September 29, 2024
Volume 11, Issue 39
Weekly Recap
The S&P 500 and the Dow Jones Industrial Average reached new record highs last week, as traders celebrated new stimulus measures in China. Chemicals and materials stocks were particularly strong on hopes for a rebound in Chinese demand. Copper prices also increased, raising hopes that “Doctor Copper” was again reflecting a healthier global industrial economy. Technology stocks outperformed too, aided by reports of a possible takeover of Intel and news that NVIDIA’s CEO had ceased sales of his own shares in the company. Moreover, chipmaker Micron Technology surged and seemed to provide a general tailwind for the sector following its upbeat outlook for artificial intelligence demand. Last week’s (light) U.S. economic calendar saw mixed results. Stocks pulled back somewhat early Tuesday on news that the Conference Board’s index of U.S. consumer confidence fell sharply in August, putting it back near the bottom (98.7) of its range over the past two years, according to its chief economist. The index of consumers’ perception of labor market conditions fell to 81.7, not far from the threshold of 80 that has historically predicted a recession.
Last week also brought some mixed news about the housing sector, following some recent signals that it might be stabilizing as mortgage rates begin to come down. The Commerce Department reported on Wednesday that new home sales declined – if not as much as expected – 4.7 percent in August, while building permits data were revised lower. Even as new buyers remained on the sidelines, however, the drop in mortgage rates did seem to be sparking a surge in refinancings. The Mortgage Bankers’ Association Mortgage Refinance Index jumped to its highest level since April 2022, which was shortly after the Fed started to raise short-term rates.
Some benign inflation data helped spur an early rally Friday. Before trading opened, the Commerce Department reported that the Federal Reserve’s preferred inflation gauge, the core (ex-food and energy) personal consumer expenditures price index, rose only 0.1 percent in August, a tick below expectations. On a year-over-year basis, the index climbed only 2.2 percent, close to the Fed’s 2.0 percent long-term inflation target and the least since February 2021. Meanwhile, personal incomes and spending both surprised on the downside in August, further suggesting a moderation in inflationary pressures. The extreme front end of the yield curve rallied modestly last week while most of the curve was little changed to slightly lower (higher in yield). Yields on the benchmark 10-year U.S. Treasury note ended last week 2 basis points higher than the previous week.
Market Monitor
A full listing of market performance data is available here.
DQYDJ.com (“Don’t Quit Your Day Job”) offers helpful investment calculators here, including one that shows total returns for individual stocks. Koyfin.com provides reams of data on individual stocks, including the ability to track total return — and just about anything else — over time.
In the News
The Federal Reserve’s preferred inflation gauge showed price pressures cooled last month, rising 2.2 percent in August from a year earlier. The personal-consumption expenditures price index came in below economists’ expectations for a 2.3 percent rise. In July, the index rose 2.5 percent from a year earlier. The closely watched core index, which doesn’t include volatile food and energy prices, rose 2.7 percent in August from a year ago, matching expectations. The readings suggest inflation continues to move towards the Federal Reserve’s 2 percent annual target. Whether interest-rate cuts from the Federal Reserve help engineer a soft landing depends only partly on how much weakness is under the hood of the U.S. economy. Success also depends on lower borrowing costs spurring new investment and spending to counteract any slowdown.
Falling interest rates and recovering real wages will help drive a slight pickup in global economic growth this year and next, while recent falls in oil prices could aid the final push to tame inflation, the Organization for Economic Cooperation and Development announced Wednesday.
Investors have poured $126 billion into money-market funds since the Federal Reserve’s recent 50 basis point interest-rate cut. That sent assets in such funds to a record $6.76 trillion as of Tuesday, based on Crane Data going back to 1998.
In the week ending September 21, the advance figure for seasonally adjusted initial jobless claims was 218,000, a decrease of 4,000 from the previous week’s revised level. The previous week’s level was revised up by 3,000 from 219,000 to 222,000. The 4-week moving average was 224,750, a decrease of 3,500 from the previous week’s revised average. The previous week’s average was revised up by 750 from 227,500 to 228,250.Pending home sales in August rose 0.6 percent, according to the National Association of REALTORS®. The Midwest, South and West posted monthly gains in transactions, while the Northeast recorded a loss. Year-over-year, the West registered growth, but the Northeast, Midwest and South declined.
Charts of the Week
I found the following articles to be of note. Some may be of interest only to advisors while others are aimed more broadly. You may hit paywalls below; many can be overcome here. Stay SafeOut There (Adam M. Grossman)
Nobody Knows Anything, The Beatles edition (Barry Ritholtz)
We Asked a Nobel Prize-Winning Economist How to Fix Fintech (Nir Kaissar)
This is the best thing I’ve read recently; this is the best thing I saw. The most insightful. The best use of data. The best copywriting. On the asteroid that killed the dinosaurs. On the minivan. Promising climate technology. Fall foliage. New music from Mozart (listen here)?!
Movie director Francis Ford Coppola, of Godfather fame, boldly gave his own film, Megalopolis – which came out Friday – five stars on the social movie-ranking app Letterboxd. I appreciate the effort, given that he has sunk $120 million of his own money into a film that reviewers are calling, “a wild fever dream of excess and idealism,” “both overcooked and half-baked,” and a “a zero-star, wacko disaster.” The best (bad) review is here.
“It is hard, I think, to learn as an adult. This is not some profound statement. It just is. But it is not hard because of the fact of it; it is hard because learning anything means learning again how to learn. It’s not that riding a bike is hard; it’s that learning is hard. Learning requires something of us. It requires our patience, yes. It requires, also, our humility.” ~ Devin Kelly
Securities and advisory services are offered through Madison Avenue Securities, LLC, a member of FINRA and SIPC, a registered investment advisor. This report provides general information only and is based upon current public information we consider reliable. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment or any options, futures, or derivatives related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation, and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities, other investment, or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that price or value of such securities and investments may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Diversification does not guaranty against loss in declining markets. Madison Avenue Securities, LLC | 13500 Evening Creek Drive N, Suite 555 | San Diego, CA 92128 US
