Weekend Update, September 30th, 2024
Index, Sector & Asset Performance
Equities throughout the world rose last week led by a near historic rally from 52-week lows to 52-week highs by China stocks as inflation data continued to decline and the Chinese politburo broke out the fiscal and monetary bazooka to stimulate their woefully bad economy. Much to the dismay of September seasonal bear calls, the S&P 500 hit more all-time highs throughout last week, ending the week +0.64% higher. International equity markets rose as well, the STOXX 600 and FTSE 100 rising by +2.73% and +1.17%, respectively. The Hang Seng index surged +13.03% on the week and is up again this morning on FOMO by Asian traders, “Fear of Missing Out”.
Cyclical sectors drove equities higher after China announced aggressive stimulus measures. This is their biggest attempt since the end of COVID lockdowns to aid its flailing economy. Autos, semiconductors, and commodity-centric sectors gained while defensives underperformed.
Treasury bond prices at the short end remained calm with the 2-year at 3.56% and the 10-year at 3.75%. The 2Y-10Y yield curve continued to steepen into positive territory as the positive slope peaked at 22 bps.
Per FS Investments, the market is broadening beyond the “Magnificent 7 tech stocks”.
Economic Indicators and Earnings Commentary
Headline PCE rose 0.1% in August from the month prior. This print brought the annual rate down to 2.2%. The core PCE rose +0.1% while the year-over-year rate was higher to 2.7%. Each measure was either in line with or below consensus expectations, indicating more incremental progress on disinflation.
Global Market Trends/Commodities/Currencies
China surprised market with new measures aimed at stabilizing the economy amid concerns over deflation and slowing growth. After the PBoC unveiled a package of broader than expected policy easing on Tuesday, fiscal policymakers called for stepping up counter-cyclical fiscal stimulus off-schedule. David Tepper, who may be one of the few retired billionaires hedge-fund managers worth listening to, claimed this as China’s “buy everything moment”.
Oil prices and energy stocks fell again last week on the news that Saudi Arabia is abandoning hopes for driving higher oil prices. Instead, it is shifting its focus on recapturing lost market share. Goodbye $100+ oil dreams? OPEC+ also committed to raising production in December, pushing the price of WTI and Brent crude lower to $68.18 and $71.98/bbl.
Copper surged +7.4% on the hopes of China turnaround. Other industrial metals and agricultural commodities were lifted by hopes of improving Chinese demand. Spot natural gas prices jumped toward $3/mmBtu as Hurricane Helene hit supply around the GOM.
In the Gold markets, the song remains the same as, the price of an ounce reached almost $2670/oz on global central bank monetary easing and money printing.
OHFG Exclusive Data & Charts
Market YTD Summary per Goldman Sachs
Oak Harvest Weekly Stock Talk: The Great Reset and What It Means for Your Money
