11/11-11/15/24 Weekly Market Recap - Movers, Macro, Monetary, and Fiscal

Weekly Market Summary by Aremorph


Summary - Movers, Macro, Monetary, and Fiscal


With another week complete, we observe some pullback in the equity market after the surge from the election results, as well as news reports from the week. With the reporting of CPI, PPI, US Retail sales, speculation on the Fed Funds Rate changes as well as market reactions to the different indicators. Take a look below for movements of the week!

Global Weekly Movements

U.S. Equities

  • S&P 500 Index: 5,870.62 (-2.18%)

  • Dow Jones Industrial Average:  44,293.13 (-1.91%)

  • Big Movers of the Week

    • Palantir Technologies Inc (PLTR): 65.77 (9.38%): Palantir stocks jumped 11% specifically on Friday after announcing its moving from NYSE to NASDAQ and investors are expecting that the stock will be eligible to be part of the NASDAQ-100 index, which will allow them to receive additional fundings from certain index funds. 

    • Shopify (SHOP): 108.49 (+20.56%): The stock rose 21% after earnings thanks to better-than-expected earnings results and forecast for the next holiday season. 

    • Disney (DIS): 115.08 (+14.10%): Disney narrowly beat estimates thanks to growth in streaming revenues, but gave good guidance.

Chinese Equities

  • Shanghai Composite (SHCOMP): 3,330.73 (-2.96%)

Hong Kong Equities

  • Hang Seng Index (HSIK): 19,426.34 (-4.90%)

Japanese Equities

  • Nikkei 2225 (NI225): 38,642.91 (-2.25%)

European Equities

  • UK Index (UKX): 8,063.61 (-0.76%)

  • German Index (DAX): 19,210.81 (-.27%)

Emerging Markets

  • Brazil Index (IBOV): 127,791.6 (-0.06%)

  • Emerging Market ETF (EEM): 42.95 (-3.44%)

Commodities

  • Gold Futures: 2,567.4 (-4.17%)

  • Crude Oil Futures: 66.88 (-4.07%)

U.S. Monetary & Fiscal Policy:

Fed Rate Cut Projections: The probability of no rate cut after the Dec 18th FOMC meeting has risen from 13.9% a month ago to over 38% today. This suggests market expectations are shifting, with investors betting that the Fed may hold rates steady in the short term. “The economy is not sending any signals that we need to be in a hurry to lower rates,” Jerome Powell stated. Projections indicate a modest 4 basis point cut by the end of 2025, signaling that inflation pressures may ease but not rapidly enough for aggressive rate cuts.

  • US Treasury Yield Curve (Gurufocus)

    • May 2024: Black

    • November 2024: Blue

→ U.S. Treasury yields remain stable, with the 1-month at 4.594% and the 30-year at 4.623%. The yield curve is mostly flat, with short-term rates slightly lower than long-term rates, reflecting uncertainty about the near-term economy and expectations for higher inflation and fiscal deficits in the longer term. The yield curve shows short-term yields falling while long-term yields remain largely unchanged, illustrating a bull steeper. This occurs when short-term rates drop more than long-term rates. It could indicate optimism for economic stability or moderation in inflation, but also a more cautious outlook for growth.

Global Macroeconomic News:

  • CPI rose 0.2% in October, bringing the annual inflation rate to 2.6%. Core CPI increased 0.3%, with annual inflation at 3.3%, reflecting persistent price pressures in housing and services. This echoes what Powell stated in his briefing, citing that there is no rush for rate cuts. Energy saw the largest decline of 4.6%, and used cars saw the most increase at 2.7%. Higher than expected CPI can impact interest rate sensitive sectors such as rates, real estate, or consumer discretionary.

  • PPI also rose 0.2% last month, pushing the annual increase to 2.4%. Core PPI climbed 0.3%, with services, including airfares and portfolio management, contributing to higher inflationary trends. Manufacturing and industries could be impacted by a rising PPI, energy and utilities as well. Raising PPI reflects the bull market sentiment, once again echoing Powells statements. 


  • Retail Sales: Retail sales in October rose 0.4%, exceeding expectations of a 0.3% increase, with auto sales driving much of the gain (+1.6%). While sales excluding autos and gas rose just 0.1%, September's numbers were revised higher, showing stronger growth than initially reported. Economists view the data as a sign of continued consumer resilience, despite rising prices and borrowing costs. This solid consumer spending momentum sets the stage for a strong end to 2024 economic growth.

Potentially impacted stocks: AXP, AMZN,  WMT

  • China and South America: China’s growing influence in Latin America, highlighted by a new port in Peru, is reshaping global trade routes. As China becomes the largest trading partner for several Latin American nations, this could boost commodities and infrastructure stocks in the region while reducing reliance on the U.S. dollar. 

Potentially impacted stocks: MELI, VALE, C

  • Russian Oil: Russia plans to merge its major oil companies, potentially making it the world’s second-largest oil producer, behind only Saudi Aramco. This move could give Russia more economic power, with oil accounting for about one-third of its federal revenue. A boost in production might drive down U.S. energy sector stocks and strengthen the ruble. Rising oil prices could also lead to higher inflation, potentially steepening the yield curve.

Potentially impacted stocks: BP, CVX, XOM

Sources: Bloomberg Terminal, Google Finance, Market Watch, CME Fedwatch, Barrons, Reuters

Have a great week investing!

Sincerely,

Aremorph

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