Tucker Financial Weekly Market Review: November 29th, 2024

Weekly Market Report: November 29th, 2024

Market Anecdotes

• An eventful month of November is now in the books where global equity markets favored the U.S. and smaller companies in particular with returns for growth and value stocks very similar.
• With the year-end fully visible now that we’re into December, a fresh look at Mag 7 earnings and the S&P 500 reinforces the narrative in the rear view but poses some questions looking forward.
• The current 10yr bond yield is sitting right at average levels of the past year and well within the “soft landing” range of 3.80% to 4.60% where yields falling below this range may suggest rising recession risks and yields rising above may suggest rising inflation risks.
• Concern over high budget deficits and outstanding government debt are tangible given the trajectory of the past 25 years but spending cuts, economic growth (the denominator), and new tariff tax revenue warrant careful attention as investors consider deficits and debt going forward.
• Inflationary fiscal stimulus (growth), tariffs (taxes), and immigration (labor supply) may result in short term price pressures and a strong USD but may ultimately slow the economy and reduce price pressures – a sentiment reflected in short versus long term inflation expectations.
• Torsten Slok pointed out a common misconception in economics, stock/level versus rate of change by noting while YoY inflation is near 2% the overall price level is 22% higher than pre-pandemic 2020.
• The first formal volley of threatened tariffs from POTUS elect came last week as 25% across the board on Canada and Mexico and 10% on China. Equity and bond markets called their bluff while FX markets blinked. Implications across earnings, USD, fiscal policy, and inflation warrant consideration.
• Treasury Secretary Scott Bessent touted a reasonable version of an Abenomics principle, “3-3-3”, which seeks 3% budget deficits, 3% GDP growth, and incentivizing an additional 3mm barrels of oil production. Bessent has also made clear his willingness to challenge Fed independence.

Economic Release Highlights

• Headline and Core PCE inflation were right in line with consensus estimates at 2.3% and 2.8% YoY respectively. MoM readings were 0.2% and 0.3% respectively.
• PCE was in line at 0.4% MoM (3% YoY) while Personal Income grew 0.6% MoM (2.7% YoY), well above the spot forecast of 0.3% and estimated range of 0.1% to 0.4%.
• The second reading of 3Q GDP was unchanged at 2.8% but personal consumption expenditures were revised slightly lower from 3.7% to 3.5%.
• Durable Goods Orders for October grew 0.2%, below the spot consensus of 0.5% but within the forecast range. Ex-Transports grew 0.1% and Core Capital Goods declined 0.2%.
• Consumer Confidence improved in November, rising from 109.6 to 111.7, slightly behind the spot forecast but within the consensus estimate range.
• New Home Sales for October declined from 738k to 610k, a larger decline than the spot forecast of 725k and below the consensus range of 710k-750k. Pending Home Sales rose 2.0%, well above the spot consensus of -1.8% and range of -2.1% to 0.4%.
• Case-Shiller Home Price Index reported home prices rising 0.2% MoM and 4.6% YoY, both generally in line with consensus forecasts.