Transcript

Injection Of Hope. · ANGLES.

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SPEAKER_00: Injection of Hope, my weekly market review, November 24th, 2024.
0:08
SPEAKER_00: Stocks began the week on Monday in a more upbeat mood,
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SPEAKER_00: with buyers re-emerging to scoop up some of the discounted tech and AI names
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SPEAKER_00: following the previous week's gloom,
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SPEAKER_00: although the early momentum slowly dissipated as the session wore on and the day
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SPEAKER_00: ended with only minimal gains.
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SPEAKER_00: Energy stocks jumped as Trump decided that a fracking company CEO was a good idea
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SPEAKER_00: to become the next head of the Department of Energy.
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SPEAKER_00: Things turned sour again on Tuesday morning,
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SPEAKER_00: following a really ugly session in Europe,
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SPEAKER_00: as tensions surrounding the Russia-Ukraine war were ramped up by apparently
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SPEAKER_00: US-sanctioned Ukrainian long-range missile attacks inside Russia.
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SPEAKER_00: swiftly followed by an apparent rewrite of Russia's nuclear doctrine,
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SPEAKER_00: and these concerns spilled into U.S.
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SPEAKER_00: markets.
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SPEAKER_00: Indeed,
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SPEAKER_00: the post-election bump seemed on the brink of disintegration at one point,
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SPEAKER_00: as stocks fell hard at the open and so-called safe haven assets like treasury bonds,
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SPEAKER_00: U.S.
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SPEAKER_00: dollar and gold pushed notably higher.
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SPEAKER_00: As the day went on,
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SPEAKER_00: though,
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SPEAKER_00: stock traders seemed to become more sanguine,
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SPEAKER_00: the early geopolitical panic subsided,
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SPEAKER_00: and prices moved back into the green and remained there until the close.
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SPEAKER_00: Wednesday was always going to feel like a waiting game,
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SPEAKER_00: with superstar NVIDIA reporting after the close that day,
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SPEAKER_00: although some horrendous earnings and forward outlook from Target caught Wall
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SPEAKER_00: Street's attention at the open and it crashed the stock more than 20%.
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SPEAKER_00: The indexes fell in line with this miserable news from a major retailer and stayed
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SPEAKER_00: rather depressed all day in advance of the main event of NVIDIA's earnings after
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SPEAKER_00: the bell.
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SPEAKER_00: The chipmaker released a broadly positive set of results,
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SPEAKER_00: but the revenue forecast fell short of some of the admittedly sky-high expectations,
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SPEAKER_00: which arguably showed that its dizzying AI fuel growth run might possibly be
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SPEAKER_00: reaching its limits.
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SPEAKER_00: Dip buyers quickly bought up the knee-jerk initial sharp fall in NVIDIA's
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SPEAKER_00: aftermarket price,
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SPEAKER_00: and by the time the real market opened on Thursday morning,
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SPEAKER_00: the stock was largely unchanged.
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SPEAKER_00: Another very healthy weekly jobless claims number provided a much-needed injection
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SPEAKER_00: of hope into the December rate-cutting case,
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SPEAKER_00: and stocks drifted north to finish the day higher,
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SPEAKER_00: with small caps in the financial sector particularly shining.
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SPEAKER_00: The market chopped quietly sideways for a while on Friday before finally shifting a
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SPEAKER_00: little higher again on still intact interest rate cut hopes,
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SPEAKER_00: with small caps and financial stocks continuing to lead the charge and tech names
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SPEAKER_00: once again struggling to keep up.
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SPEAKER_00: At around 6,000, the S&P 500 is currently priced for perfection.
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SPEAKER_00: And perfection means Goldilocks growth,
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SPEAKER_00: an ongoing Fed interest rate cutting cycle,
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SPEAKER_00: falling inflation and pro-growth policies that aren't derailed or unduly delayed by
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SPEAKER_00: political turmoil,
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SPEAKER_00: drama or incompetence.
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SPEAKER_00: While the ultimate policy direction could well be positive for stocks pro-growth,
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SPEAKER_00: the path to that destination is likely to be bumpy one,
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SPEAKER_00: given Trump's inclination towards chaos.
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SPEAKER_00: And that's something to keep in mind as we look ahead to next year.
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SPEAKER_00: It's pretty safe to say that 2025 will be a more volatile year than 2024,
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SPEAKER_00: as markets will have to digest headlines associated with
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SPEAKER_00: unorthodox policies from the incoming administration,
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SPEAKER_00: potential higher volatility in treasury yields in the US dollar,
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SPEAKER_00: trade and tariff threats,
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SPEAKER_00: and familiar unknowns from 2024,
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SPEAKER_00: such as the strength of the economy,
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SPEAKER_00: pace and size of Fed rate cuts,
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SPEAKER_00: inflation,
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SPEAKER_00: and growing geopolitical uncertainty.
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SPEAKER_00: Put in plain English,
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SPEAKER_00: the Trump administration and the Republican government will have a pro-growth,
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SPEAKER_00: low-regulation focus.
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SPEAKER_00: But as 2016 to 2020 and recent post-election events have shown us,
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SPEAKER_00: that can come with policy and rhetorical surprises and uncertainty.
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SPEAKER_00: And while the result of it all could still easily be higher stock prices,
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SPEAKER_00: it's unlikely to be as smooth a ride as 2024.
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SPEAKER_00: Higher volatility doesn't necessarily mean a bear market,
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SPEAKER_00: and the technical setup for stocks in 2025 is still mostly positive.
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SPEAKER_00: However,
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SPEAKER_00: headline-driven volatility will rise,
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SPEAKER_00: and being able to determine what negative news stories are just flare-ups that will
5:01
SPEAKER_00: likely just cause a mild and or ultra-short-term temporary pullback and what
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SPEAKER_00: unfavorable news constitutes a real threat to the stock market rally will not be easy.
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SPEAKER_00: I'll do my best to help.