Monthly Market Insights - November 2024
December’s Playbook: Powell, Politics, and Predictions Unwrapped
The holidays are almost here, bringing festive cheer—and a sleigh full of market drama. This month, we’re diving into Trump’s brewing showdown with Jerome Powell, Nvidia’s unstoppable momentum, and Bitcoin’s return to center stage. We’ll also attempt to read the macro tea leaves—because what’s the holiday season without a little geopolitical tension? Make yourself that cup of coffee, and let’s dive right in.
November Recap: Resilience and Uncertainty
November gave us plenty to discuss, with markets reflecting both resilience and uncertainty. The S&P 500 climbed 5.73%, buoyed by strong retail earnings and a tech rally that reminded us why the index remains a cornerstone of long-term portfolios. Meanwhile, the NASDAQ gained 6.21%, led by the world’s new largest company, Nvidia, and other AI pioneers. Surprisingly, the Dow Jones led the markets in November, posting a respectable 7.54% return for the month. Industrial and energy gains provided a solid foundation for sustained growth into the new year.
Political Theater Meets Market Reality
On the political front, President-elect Trump reignited his feud with Federal Reserve Chair Jerome Powell, hinting at the possibility of Powell’s replacement. Trump’s critique centers on Powell’s hawkish monetary tightening policies, which he argues have held back economic growth for too long. However, given the Fed’s independence, the mere suggestion of Powell’s replacement would likely raise the specter of rising price pressures.
Trump’s cabinet picks also add another layer of intrigue. Howard Lutnick, for Commerce Secretary, like Trump is pro-tariffs—a position that could stoke inflation fears. However, many analysts believe Trump’s tariff talk is largely rhetoric aimed at negotiating better trade deals, suggesting the actual economic impact may be muted. The markets also responded positively to the announcement of Scott Bessent as Treasury Secretary. Known for his steady leadership and market-friendly approach, Bessent could act as a counterbalance to Lutnick, and his appointment sparked an immediate rally, underscoring investor confidence.
Meanwhile, Trump’s pro-deregulation stance is expected to be a tailwind for certain sectors, including financial services, energy, and manufacturing. Loosening regulatory constraints could unlock growth opportunities, particularly in industries that have been weighed down by compliance burdens in recent years. Investors should watch these sectors closely as they stand to benefit the most from a business-friendly policy environment.
AI’s Power Player Dominates
Pivoting back to stocks, Nvidia (NVDA) continued to dominate the headlines with another standout earnings report. The chipmaker posted a record $35.1 billion in Q3 revenue, up 17% MoM and a staggering 94% YoY. Its near-complete dominance of high-end GPUs, powering everything from data centers to autonomous vehicles. However, while Nvidia remains a linchpin in the AI ecosystem, it’s soaring stock price at current levels has raised valuation concerns.
Meanwhile, the broader AI industry remains an exciting frontier with plenty of emerging opportunities. Cloud computing giants, cybersecurity innovators, and emerging software providers should all benefit from AI-driven demand. Dan Ives, senior equity research analyst at Wedbush, recently highlight the potential for government-led AI initiatives. “We believe it’s ‘get the popcorn out’ moment. This is going to be a robust one, I think you’re seeing all the breadcrumbs leading to this AI revolution just getting started”. “This is what I believe is the fourth industrial revolution.”
With government support and private-sector innovation aligning, the AI revolution offers a fertile ground for long-term growth—but smart stock selection will be key to maximizing gains.
Digital Gold Shines Again
Unsurprisingly, Bitcoin (BTC) has pulled off a triumphant post-election rebound, nearly touching $100,000 by EOM. The current Bitcoin rally is fueled by several long-term factors, including the SEC's approval of multiple spot Bitcoin ETFs at the start of the year, which, opened the floodgates for institutional investment. President-elect Trump has also been vocally supportive of BTC. In July, Trump discussed potentially establishing BTC as a strategic reserve. This plan would involve the Treasury and Federal Reserve buying 200,000 bitcoins each year for a period of five years, until reaching one million units. This would represent about 5% of the total circulating global supply of bitcoins, which is around 21 million. The idea is that this reserve would serve as a hedge against the devaluation of the U.S dollar, to strengthen national balance sheets and support future debt issues.
But while Bitcoin certainly offers diversification potential, its high degree of volatility isn’t for the fainthearted. Investors should tread carefully and always keep their crypto exposure in check.
The Wildcard for 2025
Geopolitics remain the wildcard heading into 2025. And if this year has taught us anything, it’s to expect the unexpected. From the ongoing conflict in Ukraine to Middle East tensions, global events continue to keep markets on their toes. Oil prices might be playing it cool for now, but OPEC’s next move could also quickly shift that narrative.
As we look ahead, the Fed’s December meeting and holiday retail sales data will offer key insights into how many of us are willing to splurge some of our hard-earned money. And those final Q4 earnings reports will be the best preview we have for what 2025 might have in store.
So, whether you’re betting on energy stocks to ride supply shocks or hedging with a little gold in your stockings, the savvy investor knows that diversification is like a good Thanksgiving dinner: a little bit of everything goes a long way.
Onward and upward,
Steven and Daniel
STEVEN W. SCHMITT, MBA, CFP®, CPM®, CRPS®, ADPA®
Managing Director, Private Wealth Advisor
CA Insurance # 0G61253
Any opinions are those of Steven Schmitt and Daniel Mar and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information contained in this commentary does not purport to be a complete description of the securities, markets, or developments referred to in this material. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including asset allocation and diversification. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results.
This is not a recommendation to buy or sell any company's stock mentioned above.
The prominent underlying risk of using bitcoin as a medium of exchange is that it is not authorized or regulated by any central bank. Bitcoin issuers are not registered with the SEC, and the bitcoin marketplace is currently unregulated. Bitcoin and other cryptocurrencies are a very speculative investment and involves a high degree of risk. Investors must have the financial ability, sophistication/experience and willingness to bear the risks of an investment, and a potential total loss of their investment.
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