Sunday, December 1, 2024

WEEKEND WRAP: Stocks Rally Higher; Oil Continues Slump; Gas Prices Under $3.00 in Majority of U.S. States; Shiller PE: 38.54

Market participants didn't let the short week deter them from continuing to snatch up stocks, especially those on the Dow, which outpaced the S&P and NASDAQ for the week, with the S&P 500, NYSE Composite, and Dow Industrials closing out November at record highs. The NASDAQ closed just 80 points below its own record closing price (19,298.76, November 11, 2024).

Stocks

Adding Nvidia (NVDA) to the Dow Jones Industrials may be considered market rigging or just plain genius, as the chip-maker supplanted flagging Intel (INTC) in the index, the real money this week was made on the other stock that was swapped in on November 8, Sherwin-Williams (SHW), which replaced chemical giant Dow, and was among the week's leaders among Dow components, up two-and-a-half percent while Nvidia shed more than two percent.

The Dow's move was helped along by Amazon (AMZN), up five percent, and by Boeing (BA), which was up nearly two percent on Friday's short session and up more than four percent on the week.

On a month-by-month basis, November was the best of 2024 for the Dow and S&P 500. It looks like a safe bet that the S&P 500 can finish the year up more than 20 percent, which would be the first time since 1998-99 that the index rose 20% or more in consecutive years.

With just a month left for trading in 2024, investors have been rewarded for their persistence overall. Year-to-date, all the major indices are sporting very healthy gains:

NASDAQ 19,218.17 +4,452.23 +30.15%
S&P 500 6,032.38 +1,289.55 +27.19%
NYSE Composite 20,272.04 +3,430.42 +20.37%
Dow Industrials 44,910.65 +7,195.61 +19.08%

There are just 21 trading days remaining to the year. With Christmas Day falling on a Wednesday, the last full week will be split down the middle. Market-moving events include November Non-Farm Payroll data this Friday (December 6), and the FOMC meeting which concludes Wednesday, December 18.

Barring any unforeseen disruptions, 2024 will go down as one of the better years of the 21st century for stock performance, right up there with 2003, 2009, 2013, 2019, and 2021, each of which saw the S&P 500 rise by more than 25%.


Treasury Yield Curve Rates

Date 1 Mo 2 Mo 3 Mo 4 Mo 6 Mo 1 Yr
10/25/2024 4.89 4.79 4.73 4.68 4.51 4.29
11/01/2024 4.75 4.74 4.61 4.53 4.42 4.28
11/08/2024 4.70 4.69 4.63 4.53 4.42 4.32
11/15/2024 4.70 4.67 4.60 4.52 4.44 4.34
11/22/2024 4.72 4.67 4.63 4.53 4.46 4.42
11/29/2024 4.76 4.69 4.58 4.52 4.42 4.30

Date 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr
10/25/2024 4.11 4.05 4.07 4.15 4.25 4.58 4.51
11/01/2024 4.21 4.18 4.22 4.30 4.37 4.68 4.57
11/08/2024 4.26 4.18 4.20 4.25 4.30 4.58 4.47
11/15/2024 4.31 4.27 4.30 4.36 4.43 4.70 4.60
11/22/2024 4.37 4.32 4.30 4.35 4.41 4.67 4.60
11/29/2024 4.13 4.10 4.05 4.10 4.18 4.45 4.36

There was huge movement in longer-dated maturities this week, a signal that the market believes the Fed will not pause in December or thereafter, but will continue to cut the federal funds target rate until it falls below all rates on the yield curve and remains higher than inflation, as measured by annualized CPI, the latest, 2.6%.

This implies an ultimate yield on the overnight federal funds of 3.25% to 3.50%, possibly 3.00% to 3.25%, but likely not any lower than that, as the Fed wishes to avoid another damaging bout of inflation, which they believe to have somewhat under control.

Currently holding at 4.50-4.75%, the market is anticipating 0.25% cuts at upcoming FOMC meetings, December 17-18, January 28-29, March 18-19, May 6-7, and June 17-18. Five cuts, amounting to 1.25%, gets the target rate down to 3.25-3.50%, at which point they would hold, likely for a long time unless some extraneous event upsets the apple cart.

Confident that the fiscal side of the equation at the Treasury Department will exhibit more conservative policies than what has been maintained over the Biden-Yellen years, the Fed can be fairly certain that government spending will be massively curtailed if President Trump and his able henchmen at the Department of Government Efficiency (DOGE), Elon Musk and Vivek Ramaswamy, gets his way.

The promise of reduced government spending and borrowing to finance deficits should open up lending markets to the private side. The other benefit of lower rates would be the effect on interest payments by the federal government, which, at over $1 trillion annually, is entirely unsustainable and threatens to bankrupt the nation.

Speculators may see the Fed cutting even deeper, especially in the case of general disinflation or outright deflation, which would be even more stimulative and cut government interest payments even further.

From what's happened in just the last month, with notes and bonds getting to oversold positions before large buyers stepped in this week, continued cuts appears to be the plan being executed. Lest people forget, there's a new sheriff in town, due to put on the badge come January 20, 2025, and his deputies are armed and looking to round up suspects and criminals.

The 2s-10s spread remains in normalized (dis-inverted) territory at +5, and, while full spectrum, 30days-30years, took a big step backwards from -12 to -40, that condition is likely to be temporary if the Fed cuts in December and beyond. The flattening - prior to steepening - of the yield curve continues apace.

Spreads:

2s-10s
9/15/2023: -69
9/22/2023: -66
9/29/2023: -44
10/06/2023: -30
10/13/2023: -41
10/20/2023: -14
10/27/2023: -15
11/03/2023: -26
11/10/2023: -43
11/17/2023: -44
11/24/2023: -45
12/01/2023: -34
12/08/2023: -48
12/15/2023: -53
12/22/2023: -41
12/29/2023: -35
1/5/2024: -35
1/12/2024: -18
1/19/2024: -24
1/26/2024: -19
2/2/2024: -33
2/9: -31
2/16: -34
2/23: -41
3/1: -35
3/8: -39
3/15: -41
3/22: -37
3/28: -39
4/5: -34
4/12: -38
4/19: -35
4/26: -29
5/3: -31
5/10: -37
5/17: -39
5/24: -47
5/31: -38
6/7: -44
6/14: -47
6/21: -45
6/28: -35
7/5: -32
7/12: -27
7/19: -24
7/26: -16
8/2: -08
8/9: -11
8/16: -17
8/23: -09
8/30: 00
9/6: +06
9/13: +09
9/20: +18
9/27: +20
10/4: +5
10/11: +13
10/18: +13
10/25: +14
11/1: +16
11/8: +5
11/15: +12
11/22: +4
11/29: +5

Full Spectrum (30-days - 30-years)
9/15/2023: -109
9/22/2023: -99
9/29/2023: -82
10/06/2023: -64
10/13/2023: -82
10/20/2023: -47
10/27/2023: -54
11/03/2023: -76
11/10/2023: -80
11/17/2023: -93
11/24/2023: -95
12/01/2023: -105
12/08/2023: -123
12/15/2023: -154
12/22/2023: -149
12/29/2023: -157
1/5/2024: -133
1/12/2024: -135
1/19/2024: -118
1/26/2024: -116
2/2/2024: -127
2/9: -117
2/16: -103
2/23: -112
3/1: -121
3/8: -125
3/15: -109
3/22: -112
3/28: -115
4/5: -93
4/12: -87
4/19: -77
4/26: -70
5/3: -85
5/10: -87
5/17: -94
5/24: -99
5/31: -83
6/7: -92
6/14: -113
6/21: -103
6/28: -96
7/5: -101
7/12: -108
7/19: -103
7/26: -104
8/2: -143
8/9: -131
8/16: -138
8/23: -141
8/30: -121
9/6: -125
9/13: -117
9/20: -80
9/27: -80
10/4: -75
10/11: -58
10/18: -54
10/25: -38
11/1: -18
11/8: -23
11/15: -10
11/22: -12
11/29: -40


Oil/Gas

WTI crude oil took it on the nose again this week, closing at $68.15 on Friday, down sharply from $71.81 last Friday. Oil's price reflects the hastily-called Israeli cease fire in the Middle East and the lack of any real nuclear threat coming out of the Ukraine-Russia conflict. Mostly, it's been saber-rattling by the NATO crowd and stoicism by Putin and Russia.

Gasbuddy.com reports the national average for a gallon of unleaded regular gas at the pump at $3.03 a gallon, down another penny from the prior week.

California continues to be the price leader, at $4.37 a gallon, down four cents from the prior week.

Pennsylvania prices continue to head lower, at $3.22, with the Keystone State holding the high price in the Northeast, though it is at or near the lowest level in three years. New York was static, at $3.13. Connecticut ($3.07) and Massachusetts ($3.02) were slightly higher, while Maryland slipped another six cents to $3.06 per gallon, the second straight weekly decline of six cents. Prices in the Midwest continue to wane, though Illinois was up a nickel ($3.20).

Fuel prices in Oklahoma ($2.39) continue to be by far the lowest in the nation, down another seven cents on the week. Following are Texas ($2.52), down nine cents, Mississippi ($2.55), Arkansas ($2.58), Louisiana ($2.61), and Tennessee ($2.68). Florida ($3.10) remains the outlier, with all other Southeastern states well below $3.00, including Georgia ($2.88) and North Carolina ($2.83).

Sub-$3.00 gas can now be found in some locations in at least 35 U.S. states, mostly in the Southeast and Midwest, but now spreading west, with Montana, Utah and Wyoming joining the sub-$3.00 party and a few Northeast states, Delaware the latest to drop below $3.00.

Western states are still the highest overall. Arizona ($3.19) steadied on the week, with Oregon at $3.51, Nevada at $3.64, and Washington at $3.98, leaving only California above $4.00. Utah ($2.97) and Idaho ($3.01) have both come down to levels seen 12 months ago.


Bitcoin

This week: $97,184.05
Last week: $97,283.64
2 weeks ago: $90,205.13
6 months ago: $67,737.81
One year ago: $39,463.38
Five years ago: $7,521.31

Bitcoin remains atop the asset leaderboard, up a stunning 120% year-to-date and more than 40% since the November 5 U.S. elections, topping out at $98,367 this week.


Precious Metals

Gold:Silver Ratio: 85.97; last week: 86.13

Per COMEX continuous contracts:

Gold price 11/1: $2,745.90
Gold price 11/8: $2,691.70
Gold price 11/15: $2,567.40
Gold price 11/22: $2,743.20
Gold price 11/29: $2,673.90

Silver price 11/1: $32.58
Silver price 11/8: $31.42
Silver price 11/15: $30.33
Silver price 11/22: $31.85
Silver price 11/29: $31.10

Here are the most recent prices for common one ounce gold and silver items sold on eBay (numismatics excluded, free shipping):

Item/Price Low High Average Median
1 oz silver coin: 37.00 45.00 40.59 40.00
1 oz silver bar: 33.26 47.91 40.67 40.50
1 oz gold coin: 2,742.87 2,844.21 2,801.07 2,816.94
1 oz gold bar: 2,750.70 2,842.06 2,770.03 2,760.64

The Single Ounce Silver Market Price Benchmark (SOSMPB) was up nearly a dollar this week, to $40.44, an increase of 94 cents over the November 22 price of $39.50 per troy ounce.

Not much to comment upon concerning gold and silver prices. While the COMEX and LBMA are up to their usual tricks and the past few weeks have seen prices retreat and now level off, retail buyers seem more than content to pay high premia for finished goods. Chinese New Year and wedding season in India are likely to boost demand. Central banks may have slowed their purchasing slightly, though that appears to be only a temporary condition.

WEEKEND WRAP

There are changes afoot. With the political situation remaining up in the air until Trump's inauguration, there are likely to be any number of fits and starts in verious sectors and asset classes. With certain funds having already closed their books for 2024, and, with year-end squaring up proceeding, stocks are just as likely to waver as to move higher.

The Shiller PE ratio stands at 38.54, just shy of the second-highest ever, 38.58, from October 2021.

At the Close, Friday, November 29, 2024:
Dow: 44,910.65, +188.59 (+0.42%)
NASDAQ: 19,218.17, +157.69 (+0.83%)
S&P 500: 6,032.38, +33.64 (+0.56%)
NYSE Composite: 20,272.04, +62.22 (+0.31%)

For the Week:
Dow: +614.14 (+1.39%)
NASDAQ: +214.52 (+1.13%)
S&P 500: +63.04 (+1.06%)
NYSE Composite: +148.59 (+0.74%)
Dow Transports: _251.76 (+1.45%)

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