Weekend Update, November 25th, 2024
Index, Sector & Asset Performance
Global equities re-accelerated last week with the MSCI up +1.4%. Here in the states, the Russell 2000 (IWM Etf) led with a +4.46% gain, while the S&P 500 rose +1.68% as some members of the Mag 7 dragged down returns.
Year to date global returns from Goldman Sachs:
The rise in the S&P 500 was led by materials and energy, while financials and consumer discretionary lagged. Earnings results are ending, and the reporting season is proving to be good. Over 75% of S&P 500 companies have topped expectations in Q3, and growth is on track to be near 10% y/y.
2-year Treasury yields ended the week at 4.37%, up +85 bps from their low in late September. The 10-year Treasury yield traded in a 13-bps range and ended flat. Both interest rate markets are mimicking late 2016 during Trump 1.0. Neither inflation nor growth caused interest rate issues in stock markets in 2017.
Economic Indicators and Earnings Commentary
Initial jobless claims fell to 213,000, which is a 6-month low. Continuing claims rose to 1.9 million, which is a 3-year high. There are few layoffs but sluggish hiring. The housing data was mixed as well. Existing home sales had a 3.4% m/m increase to +3.96 million units in October. However, housing starts posted a –3.1% m/m decline to 1.311 million units. Building permits fell as well. The two hurricanes in the Southeast late in the season are affecting housing.
Nvidia’s earnings announcement was initially met with mild disappointment, but the stock ended the week flat. Target whiffed badly while Wal-Mart beat both revenue, margin, and EPS expectations by a wide margin.
Alphabet/Google was the largest laggard in technology as the company was the subject of a DoJ antitrust suit focused on its Chrome browser.
Tesla continued its post-election surge. The stock is now up 40% since Nov 5.
Global Market Trends/Commodities/Currencies
Bitcoin continued its ascent on global easing and speculative trading around Trump 2.0 buying it as a reserve. Here is an overlay of Bitcoin in 2016-17 versus 2024. You must squint hard. It’s now nearing $100k.
Oil prices rose above $70/bbl on escalations in the Russia-Ukraine war and belief OPEC+ will delay plans to reintroduce supply.
Geopolitical tensions drove a +5.53% rally in gold prices.
“De-dollarization”? Not so fast dollar Doomers. The dollar continued to rally during the week ending up 1.5%. The DXY index is up over +3% post-election. That said, the near EXACT same move occurred in 4q2016 during the first Trump win, with the dollar peaking spot-on year end 2016 and declining in 2017. Here’s the DXY path in 2016-2017 overlaid on 2024.
The U.S. dollar continues to rally. Since hitting a low in late September, the dollar has been on an eight-week rally, rising by roughly +6% on a trade-weighted basis against the major currencies. The dollar’s rise is again woes in Europe, with the euro among the biggest losers, dropping -5% since Election Day. The dollar’s strength is in the face of the BRICS’ goal of moving away from the dollar . However, note that 3 of the 5 top member BRICS have boosted their holdings of U.S. Treasuries in the past year, and China has only shaved them by $6 billion. So much Doomer noise around this topic, it was the focus of last week’s stock talk.
Oak Harvest Weekly Stock Talk
De-Dollarization: Here’s Why It’s Not a Thing to Worry about for Years
