Weekly Newsletter 12/20/24

Good afternoon and thank you for your time this second to last Friday of 2024. Wrapping up the week before Christmas is commonly a quiet time in markets unlike nearly everyone’s household. However, U.S. Federal Reserve interest rate commentary delivered a big lump of coal to global markets this week. Fed Chair Jerome Powell said inflation had been moving sideways this year and suggested that the bank may cut rates only twice in 2025 — two times fewer than signposted in September. This analysis left many “investors” scrambling to assess how it could affect global interest rates looking ahead and the leveraged positions they had in place. While global central banks insist their monetary policy decisions are made independently of the Fed, currency moves could force them to act as we witnessed earlier this year in the previously and ludicrously referenced “Japanese Yen Carry Trade.” (weekly email of 8/9/24). Other factors also contributed to a “risk-off” tone with stretched valuations another go-to excuse along with tariff concerns, market dynamics (mentioned next) and mixed results from corporate earnings. Pasquale and I will never claim to be market prognosticators, however, we are firm believers to be extra cautious as the masses move to from fear to greed and we witnessed it again: Bank of America's latest Global Fund Manager Survey showed a record low allocation to cash, record high allocation to US stocks (net 36% overweight), and global risk appetite at three-year high.

Another can Congress kicked down the road is again in our path and causing a distraction in the form of yet another “urgent deadline to avert government shutdown.” A vote failed yesterday on a new plan to keep the government funded until mid-March. It’s a shame we run our public finances like a hillbilly with a new credit card.

November retail sales rose 0.7% m/m, ahead of consensus for a 0.5% increase while October's headline revised up to 0.5% (was 0.4%). Headline retail sales now up 3.8% y/y, highest since Dec-23. Retail sales ex-autos rose 0.2% m/m vs expectations for a 0.4% increase and October's revised 0.2% (was 0.1%).

November housing starts miss but permits beat expectations. December homebuilder confidence holds steady as optimism offset by price/rate headwinds. Overall, 2025 housing market outlook calls for a middling 2025 as mortgage rates remain elevated and inventories remain depressed.

Final Q3 GDP came in at +3.1% Q/Q vs consensus and prior revision of +2.8%. Update primarily reflects upward revisions to exports and consumer spending that were partly offset by a downward revision to private inventory investment.

The link below has additional financial articles for your reading pleasure.

https://www.raymondjames.com/evangelista/resources

Wishing you and yours a Merry Christmas and a Happy Hanukkah. My kids are getting older (16, 13 & 10) yet the excitement for Christmas is still high in our house. As we decorated this year and put out the pictures of them around the tree from years past Miranda and I couldn’t help but be those cheesy parents I love to make fun of…Father Time waits for no one. I have great memories from my Christmas youth thanks to a loving group: my parents, sister, grandparents, aunts, uncles, cousins, and family friends. I hope you get your equivalent to a Red Rider BB gun this year…our not-so-little Ralphie (Jake) just might get his this year.

“Every gift which is given, even though it be small, is in reality great, if it is given with affection.”--Pindar

Thank you,

Kyle

KYLE CHRISTIANSON, CFP®
Financial Advisor
Raymond James & Associates, Inc.
1421 Pine Ridge Rd, Ste 300
Naples, FL 34109
Toll Free (800) 843-2025 | Direct (239) 513-6525 | Main (239) 513-6500 | Fax (239) 596-5474
Kyle.Christianson@RaymondJames.com

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