• Broad U.S. equity markets once again hit new highs as the post-election rally shifted to a seasonal “Santa Claus” rally. The S&P 500 closed up 1% to 6,090, while the Nasdaq climbed by 3.4% to nearly 19,860, both new all-time highs.  The Dow was down slightly for the week (-0.5%).
• In retail sales, Cyber Monday saw sales of $13.3 bn which topped expectations of $13.2 bn, and posting a 7.3% YoY increase. Cyber Week as a whole saw sales of $41.1 bn, 8.2% higher than 2023. Consumer discretionary was the leader in equity sectors last week, while communications and info tech were also up strongly. Breadth was weaker, with the indices being dragged upwards by mega-cap tech names, with most other equity sectors down for the week.

• For the year-to-date, communications and info tech are once again atop the leaderboard, followed closely by financials and consumer discretionary. Materials and health care remain the laggards.

• The November employment report showed a rebound in hiring, as expected, after strikes and hurricanes impacted the October figures. Nonfarm payrolls rose by 227,000, slightly ahead of the estimate for 220,000, and a significant rebound from 36,000 (revised) in October.

• The unemployment rate climbed slightly to 4.2% while wage growth was firm, rising 0.4% MoM and 4.0% YoY.

• With this set of employment data, we think the Fed is likely to cut rates by -25 bps at the FOMC meeting of 2024. Markets are pricing in an 86% chance of a -25 bps cut from the Fed, which we agree with.

• In earnings, Salesforce (CRM) posted strong results albeit mostly in-line with expectations, but saw its shares rally after announcing its new AI product named AgentForce. Other positive earning highlights came from Marvel Tech (MRVL), HP Enterprises (HPE) and Okta Inc (OKTA), while biggest disappointments were from Dollar General (DG), Kroger (KR), UiPath (PATH) and Chewy (CHWY).
• In tech news, Super Micro (SMCI) said both internal and an external review by Cooley LLP saw no evidence of misconduct by management, leading shares higher.  MicroStrategy (MSTR) disclosed additional Bitcoin purchases, Toast (TOST) shares retracted after its CEO said during a conference that 2025 margin expansion will be less than expected, Uber (UBER) and Lyft (LYFT) shares sold off after Google’s (GOOGL) Waymo revealed it plans to offer driverless rides in Miami starting in 2026. Meta (META) and Snap (SNAP) reacted positively to concerns that Chinese owned rival Tik Tok may fail to meet its Jan 19 appeal deadline leading to a ban of its services in the United States while Palantir (PLTR) signed a partnership with Shield AI to provide AI-powered defense drones to the defense department.

The Week Ahead

• For the week ahead, we have November inflation and PPI data. This will be the last major macro data before the Fed’s final meeting of the year. CPI for November is expected to climb by 0.3% MoM and 2.7% YoY, both up slightly from October. On a core basis, CPI is expected to remain steady at 0.3% MoM and 3.3% YoY.

• PPI for November is forecast to rise by 0.3% MoM, and 0.2% MoM excluding the volatile food and energy categories. On a YoY basis, PPI is expected to rise by 2.6% while up by 3.2% excluding food and energy.

Market Summary – Returns and Yields

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 views contained herein are not to be taken as advice or a recommendation to buy or sell any investment in any jurisdiction, nor is it a commitment from Amerant Investments, Inc. or any of its affiliates to participate in any of the transactions mentioned herein. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit and accounting implications and determine, together with their own professional advisers, if any investment mentioned herein is believed to be suitable to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

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