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WEEKLY ROUND-UP Thru Dec 1st 2023; “Will Santa Rally Continue?”

Hey Folks we saw a recording breaking November for US Indexes and now we will see where the month of December takes us. Get my take here in this week’s round-up.


US indexes have built on strong gains over the month of November. Momentum continued in the last week of the month where we saw the S&P up over 8.9% and NASDAQ up over 10.7%, while the DOW made new 2023 highs.

The week brought some good news on the inflation front. On Thursday, the Commerce Department reported that the Federal Reserve’s preferred inflation gauge, the core (less food and energy) personal consumption expenditures (PCE) price index, rose 0.2% in October, a slowdown from September. This brought its year-over-year increase down to 3.5%—still well above the Fed’s 2% target, but the lowest level since April 2021. Over the past six months, core PCE was running even slower, at an annualized rate of 2.5%. The week offered evidence the economy may be headed toward policymakers’ goal of a “soft landing.” Personal spending rose 0.2% in September, its smallest increase in six months, while personal incomes rose at the same pace.

A noted Fed voting member and a hawk, Christopher Waller, surprised investors by saying that he is increasingly confident policy is currently well positioned to slow the economy and get inflation back to 2%. He also told the audience that if inflation continued to moderate over the next three to five months, “we could start lowering the policy rate just because inflation is lower. In a speech on Friday, “Boom Boom” Powell acknowledged interest rates were now “well into restrictive territory, but also warned that the Fed would raise rates again, however, if dictated by the data. Essentially price action viewed his comments to mean the FEDs are done hiking rates and now it is only a matter of when and by how much will they begin lowering rates. The US 10 Yr fell 52.5 bps in the month of November, its biggest drop in 4 years while Bond had their best month since the 80’s.

Eurozone annual consumer price growth in November slowed more than expected in November to 2.4%, down from 2.9% in October and below expectations for 2.7% in a FactSet poll of economists. Underlying price pressures also eased. Core inflation, which excludes food and energy costs, dropped to 3.6% from 4.2%. Separately, the jobless rate held steady at a record low of 6.5%. Both the ECB and the BOE are pushing back against the market’s perception of rate cuts coming sooner rather than later.

Japan’s Prime Minister Fumio Kishida reiterated the government’s commitment to taking all necessary measures to cushion the negative impact of recent price hikes. In early November, his administration announced a new economic stimulus package worth more than USD 110 billion, aimed at boosting growth and helping households cope with the rising cost of living. The BOJ could not say with conviction that a sustained and stable achievement of their 2% inflation target was in sight and stressed the need to maintain ultra-loose monetary policy for the time being.

Chinese equities retreated as official indicators underscored concerns about the country’s fragile recovery. The official manufacturing Purchasing Managers’ Index (PMI) fell to a below-consensus 49.4 in November from 49.5 in October, marking the second consecutive monthly contraction. The nonmanufacturing PMI slipped to a lower-than-expected 50.2 from 50.6 in October. For the first 10 months of 2023, profits fell by 7.8% from a year ago, slowing from a 9% contraction recorded in the first nine months of the year. The latest report deepened concerns that China’s recovery has yet to find a solid footing.

Enjoy this Week’s Round-Up

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