• After a solid week in markets last week, news over the weekend put equities in the red pre-market to start the week. The sell-off was driven by reported developments in AI that need less advanced computing power. As of this writing, NVDA is down by double-digits pre-market. Prior to this tech news, the weekend drama focused on potential 25% tariffs on all Colombian exports, after the country initially refused to accept deportations. The stand-off cooled when Colombian President Petro agreed to accept the migrants, but it gives a hint of what is to come in the new administration.
• Last week was a relatively light week for macro data, with markets focused on 4Q24 earnings season. Equities added to the prior week’s gains, as Trump delayed imposing tariffs, particularly on China, easing market fears of inflationary impacts and slower growth from potentially onerous tariff policy.

• Bonds also rose last week, on expectations for the Fed to be on hold this week. The U.S. economy remains in a position of strength, with 4Q advance GDP expected to show 2.7% annualized growth.

• In earnings, Netflix (NFLX) shares reacted positively to a 19m reported net subscriber addition in the quarter, which exceeded expectations for 9m net subscriber ads. Other standout results were reported from Charles Schwab (SCHW), Interactive Brokers (IBKR), Prologis (PLD), and General Electric (GE). Meanwhile on a negative note, Kinder Morgan (KMI), American Airlines (AAL), CSX Corp (CSX) and NextEra (NEE) posted disappointing releases.
• In corporate news, Trump revealed a $500 bn AI investment partnership named Stargate, between OpenAI, Oracle, and Softbank, with backing from Nvidia (NVDA), Microsoft (MSFT) and Arm Holdings (ARM). Meanwhile, Apple (AAPL) retreated further from the prior week’s losses, as analysts reduced their iPhone projections. Meta (META) disclosed plans to increase AI spending for the year with a now budgeted $60-65 bn, above expectations for $51 bn. Tesla (TSLA) launched a revamped Model Y model for the US market with deliveries scheduled in the coming months. Novo Nordisk (NVO) stock rallied after positive trial results from its new weight loss drug.

The Week Ahead

• 4Q24 earnings season will continue with earnings this week from Meta (META), Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Tesla (TSLA), IBM (IBM), ServiceNow (NOW), Lam Research (LRCX), UPS (UPS), Thermo Fisher (TMO), Roper (ROP), General Dynamics (GD), ADP (ADP), Mastercard (MA), Visa (V) and Caterpillar (CAT).
• Macro data will also be important with the Fed expected to hold rates steady at its meeting on Wednesday, for the first time since starting its cutting cycle in September 2024.
• There will also be important inflation update, with PCE figures for December. Headline PCE is expected to rise by 0.3% MoM and 2.5% YoY, while core PCE is expected to climb by 0.2% and 2.8%, respectively.

• We also get December personal income, which is expected to grow by 0.4% while Personal Spending is up 0.5% MoM, both up slightly from November.

Market Summary – Returns and Yields

• Bonds and equities were both higher last week. Only the dollar and long bonds are weaker for the YTD.

For additional insights, be sure to check out last week’s blog post.

Definitions, sources, and disclaimers

This content is being published by Amerant Investments, Inc (Amerant Investments), a dually registered broker-dealer and investment adviser registered with the Securities and Exchange Commission (SEC) and member of FINRA/SIPC. Registration does not imply a certain level of skill, endorsement, or approval. Amerant Investments is an affiliate of Amerant Bank.

Definitions:

• Gross Domestic Product (GDP): A comprehensive measure of U.S. economic activity. GDP is the value of the goods and services produced in the United States. The growth rate of GDP is the most popular indicator of the nation’s overall economic health. Source: Bureau of Economic Analysis (BEA).
• GDPNow is not an official forecast of the Atlanta Fed. Rather, it is best viewed as a running estimate of real GDP growth based on available economic data for the current measured quarter. There are no subjective adjustments made to GDPNow—the estimate is based solely on the mathematical results of the model. In particular, it does not capture the impact of COVID-19 and social mobility beyond their impact on GDP source data and relevant economic reports that have already been released. It does not anticipate their impact on forthcoming economic reports beyond the standard internal dynamics of the model.
• The Current Employment Statistics (CES) program produces detailed industry estimates of nonfarm employment, hours, and earnings of workers on payrolls. CES National Estimates produces data for the nation, and CES State and Metro Area produces estimates for all 50 States, the District of Columbia, Puerto Rico, the Virgin Islands, and about 450 metropolitan areas and divisions. Each month, CES surveys approximately 142,000 businesses and government agencies, representing approximately 689,000 individual worksites. Source: Bureau of Labor Statistics (BLS).
• Initial Claims: An initial claim is a claim filed by an unemployed individual after a separation from an employer. The claimant requests a determination of basic eligibility for the UI program. When an initial claim is filed with a state, certain programmatic activities take place and these result in activity counts including the count of initial claims. The count of U.S. initial claims for unemployment insurance is a leading economic indicator because it is an indication of emerging labor market conditions in the country. However, these are weekly administrative data which are difficult to seasonally adjust, making the series subject to some volatility. Source: US Department of Labor (DOL).
• The Consumer Price Index (CPI): Is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. Average price data for select utility, automotive fuel, and food items are also available. Source: Bureau of Labor Statistics (BLS).
• The national unemployment rate: Perhaps the most widely known labor market indicator, this statistic reflects the number of unemployed people as a percentage of the labor force. Source: Bureau of Labor Statistics (BLS).
• The number of people in the labor force. This measure is the sum of the employed and the unemployed. In other words, the labor force level is the number of people who are either working or actively seeking work.Source: Bureau of Labor Statistics (BLS).
• Advance Monthly Sales for Retail and Food Services: Estimated monthly sales for retail and food services, adjusted and unadjusted for seasonal variations. Source: United States Census Bureau.
• Federal Open Market Committee (FOMC): Responsible for implementing Open market Operations (OMOs)–the purchase and sale of securities in the open market by a central bank—which are a key tool used by the US Federal Reserve in the implementation of monetary policy. Source: Federal Reserve.
• The Federal Funds Rate: Is the interest rate at which depository institutions trade federal funds (balances held at Federal Reserve Banks) with each other overnight. When a depository institution has surplus balances in its reserve account, it lends to other banks in need of larger balances. In simpler terms, a bank with excess cash, which is often referred to as liquidity, will lend to another bank that needs to quickly raise liquidity. Source: Federal Reserve Bank of St. Louis.
• The “core” PCE price index: Is defined as personal consumption expenditures (PCE) prices excluding food and energy prices. The core PCE price index measures the prices paid by consumers for goods and services without the volatility caused by movements in food and energy prices to reveal underlying inflation trends. Source: Bureau of Economic Analysis (BEA).

Sources: U.S. Bureau of Economic Analysis (BEA), Bureau of Labor Statistics (BLS), U.S. Department of Labor (DOL), Federal Reserve, Federal Reserve Economic Database (FRED), Federal Reserve Bank of Atlanta, U.S. Census Bureau, Department of Housing and Human Development (HUD), U.S. Department of Agriculture, U.S. Energy Information Administration (EIA), U..S Department of the Treasury, Office of the United States Trade Representative (USTR), U.S. Department of Commerce, data.gov, investor.gov, usa.gov, congress.gov, whitehouse.gov, U.S. Securities and Exchange Commission (SEC), Morningstar, The International Monetary Funds (IMF), The World Bank (WB), European Central bank (ECB), Bank of Japan (BOJ), European Parliament, Eurostats, Organization for Economic Co-operation and Development (OECD), National Bureau of Statistics of the People’s Republic of China, Organization of the Petroleum Exporting Countries (OPEC), World health organization (WHO).

Financial Markets – Recent Prices and Yields, and Weekly, Monthly, and YTD (Table): Bloomberg, Weekly Market Data is in USD and refers to the following indices: Macro & Market Indicators: Volatility (VIX); Oil (WTI); Dollar Index (DXA); Inflation (CPI YoY); Fixed Income: All U.S. Bonds (Bloomberg Aggregate Index); Investment Grade Corporates (Bloomberg US Corporate Index); US High Yield (Bloomberg High Yield Index), Treasuries (ICE BofA Treasury Indices); Equities: U.S. Industrials (Dow Jones Industrial Average); U.S. Large Caps (S&P 500); U.S Tech Equities (Nasdaq Composite); European (MSCI Euope), Asia Pacific (MSCI AP), and Latin America Equities (MSCI LA); Sectors (S&P 500 GICS Sectors) Source: Bloomberg. Fed Funds Rate probabilities, Source: CME FedWatch Tool.  

Important Disclosures:

The information provided here is for general informational purposes only and should not be considered a customized recommendation, personalized investment advice offer, or solicitation for the purchase or sale of any security or investment strategy. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own situation before making any investment decision.

This information is obtained by AMTI from third-party providers from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.  All expressions of opinion are subject to change without notice in reaction to changes in market conditions. By using such information, you release and exonerate AMTI from any responsibility for damages, direct or indirect, that may result from such use. Consult the issuer of any investment for the most up-to-date and accurate information.

All references to performance refer to historical data. There could be benchmarks used that do not reflect the performance of funds or other products with similar objectives

Presentation does not apply in jurisdictions where its use has not been approved. Some products or strategies may be complex or unusual. Make sure you have a clear understanding of the products before investing. Investments may have different tax consequences in different jurisdictions and will depend on the circumstances. AMTI does not offer legal or tax advice, please consult your legal, CPA, or other tax professional regarding your situation.

Before investing you must consider carefully the investment objectives, risks, charges and expenses of the underlying funds of your selected portfolio. Please contact AMTI to request the prospectus, private placement memorandum or other offering materials containing this and other important information. Please read these materials carefully before investing.

Not FDIC Insured | Not Bank Guaranteed | May Lose Value | Not Insured By Governmental Agencies | Member FINRA/SIPC, Registered Investment Advisor

Additional Risks:

• Past performance is no guarantee of future returns.
• There is no assurance the Fund will pay distributions in any particular amount, if at all. Any distributions the Fund makes will be at the discretion of the Fund’s Board of Trustees
• There can be no assurance that any Fund or investment will achieve it objectives or avoid substantial losses. Actual results may vary
• The value of the investments varies and therefore the amount received at the time of sale might be higher or lower than was originally invested. Actual returns might be better or worse than the ones shown in this informative material.
• Limited liquidity: Investors should not expect to be able to sell shares regardless of how the Fund performs. Investors should consider that they may not have access to the money they invest for an extended period of time.
• Volatile markets: Because an investor may be unable to sell its shares, an investor will be unable to reduce its exposure in any market downturn
• Funds may invest in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated. Below investment grade securities, which are often referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. They may also be illiquid and difficult to value

Please review the prospectus or related materials for further details regarding risks and other important information. For additional disclosures and other information regarding AMTI including our customer relationship summary, please visit: https://www.amerantbank.com/personal/investing/