U.S. Presidential elections since 1900, equities gained 61% of the time 3 months post-election, with a median gain of +5.5%. Non-recession years heading into the election, the stock market rallied six out of six times, with median gains of +7.2%. A +7% gain from 2024 Election Day would imply the S&P 500 reaching around 6,300 into inauguration.
Bitcoin pulled back -4% falling short of crossing above $100,000.
Oil finished near$70/bbl again. Energy stocks were underperformers under Trump 1.0 as more drilling led to lower and energy prices. Higher U.S. oil production and tariffs would be a negative for prices. Good for consumers, generally bad for investing in energy equities.
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