THE WELL-TH NOTES

By Alexandria | Hightower on December 15, 2023

Weekly data-driven insights on the markets and economy

Second Week of December 2023

• Market Momentum
  The S&P 500 added 0.46% on Tuesday and climbed to its highest intraday level since January 2022. Wall Street is watching inflation data for signs that the Fed will start easing monetary policy. The Dow Jones Industrial Average and Nasdaq Composite also gained 0.48% and 0.70%, respectively.[I]

• Waiting Game
  Treasury yields dipped on Wednesday as investors awaited the Fed’s interest rate decision following the release of the monthly consumer price index data. The 10-year fell 6 bps to 4.14% and the 2-year fell 6.1 bps to 4.67%.[ii]
• On the Horizon
  • The consumer price index (CPI) for November rose 0.1% month-over-month and 3.1% year-over-year, in line with economists’ expectations. Core CPI, excluding food and energy, increased 0.3% month-over-month and 4% year-over-year. A 2% decrease in energy prices helped keep inflation in check, and gas and fuel fell 6% and 2.7%, respectively. Shelter prices were up 0.4% on the month and 6.5% on the year but showed a steady decline since peaking in early 2023.[iii] The CPI figure points to inflation nearing the Fed’s 2% target. On Wednesday, the Fed decided to hold interest rates steady and indicated multiple rate cuts to come in 2024.[iv]
• Billion-Dollar Shuffle
  Warren Buffet’s firm Berkshire Hathaway sold $287 billion of stock in the first three quarters of 2023. According to company earnings, it sold a net $10.4 billion in stock in the first quarter; sold close to $13 billion and bought less than $5 billion in the second quarter; and sold about $5.3 billion in the third quarter. Economists say this recent lightening of stocks is consistent with the fact that stocks are relatively pricey right now.[v] As Buffett is considered one of the greatest investors of all time, and one of America’s richest men, his moves are closely observed and analyzed.

• Talk the (Money) Talk
  • In a 2023 study by Northwestern Mutual, researchers found that 32% of Gen Z adults and 40% of millennials say an honest conversation about your finances and long-term goals should happen before a relationship gets serious. This study also found that across all generations, 72% of Americans believe couples should talk about their finances before living together. A February survey by Bread Financial found that 64% of couples say they are “financially incompatible” with their partners.[vi] Having these money conversations early in the relationship can help couples to ensure their habits and goals are aligned.

• For Sure, Maybe…
  With the anticipation of the spot Bitcoin ETF and expectations of the Fed cutting rates in 2024, Bitcoin is entering the new year with bullish momentum. Prices have drifted to their highest levels in over a year as 2023 closes, up 150% year-over-year. Still, the crypto market is uncertain and will likely be navigating regulatory crackdown in 2024 to bring more certainty to the market.[vii]
• Moving On Up
  As optimism about India’s economic prospects grows, it overtakes Hong King’s market value to become the seventh largest stock market in the world. As of the end of November, the National Stock Exchange of India was valued at $3.989 trillion versus Hong Kong’s $3.984 trillion. While India’s Nifty 50 index has jumped nearly 16% this year and is headed for its eighth straight year of gains, Hong Kong’s benchmark Hang Seng index has plunged 17% year-to-date, making it the worst performing major Asia-Pacific market. Increased liquidity, more domestic participation and improving dynamics in the global macro environment via falling U.S. Treasury yields have boosted India’s stock markets.[viii]

• Prime Time
  Colorado Buffaloes football head coach Deion “Coach Prime” Sanders has brought increased attention to the team that has generated an economic impact of $113.2 million during the 2023 season, both directly and indirectly. Direct spending is estimated at $72.1 million. The University of Colorado Boulder recently reported a 26% rise in new student applications as well, with applications from African-American students up 80% and international applications up 38% from last year.[ix] The Prime effect seems to be spreading at CU!

[i] Evans, Brian and Jesse Pound, “Stocks close higher for a 4th day, S&P 500 touches highest level since January 2022: Live updates,” CNBC, December 12, 2023, https://www.cnbc.com/2023/12/11/stock-market-today-live-updates.html?__source=newsletter%7Cmsemea. Accessed December 13, 2023.

[ii] Kinderlin, Sophie, “Treasury yields dip as investors look to Fed rate decision, policy guidance,” CNBC, December 13, 2023, https://www.cnbc.com/2023/12/13/us-treasury-yields-investors-look-to-fed-rate-decision.html. Accessed December 13, 2023.

[iii] Cox, Jeff, “Inflation slowed to a 3.1% annual rate in November,” CNBC, December 12, 2023, https://www.cnbc.com/2023/12/12/cpi-inflation-report-november-2023.html. Accessed December 13, 2023.

[iv] Cox, Jeff, “Fed holds rates steady, indicates three cuts coming in 2024,” CNBC, December 13, 2023, https://www.cnbc.com/2023/12/13/fed-interest-rate-decision-december-2023.html. Accessed December 13, 2023.

[v] Carbonaro, Guilia, “Warren Buffett Selling $28.7 Billion in Stock Rings Alarm Bell Over Economy,” Newsweek, December 11, 2023, https://www.newsweek.com/warren-buffet-selling-28-7-billion-stock-rings-alarm-bells-over-economy-1851270. Accessed December 13, 2023.

[vi] Sola, Ana Teresa, “Gen Z, millennials say money talks should happen before the relationship gets serious, study finds,” CNBC, December 12, 2023, https://www.cnbc.com/2023/12/12/gen-z-millennials-say-talks-about-money-should-happen-early.html. Accessed December 13, 2023.

[vii] Macheel, Tanaya, “Crypto has had a stellar year, but regulatory uncertainty may lurk beneath the surface through 2024,” CNBC, December 13, 2023, https://www.cnbc.com/2023/12/13/crypto-has-had-a-stellar-year-but-regulatory-uncertainty-may-lurk-beneath-the-surface-through-2024.html. Accessed December 13, 2023.

[viii] Sanyal, Shreyashi, “India overtakes Hong Kong to become the world’s seventh largest stock market,” CNBC< December 11, 2023, https://www.cnbc.com/2023/12/12/india-overtakes-hong-kong-to-become-worlds-seventh-largest-stock-market.html. Accessed December 11, 2023.

[ix] Lynn, Nate, “The Prime Effect: CU home games generated economic impact of $113.2 million, study says,” 9News, December 9, 2023, https://www.9news.com/article/sports/ncaa/colorado-buffaloes/deion-sanders-coach-prime-colorado-economic-impact/73-328e7afc-d61d-4136-ad4c-d4c22501ad49#:%7E:text=The%20Prime%20Effect%3A%20CU%20home,impact%20on%20the%20local%20economy.&text=BOULDER%2C%20Colo. Accessed December 13, 2023.