This report is from today’s TNC’s Daily Open, our international markets update.
TNC Daily Open keeps investors informed on everything they need to know, no matter where they are.
What To Note Today
U.S. government shutdown halted
President Joe Biden signed a temporary government funding bill on Saturday, preventing the U.S. government from going into shutdown.
A first, negotiated funding plan was stymied Wednesday by President-elect Donald Trump and Elon Musk, who vehemently criticised its provisions and pushed on a two-year suspension of the U.S. debt ceiling.
Price hikes slowed down
According to the personal consumption expenditures price index, headline inflation in the United States increased by just 0.1% in November compared to October. Price increases were 2.4% annually. Ten basis points were subtracted from both readings.
Additionally, core inflation was 10 basis points lower than expected. The favoured inflation indicator used by the US Federal Reserve is the PCE.
Asia-Pacific and U.S. markets expand
The Dow Jones Industrial Average increased by 1.18%, the S&P 500 increased by 1.09%, and the Nasdaq Composite increased by 1.03% on Friday.
However, the week saw a decline in all indexes.
After a successful Friday closing on Wall Street, Asia-Pacific equities increased on Monday.
As Honda, Nissan, and Mitsubishi reportedly notified the nation’s industry ministry about starting merger negotiations, Japan’s Nikkei 225 rose by 1.2%.
CEOs notice the door
Many well-known corporations, like Starbucks, Intel, and Boeing, announced changes to their CEOs this year.
They’re not by themselves. Challenger, Grey & Christmas, an outplacement company, reports that 327 CEOs left U.S. public businesses this year through November.
Since the company began recording statistics in 2010, that is the highest level.
Putting money on Broadcom
In terms of market capitalization, Nvidia is unquestionably the industry leader in artificial intelligence chips, and it seems unlikely that any other business can overtake it.
Broadcom, meanwhile, is “the next Nvidia in terms of outperformance potential,” according to a portfolio manager who spoke to reporters.
Bottom Line
After the Fed said it expects two quarter-point rate reduction this year, rather than the four originally forecast, stocks fell on Wednesday.
Fed Chair Jerome Powell stated during his press conference that “we have been moving sideways on 12-month inflation.”
However, the PCE for November was lower than anticipated. Chris Larkin, managing director of trading and investing at E-Trade Morgan Stanley, stated that “stucky inflation seemed to be a little less stuck this morning.”
The Fed has often stressed that it is “data-dependent.” Therefore, if the Fed had had the opportunity to examine the PCE data beforehand, would they have shown the world a slightly different dot plot?
Chicago Fed President Austan
Goolsbee gave some credibility to that line of thinking when he told a reporter that he is optimistic about November’s inflation figure, saying it “indicates that the couple of months of firming were more of a bump than a change in path.”
Put differently, Goolsbee stated that the economy is “still on path to get to 2%.”
However, Powell stated in July that the central bank’s decision to lower rates would be “data dependent, but not data-point dependent.”
One month’s data wouldn’t have changed the picture, even if the PCE index for November had indicate that inflation was starting to decline again. Maybe two months in a row with lower readings might have?
Those are rhetorical queries. It is impossible to answer conditional queries, particularly in markets.
However, because of their ambiguity and deceptiveness, they draw attention to the fact that it may not be the wisest course of action to try to time or game the market, particularly during turbulent periods like today.
Instead, examine the core factors that influence stocks despite changes in inflation and interest rates: earnings, cash flow, and future income.
Do you recall when Fed meetings and inflation numbers were just another day in the life of the market?