Latest / ANGLES. / Walking Into A Dark Room.

Transcript

Walking Into A Dark Room. · ANGLES.

• 0:01
  SPEAKER_00: Walking into a Dark Room.
• 0:04
  SPEAKER_00: My Weekly Market Review, December 22nd, 2024.
• 0:09
  As we entered 2024's final full week of trading,
• 0:13
  political turmoil raged around the world.
• 0:16
  SPEAKER_00: A vote of no confidence brought down the German government.
• 0:20
  French national debt was downgraded by credit agencies after
• 0:24
  the selection of a new
• 0:25
  SPEAKER_00: prime minister.
• 0:26
  Canada's finance minister resigned in response to what she saw
• 0:31
  as Trudeau's wimpy
• 0:32
  SPEAKER_00: response to Trump's tariff threats.
• 0:35
  SPEAKER_00: Presidential impeachment proceedings in South Korea continued.
• 0:39
  A Chinese spy scandal in the UK engulfed two former
• 0:44
  conservative prime ministers,
• 0:45
  SPEAKER_00: as well as the royal family.
• 0:48
  And attempts went on to sustainably fill the post-Assad
• 0:51
  political vacuum in Syria.
• 0:54
  SPEAKER_00: Despite the global turbulence,
• 0:56
  SPEAKER_00: there was green all over the screens in New York on Monday,
• 1:00
  SPEAKER_00: ahead of Wednesday's highly anticipated Fed interest rate cut.
• 1:04
  Big tech names forcefully led the way again and built nicely on
• 1:08
  record highs for
• 1:09
  SPEAKER_00: the NASDAQ 100 index,
• 1:11
  which waved goodbye and good riddance to dogs like Moderna and
• 1:15
  Supermicro Computer
• 1:17
  and welcomed in big data and crypto giants Palantir and
• 1:21
  MicroStrategy as part of a
• 1:23
  SPEAKER_00: periodic shakeup of its component stocks.
• 1:27
  SPEAKER_00: Retail sales came in stronger than expected on Tuesday morning,
• 1:31
  SPEAKER_00: up 0.7% in November,
• 1:34
  SPEAKER_00: with a solid upside revision for October.
• 1:37
  SPEAKER_00: Under the hood,
• 1:38
  evidence continued to show that American consumers could be
• 1:42
  preempting Trump's
• 1:43
  SPEAKER_00: tariffs with a more buy now approach to certain big ticket items.
• 1:50
  SPEAKER_00: While not seen as a hurdle for an interest rate cut the following day,
• 1:54
  the continued robust US economic performance is putting 2025's
• 1:59
  anticipated cuts in
• 2:00
  SPEAKER_00: increasing jeopardy,
• 2:02
  SPEAKER_00: and the indexes stumbled in response,
• 2:04
  SPEAKER_00: ending the session lower.
• 2:08
  Fed day finally rolled around on Wednesday,
• 2:11
  and it proved to be a wild ride.
• 2:14
  SPEAKER_00: Stocks were quiet in advance of the 2 p.m.
• 2:16
  Eastern Committee statement and subsequent press conference
• 2:20
  starring Chairman Jerome Powell.
• 2:23
  Far more interesting than the announcement of the fully
• 2:26
  expected quarter-point Fed
• 2:28
  Funds rate cut to 4.375% was the release of the latest
• 2:33
  quarterly so-called dot plot chart,
• 2:36
  which shows the Fed Committee members' projections of what will
• 2:40
  happen to interest
• 2:41
  SPEAKER_00: rates in 2025 and beyond.
• 2:44
  SPEAKER_00: At both their June and September meetings,
• 2:47
  the members signaled a total of four interest rate cuts over
• 2:51
  the course of eight
• 2:52
  SPEAKER_00: meetings in 2025.
• 2:54
  SPEAKER_00: Those expectations were cut in half to only two next year,
• 2:59
  SPEAKER_00: with just a handful more anticipated through the end of 2027.
• 3:05
  This horrified markets and stocks completely crapped out with
• 3:10
  the worst pain being
• 3:12
  SPEAKER_00: felt in big tech and small caps.
• 3:14
  SPEAKER_00: It was the worst Fed day for equities since 2001.
• 3:19
  Bonds followed suit as interest rates soared on the news of the
• 3:23
  expected rate cut slowdown.
• 3:27
  SPEAKER_00: At the press conference,
• 3:28
  a rather defensive Powell batted awake reporter questions about
• 3:33
  how much of the
• 3:34
  gloomier outlook for cuts was due to the potential for higher
• 3:37
  inflation next year
• 3:39
  SPEAKER_00: caused by tariffs under a Trump administration.
• 3:42
  But he did concede that the Fed needed to slow down and be more
• 3:47
  cautious with its
• 3:48
  decision making right now as it was walking into a dark room
• 3:53
  full of furniture,
• 3:54
  SPEAKER_00: as he put it.
• 3:56
  SPEAKER_00: He muttered some variation of the word uncertain 17 times.
• 4:02
  He also pointedly failed to rule out the possibility of the Fed
• 4:07
  having to actually
• 4:08
  SPEAKER_00: raise interest rates next year.
• 4:12
  SPEAKER_00: Egged on by first buddy Musk,
• 4:15
  SPEAKER_00: Trump then tossed a huge bucket of gasoline onto the dumpster fire,
• 4:20
  shocking markets just before the closing bell by barging in and
• 4:24
  trashing the 1500
• 4:26
  plus page bipartisan compromise bill crafted by Congress that
• 4:31
  was designed to avert
• 4:32
  SPEAKER_00: a government shutdown by the end of the week.
• 4:36
  SPEAKER_00: This swiftly torpedoed the rescue measure as many Republican lawmakers,
• 4:40
  SPEAKER_00: who just hours earlier had been supportive of the bill,
• 4:44
  suddenly flipped and fell in line behind the president-elect
• 4:48
  and his new mini-me.
• 4:51
  A closure of the federal government starting at the weekend and
• 4:54
  an end to multiple
• 4:55
  SPEAKER_00: disaster aid programs was not on anyone's bingo card.
• 5:00
  There had previously been a 100% certainty that the deadline
• 5:04
  would be extended one
• 5:05
  SPEAKER_00: way or another,
• 5:06
  SPEAKER_00: which is why it had barely registered as a concern.
• 5:11
  As day's traders reconvened on Thursday morning following
• 5:15
  depressed Asian and
• 5:16
  SPEAKER_00: European sessions,
• 5:18
  they learned that the US gross domestic product GDP economic
• 5:22
  growth estimates for
• 5:23
  the third quarter had been revised up from 2.8% to 3.1% and
• 5:29
  that the Bank of
• 5:30
  SPEAKER_00: England had decided not to cut interest rates in the UK.
• 5:34
  The initial sense when markets opened was that the previous
• 5:38
  day's wipeout may have
• 5:39
  SPEAKER_00: been overdone and some dip buyers took advantage,
• 5:43
  SPEAKER_00: stepping in to scoop up some of the more battered and bruised stocks.
• 5:49
  SPEAKER_00: But the rebound became more and more half-hearted as the session wore on,
• 5:53
  and by the close it had completely fizzled and the indexes
• 5:57
  slipped back into the
• 5:58
  SPEAKER_00: red again,
• 5:58
  SPEAKER_00: with the S&P 500 falling to its lowest point since the election.
• 6:04
  SPEAKER_00: Stock prices didn't fall because of the shutdown itself,
• 6:08
  but because this is exactly the kind of unhinged political
• 6:12
  chaos that financial
• 6:14
  markets fear from the Trump-Musk circus that appears to have
• 6:18
  already rolled into
• 6:19
  SPEAKER_00: town weeks before the inauguration.
• 6:23
  Thursday night's dismal failure of Congress's botched Plan B to
• 6:28
  avoid a shutdown
• 6:30
  SPEAKER_00: hung over markets like a bad smell when the opening bell rang on Friday,
• 6:34
  SPEAKER_00: and stocks initially continued their slide.
• 6:37
  Although the release of a better than expected personal
• 6:40
  consumption expenditures
• 6:41
  PCE inflation indicator of plus 2.4% annualized took some of
• 6:47
  the edge off the pessimism.
• 6:49
  While Congress continued to pitifully fumble around trying to
• 6:52
  cobble together a
• 6:53
  SPEAKER_00: plan C,
• 6:54
  a version of which was eventually passed by the House after the
• 6:58
  markets closed.
• 7:01
  SPEAKER_00: Circle March 14th on your calendar,
• 7:04
  as the next time we'll probably be going through this same
• 7:07
  sorry mess all over again.
• 7:10
  SPEAKER_00: Things quickly turned around late morning,
• 7:13
  SPEAKER_00: though,
• 7:13
  SPEAKER_00: as Wall Street traders decided that enough was enough,
• 7:17
  SPEAKER_00: with the broad stock market 3-4% cheaper than it was on Monday,
• 7:21
  SPEAKER_00: right in the middle of traditional buying season,
• 7:24
  SPEAKER_00: and were tempted back into buying mode.
• 7:27
  The index is all closed substantially higher on the day,
• 7:31
  although still well down for the week.
• 7:34
  Although the index has been hitting new all-time record highs
• 7:38
  consistently over the
• 7:39
  SPEAKER_00: last few weeks,
• 7:40
  last Wednesday marked the 13th straight trading day that more
• 7:45
  than half the S&P 500
• 7:46
  SPEAKER_00: stocks fell during the session,
• 7:48
  SPEAKER_00: a record ever streak for this measure.
• 7:53
  The fact is that a fully fledged stock market pullback has been
• 7:57
  underway since
• 7:58
  SPEAKER_00: before Thanksgiving.
• 8:00
  SPEAKER_00: But until last week's shenanigans,
• 8:03
  it had been obscured by headline grabbing positive readings
• 8:07
  from the heavily mega
• 8:08
  SPEAKER_00: cap weighted S&P 500 and NASDAQ indexes.