Your Weekly Update for Monday, November 18, 2024.
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Mike Elerath
CERTIFIED FINANCIAL PLANNERTM
CERTIFIED IN LONG-TERM CARE
[email protected]
Bill Roller
NMLS #107972
CHARTERED FINANCIAL ANALYST
CERTIFIED FINANCIAL PLANNERTM
CHARTERED MARKET TECHNICIAN
[email protected]
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Summary
Markets were DOWN last week. The Dow Jones Industrial Average was DOWN 1.25% to 43,439.19 while the S&P500 ended DOWN 2.10% to 5,869.75. The Nasdaq Composite FELL 3.15% to 18,678.54. The annual yield on the 30-year Treasury ROSE 12.4 basis point(s) to 4.601%.
Economic data for the week included declines in retail sales and industrial production, while producer and consumer inflation remained stickyâespecially on the shelter side.
Equities lost ground across the board last week, as the post-election rally faded a bit. Bonds also fared poorly as interest rates ticked higher. Commodities also lost ground with a stronger dollar and demand concerns holding down sentiment.
Economic Notes
(+/0) Retail sales rose 0.4% in October at a headline level, a tenth higher than expected, but at only half the pace of the prior month, after revisions. As auto sales rose nearly 2% in the month, removing autos from the total pulled the increase down to 0.1%, while core/control sales (removing autos, gasoline, and building materials) ended up falling by -0.1%.    In the latter, gains in electronics, and food services offset declines in misc./online retail, furniture, and health/personal care for the month. Year-over year, total retail sales rose 3% (led by gains in restaurants/bars) which is right about the rate of inflation by a few tenths in either direction, so points to little ârealâ growth over that time.
(-) Industrial production fell by -0.3% in October, just above the -0.4% median forecast decline, in addition to downward revisions for prior months. This appeared to be another economic data point which may have almost been entirely caused by reduced activity from the Gulf hurricanes and Boeing strike. As a result, manufacturing production fell by -0.5% (with motor vehicle assemblies down over -5%, and business equipment down -3%). Utilities production rose by 0.7%, while mining production rose by 0.3%. Year-over-year, total industrial production was also down -0.3%, with gains in utilities and specialty areas like high-tech equipment (8%) and auto production (5%) offset by declines elsewhere. Capacity utilization fell by -0.3% to 77.1%. Overall, this is in keeping with general manufacturing weakness, other than some areas boosted by the CHIPS act and IRA.
(+) The Empire manufacturing index for November rose by a dramatic 43.1 points back into an expansionary level of 31.2, relative to expectations for a neutral 0 reading. New orders and shipments were the strongest contributors, each up over 35 points back into expansion, while employment fell by a few points but remained slightly expansionary. Prices paid ticked down by a point but remained at an expansionary 28 level. The six-month ahead index of business conditions fell by over -5 points to a still-expansionary 33 level. The survey was taken after the election and port strike resolution, which likely explains the buoyancy, although the index has been far more volatile than usual.
(0/-) The Consumer Price Index rose 0.2% in October, being the fourth straight month at that pace. The core measure, ex-food and energy, came in up 0.3%, being the third straight month at that level. Both were in line with expectations. Energy commodities fell another -1% in the month, accounting for the difference between headline and core. The rest of the report was a more typical mixed bag, with some strong items, such as used cars (2.7%) and airline fares (3.2%), offset by weaker segments like retail (-1.5%) and small drops in price for medical commodities and car insurance. Shelter ticked up again after decelerating the prior month.
Year-over-year, headline CPI ticked up by 0.2% to 2.6%, while core CPI was unchanged at 3.3%. The past year has shown similar volatility as the consumer basket continues to correct itself toward normalcy. Weaker pricing came in for energy commodities (-12%, accounting for weaker headline CPI), new cars (-1%), and used cars (-3%); strength remained in shelter (5%, mostly from ownersâ equivalent rent), medical services, car insurance (14%!), and airline fares. The inflationary impulses continue to originate from services, as a closely-watched category for the Fed called âsupercore,â which tracks CPI ex-food, energy, other goods, and shelter rents, reaccelerated to 4.4% year-over-year, a half-percent higher than the pace this time last year. CPI hasnât fallen back nearly as quickly as some had hoped, with some year-over-year effects still problematic.
A key question remains about the road ahead. While far too early to assess, discussion continues around the potential effects of policies such as tariffs on inflation, with any specific policies or tariff rates still to be determined. Election polling indicated that inflation was one of the biggest factors behind voter unhappiness with the Democratic administration, although there continues to be confusion about the rate of current inflation (steadier to slowly better) versus higher price levels (expensiveness caused by past high inflation, which is now too late to do anything about, as prices tend to not deflate after having risen).
(0) The Producer Price Index rose 0.2% in October on a headline basis, while core PPI less food and energy rose 0.3%. Final demand goods rose 0.1%, with final demand services up 0.3%. As in the CPI data, energy was a primary differentiator between the two, with some higher gains in areas like airfares. On a trailing 12-month basis, headline PPI increased by 2.3%, while core PPI gained 3.1%. The headline figure was held back by falling energy prices (down nearly -9% overall), with a mixed bag elsewhere, as goods prices were up only 0.2% over the past year with services gaining 3.5%, no doubt led by wage growth.
(+) Initial jobless claims for the Nov. 9 ending week fell by -4k to 217k, just below the median forecast of 220k. Continuing claims for the Nov. 2 week fell by 11k to 1.873 mil., right on par with consensus expectations. Initial claims gains/losses were mixed by state, with some indications pointing to a mixture of residual weather and some specific industry layoff effects.
Market Notes
| Period ending 11/15/2024 | 1 Week % | YTD % |
| DJIA | -1.17 | 17.11 |
| S&P 500 | -2.05 | 24.56 |
| NASDAQ | -3.13 | 25.20 |
| Russell 2000 | -3.96 | 14.99 |
| MSCI-EAFE | -2.57 | 4.32 |
| MSCI-EM | -4.45 | 8.26 |
| Bloomberg U.S. Aggregate | -0.85 | 1.33 |
| U.S. Treasury Yields | 3 Mo. | 2 Yr. | 5 Yr. | 10 Yr. | 30 Yr. |
| 12/31/2023 | 5.40 | 4.23 | 3.84 | 3.88 | 4.03 |
| 11/8/2024 | 4.63 | 4.26 | 4.20 | 4.30 | 4.47 |
| 11/15/2024 | 4.60 | 4.31 | 4.30 | 4.43 | 4.60 |
U.S. stocks pulled back last week, in a reversal of pre- and early post-election gains. By sector, financials and energy eked out gains of a percent each for the week to lead, each with hopes for benefits from deregulation in the new administration, while all other sectors ended in the negative, led by an over -5% drop in health care, in addition to -3% drops in technology and materials. Health care sentiment was pulled downward by the announcement of Robert Kennedy, Jr. as nominee to lead the Department of Health and Human Services (responsible for nearly a quarter of the Federal budget within Medicare, Medicaid, and others), whoâs had an extensive history of being critical of big pharma and vaccines, and has held some views seen as non-traditional in the medical community.
Markets werenât overly disappointed with the Wednesday CPI report, with âsteadyâ being acceptable enough to not raise worries of the Fed halting their easing path. Though, comments from Fed Chair Powell on Thursday affected stocks negatively for several days, especially in that the FOMC doesnât need to be âin a hurry to lower ratesâ and that current economic strength allows the committee âto approach our decisions carefully.â This was translated to a slower rate cut path than was previously assumed, with expectations for a December cut falling from about 80% to about 60%, and the number of cuts in 2025 fading, with even a possible stop mid-year at around 4.00%. This is in sharp contrast to the 3.00%-ish level expected just a few months ago.
Foreign stocks fell back, along the same magnitude as U.S. stocks generally, with the added headwind of a weaker U.S. dollar. Europe fared best insofar as a smaller decline (minimal in local terms, made worse by the dollar effects), with emerging markets ending in last place. U.K. GDP growth in Q3 decelerated from 0.5% to 0.1%, with slightly better expectations for core Europe, though the entire region continues to lag robust U.S. growth. In EM, an over -5% decline in China, as investors attempted to digest potential adverse trade effects, was coupled with poor returns in South Korea and Taiwan, which tend to be correlated with the technology sector as a general rule. Overseas, there have been obvious concerns over post-U.S. election effects in regard to possible trade policies/tariffs that could prove more damaging to foreign nations than to U.S. consumers, but markets no doubt also realize a lot is yet to be determined/finalized, and lower valuations already tend to reflect this uncertainty.
Bonds fell back again as interest rates continued to tick higherâwith a less dovish path for Fed cuts in the coming year as well as concerns over rising Federal deficits/debt. The 10-year Treasury yield rose by nearly 15 basis points on net to end the week after reaching a level of 4.5% briefly. Senior floating rate bank loans outperformed, with small gains, while traditional bonds performed similarly on the downside, with governments outperforming investment-grade corporates a bit. Foreign bonds were down across the board due to a sharply stronger dollar.
Commodities fell back broadly, not helped by the rising dollar, with small gains in agriculture offset by declines in energy and metals. Crude oil prices fell -5% last week to $67/barrel, due to the dollarâs effects, ample supplies, and continued demand fears abroad.
Mortgage Rates
âAfter a six-week climb, rates have leveled off, but overall affordability continues to be an issue for potential homebuyers,â said Sam Khater, Freddie Macâs Chief Economist. âOur latest research shows that mortgage payments compared to rents on the same homes are elevated relative to most of the last three decades.”
The 30-year FRM averaged 6.78 percent as of November 14, 2024, down from last week when it averaged 6.79 percent. A year ago at this time, the 30-year FRM averaged 7.44 percent.
The 15-year FRM averaged 5.99 percent, down from last week when it averaged 6.0 percent. A year ago at this time, the 15-year FRM averaged 6.76 percent.
Freddie Macâs Primary Mortgage Market SurveyÂŽ is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20% down and have excellent credit. Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Borrowers may still pay closing costs which are not included in the survey.
Through our relationship with Mortgage Window, Inc. Â (NMLS#2485156) in Vancouver, Washington we originate residential and reverse mortgages.
Selected Cryptocurrencies
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| Symbol | Name | Price | 24h % | 7d % | Market Cap | Volume(24h) |
| BTC | Bitcoin | $89,776.48 | 0.90% | -9.42% | $1,770,701,544,008 | $53,943,804,166 |
| ETH | Ethereum | $3,070.57 | -1.13% | -2.74% | $369,439,657,890 | $26,570,568,651 |
| SOL | Solana | $238.83 | 3.27% | 9.93% | $113,347,300,179 | $7,839,085,400 |
| BNB | BNB | $615.68 | -1.80% | 0.35% | $87,788,409,570 | $2,110,909,002 |
| XRP | XRP | $1.13 | 2.24% | 94.78% | $64,558,948,333 | $9,625,212,060 |
| DOGE | Dogecoin | $0.36 | -0.52% | 24.18% | $53,125,771,624 | $7,054,960,410 |
| ADA | Cardano | $0.73 | 0.64% | 22.58% | $25,567,130,468 | $2,165,914,398 |
| TRX | TRON | $0.20 | 2.52% | 22.37% | $17,443,248,436 | $836,653,282 |
| SHIB | Shiba Inu | $0.00 | -1.21% | -5.39% | $14,369,467,151 | $1,334,783,205 |
| AVAX | Avalanche | $34.39 | -6.10% | 6.34% | $14,067,543,145 | $790,295,391 |
| TON | Toncoin | $5.44 | -1.08% | 2.51% | $13,858,789,999 | $280,225,151 |
| SUI | Sui | $3.66 | -5.44% | 12.86% | $10,410,250,609 | $1,700,349,527 |
| LINK | Chainlink | $14.42 | 2.08% | 2.86% | $9,038,644,209 | $599,826,672 |
| DOT | Polkadot | $5.76 | 3.50% | 11.95% | $8,761,132,327 | $525,134,516 |
| PEPE | Pepe | $0.00 | -3.02% | 70.26% | $8,705,294,672 | $4,939,970,306 |
| BCH | Bitcoin Cash | $435.28 | -1.30% | 0.12% | $8,614,095,587 | $502,396,748 |
| XLM | Stellar | $0.24 | 19.65% | 121.96% | $7,255,210,982 | $2,127,648,290 |
| NEAR | NEAR Protocol | $5.84 | -1.59% | 11.13% | $7,113,853,859 | $543,744,306 |
Information current as of 6:05 AM PST, Monday, November 18, 2024. Source: https://coinmarketcap.com
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Sources: Ryan Long, CFA, FocusPoint Solutions, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Citigroup, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management,
MarketfieldAsset Management, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, PIMCO, Standard & Poorâs, StockCharts.com, The Conference Board, Thomson Reuters, T. Rowe Price, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wall Street Journal, The Washington Post. Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends. Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.
The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness. All information and opinions expressed are subject to change without notice. Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product. FocusPoint Solutions, Inc. is a registered investment advisor.
Notes key: (+) positive/encouraging development, (0) neutral/inconclusive/no net effect, (-) negative/discouraging development.