I first wrote about CES (Consumer Electronic Show) in 2015. How time flies! Back then, attendance was expected to break 2014’s record of 160,000. It did. There were 170,000 professional/industry attendees at CES 2015. New attendance records continued until 2020. In 2021 the Consumer Electronic Show was a full-digital event due to the COVID-19 pandemic. A video conferencing platform was used to support tens of thousands of people remotely, but CES 2021 was just not the same. CES 2022 also suffered from public health concerns as many companies pulled out of the event. Most of them switched to a virtual-only appearance. As “the show must go on”, the global stage for innovation regained impressive attendance numbers last year with over 115,000 attendees. This year’s biggest tech event in the world kicked of Tuesday and is expected to attract over 130,000 attendees. Take a quick peak at day one… Click here to see how things are rolling at CES 2024 day one.
With CES 2024 now in day three, “The most powerful tech event in the world” is well underway. The 4,000 exhibitors have gathered in Las Vegas to harness the power of human-to-human interaction to keep their innovation engines moving forward and have a direct business impact. These exhibitors include 311 of the Fortune Global 500 companies and 84 of the Interbrand 100, which are the worlds most valuable brands. Over 150 countries are represented at this year’s CES.
AI dominates the tech topics at CES 2024. CES represents all facets of the consumer technology industry, from baby tech to sports tech, and from home entertainment to smart cities. This year, though, artificial intelligence is the story of the show. Consumer technology touches almost all aspects of business, work and life. CES 2024 is displaying how AI is revolutionizing the technology user experience. CES 2024 kicked off Monday night with a keynote presentation by Siemens’ CEO, Dr. Roland Busch. He showcased technology that is enabling leading brands to improve the way we live, work, move, and make – with AI.
Starting Tuesday morning, other CES keynotes were delivered by a diverse list of company leaders, global innovators, and industry experts. On stage are CEO’s from L’Oréal, Walmart, McDonalds, Intel, Hyundai, Qualcomm and Best Buy, in addition to a Microsoft tech executive. From food to makeup and cars to retailers, CES underscores that technology – and AI – is in everything
Combining AI with robotics, CES 2024 highlights the latest developments in artificial intelligence and the next generation of intelligent, autonomous machines. Scheduled topics include: “The Hard Part of AI: Hardware and Chips”, “The AI Driven Retail & Restaurant Experience”, “How AI is Transforming Food”, “AI Controversy: Innovation & Transformation vs. Threat to the Future”, “Harnessing the Power of AI Ethically”, and “Great Minds, Bold Visions: What’s Next for AI?” among others.
Almost every announcement, keynote, and product at CES 2024 so far has included some type of update on of artificial intelligence. From a grill that uses AI to improve cooking time and quality to Volkswagen announcing it is bringing OpenAI’s ChatGPT to its vehicles, 2024’s CES is displaying the technology of the day is everywhere.
TAKING PERSPECTIVE…
Proper Perspective: In our hectic and often hard to comprehend world, it is very easy to lose perspective. You may agree it is sometimes difficult to see the big picture. The media often doesn’t help with this, but unfortunately instead encourages us to see things in a most negative light. Here is hopefully a pause to gain positive perspective.
What Happened On This Day, December 7, – Pearl Harbor attacked.
MARKET ANALYSIS
INDICATORS OF INTEREST:
Market’s Current Signal: Market in Confirmed Uptrend. Analysis of the stock market over 130 years of history shows we can view it in terms of three stages – market in uptrend, uptrend under pressure and market correction. I analogize this to a traffic signal’s changing colors from green to yellow and then to red. Since the 1880’s, this perspective has led to investment out-performance relative to market indexes. This is due to trend analysis which determines risk reducing, return enhancing market entry and exit points.
The Stock Market Trend: Market in Confirmed Uptrend. Wednesday November 1 the market closed up in higher volume came on the fourth day of a rally attempt. This follow-through day triggered a positive market trend signal to Market in Confirmed Uptrend. This was a bullish direction change from Market in Correction. The market’s technical’s and fundamental’s are both solid and support the market’s extended Confirmed Uptrend.
Here are key market levels as of Monday, January 8:
Recapping Last Week
The stock market struggled in the first week of 2024, as interest rates rose, and investors reassessed the timing of potential rate cuts. The S&P500 index slid 1.5%, while the Nasdaq Composite and Russell 2000 sank more than 3% each. Rotation was evident in S&P500 sectors, as 2023 standouts technology and consumer discretionary dropped more than 4% and 3%, respectively, while last year’s laggards such as healthcare, energy, and utilities gained 1%-2%. Crude oil prices jumped 3.5% as Middle East tensions escalated, with deadly blasts in Iran and attacks against commercial ships on the Red Sea. U.S. Treasury yields climbed after December’s employment data came in above expectations. Non-farm payrolls increased by 216,000 in December, while average hourly earnings stayed hot at +0.4% MoM. However, prior jobs growth was revised downward, and the three-month average stood at 165,000, consistent with an overall moderating trend. Job openings eased in November and the quits rate fell to the lowest level since September 2020, suggesting gradual labor market cooling. The probability of a March FOMC rate cut fell below 50% on Friday morning before rebounding to near 62%, according to CME fed funds futures. The December FOMC meeting minutes revealed little insight into the timing of rate cuts, with an “unusually elevated degree of uncertainty” about the policy path. In other economic news, U.S. manufacturing remained in contraction, but the ISM survey also showed a continued decline in prices paid. ISM Services PMI fell unexpectedly in December to 50.6 from 52.7 as employment shrank. U.S. factory orders did surprise on the upside, rising 2.6% month-over-month in November.
Internationally, inflation in Germany and the Eurozone increased in December, but the rise was anticipated due to base effects, as the drop from last year’s high energy prices moderated. Core inflation cooled to +3.4% year0over-year from +3.6%, but the European Central Bank will likely be waiting for January’s report before considering any rate cuts. Finally, China’s private-sector PMI surveys were above the boom-bust 50-mark, contrasting with the official government reports released the prior week. Services activity expanded at the fastest rate in five months in December, while factory business saw strong gains in output and new orders
Current View
The major U.S. stock indices rallied sharply higher as 2023 came to a close. The stock market climbed higher 9 straight weeks into year end. As noted above, the market showed some weakness in the first full week of the year. Overall, the stock market is behaving as it should in a confirmed uptrend that is in its third month of life.
From a 30,000-foot view of the stock market, small corporate anecdotes such as news concerning Boeing and various daily company upgrades and downgrades by stock analysts may not seem like much. But they add up. And with the fourth-quarter earnings season about to accelerate on this week, investors can benefit from using these pieces of information to help understand what is really going on.
The Nasdaq, which led was the leading index last year, is continuing its bulling trend. As of yesterday, it marked a fourth up day in a row, has now lifted 19% from its October 26 low of 12,543. Back then, the Nasdaq likely gave most investors a pretty sour taste, at least technically. The index cut right through its 200-day moving average, leading investors to expect lower lows. More than three months later, the composite has now created an 11% cushion above its still-rising 200-day line. It also stands 4.7% above the upward-sloping 50-day moving average as well.
Away from last year’s “Mag 7” and mega cap growth stocks, some analysts are pointing to smaller equities. Strong opportunities are expected in the coming years. One reason? Valuation. Here’s some perspective: The total value of stocks in the Russell 2000 is around $2.7 trillion. That’s less than Apple stock alone. Apple’s valuation as of yesterday is $2.9 trillion.
Industry Group Strength: BULLISH. As of yesterday, 109 out the 197 groups I monitor are up year-to-date. 88 are down.
New Highs vs. New Lows: BULLISH. In yesterday’s session, there were 157 new 52-week highs and 80 new 52-week lows.
Dow Dividend Yield: BEARISH. The current yield for the Dow Jones Industrial Average is 2.05%. The 10-year Treasury now 4.03%.
Volatility Index: BEARISH. Volatility has been volatile. The “VIX” is now 13. The index is also known as the “Fear Index.” It is considered a contrarian indicator and therefore viewed as bullish as it rises indicating investors are becoming more fearful. The VIX:
Fear / Greed Index: BEARISH. Investors are driven by two emotions: fear and greed. Too much fear can create a condition of oversold/ undervalued stock prices. Too much greed can result in overbought/overvalued stock prices. The AAII Investor Sentiment Index is now neutral. BE FEARFUL WHEN OTHERS ARE GREEDY. At 72, the Fear & Greed Index is up from 64 two weeks ago.
CLICK VIDEO FOR MORE ON THE “FEAR & GREED INDEX”
How CNNMoney’s Fear & Greed Index works
Bull / Bear Barometer: BEARISH. This secondary market indicator should also be viewed with a contrarian perspective. As of yesterday, according to the latest survey of stock market newsletter writers by Investor’s Intelligence (see below), bullish sentiment is 54.4% and the bears came in at 17.7%. Consider this a contrarian indicator because the crowd is often wrong at market tops and bottoms. In other words, extreme bullishness has been seen near several market tops in the past, while extreme bearishness has been seen at market bottoms.
Put / Call Ratio: BEARISH. The ratio of put-to-call options is 0.50. The put-call ratio tracks the mood of what options investors are doing, not just saying. They typically buy puts if they think a stock will decline and calls if they think it will rise. If they’re buying lots of puts, they see the market declining. And if they’re loading up on calls, they’re generally bullish. Historically, market bottoms occurred when the reading spikes to 1.2 or more. Market tops are often made when the reading is 0.6 or less. Note how reliable this is with respect to the February record low coinciding with the market high. Keep in mind this is also a contrarian indicator.
ECONOMIC UPDATES
Global Economic Indicators & Analysis:
POSITIVE INDICATORS
Initial Jobless Claims Drop: Initial jobless benefit claims inched lower by 1,000 to 202,000 in the last week, the Labor Department said today. This is the lowest level since mid-October. The number of people already collecting unemployment benefits in the week ended Dec. 30 fell by 34,000 to 1.83 million. Continuing claims have fallen by 90,000 since the end of November. The labor market remains healthy. That keeps consumers spending and supports economic growth, albeit at a slower pace than last fall.
Trade Deficit Narrows: The U.S. trade deficit narrowed 2% to $63.2 billion in November after a decline in imports, in a potential lift to gross domestic product in the fourth quarter. The U.S. trade deficit in 2023 is likely to be the smallest in three years, making it a positive contributor to GDP, the official scorecard for the economy. The outlook for trade in 2024 is uncertain. The U.S. economy has avoided a recession, but growth has slowed, and most foreign economies are doing even worse.
U.S. Jobs Report Surprisingly Strong: The economy pumped out a surprisingly strong 216,000 new jobs in the final month of 2023, the latest report that suggest lots of residual strength in a cooling U.S. labor market. The unemployment rate was unchanged at 3.7% in December, the government said last Friday, keeping it near a half century low.
ADP Employment Numbers Showing Strength: Businesses added a solid 164,000 new jobs in December, paycheck company ADP said, in a sign the U.S. labor market remains fairly robust. The labor market has lost some luster. Job openings have fallen to a nearly three-year low and hiring has slowed. Yet unemployment remains extremely low and consumers feel confident enough to keep spending. That could be enough to keep the U.S. out of recession despite high interest rates put in place by the Federal Reserve to extinguish high inflation.
Construction Spending Continues Rise: Construction spending rose in November as companies and the government continued to ramp up projects across the U.S. Spending on construction projects rose 0.4% in November to $2.04 trillion, the Commerce Department reported last Tuesday. Over the past year, construction spending is up 11.3%.
WEAK INDICATORS
CPI Creeps Back Up: The consumer price index climbed 3.4% year over year last month, an acceleration from the 3.1% pace logged in November, according to data released today by the Bureau of Labor Statistics. On a month-over-month basis, the headline index rose 0.3%. Economists forecast the pace of inflation would rise to 0.2% from the 0.1% monthly rate recorded in November. While the pace of headline inflation was on the rise in December, core CPI—a metric that excludes the more volatile food and energy indexes and is generally considered a better gauge of underlying trends—continued to decline slightly. Core CPI growth slowed to 3.9% year over year in December from the 4% rate seen in November.
Consumer Credit Increases: Total consumer credit rose $23.7 billion in November, up from a $5.8 billion increase in the prior month, the Federal Reserve said Monday. That translates into a 5.7% annual rate, up from a revised 1.4% rise in the prior month. That was the biggest gain since November 2022, and puts total consumer credit above $5 trillion for the first time ever. The data is not adjusted for inflation. The sharp pickup in consumer credit growth was likely due to the start of the holiday shopping season.
ISM Service Survey Stumbles: A barometer of business conditions at service-oriented companies fell in December to a seven-month low, suggesting a hiccup for the U.S. economy. The Institute for Supply Management’s survey dropped to 50.6% from 52.7% in the prior month. Numbers over 50% are viewed as positive for the economy. The index ranged between 50% and 55% throughout 2023. The economy slowed in the final quarter of 2023, but it’s still expanding at a fairly healthy pace despite sharply higher interest rates.
ISM Manufacturing Still in Contraction Territory: A closely watched index that measures U.S. manufacturing activity rose by 0.7 percentage point to 47.4 in December, according to the Institute for Supply Management. Any number below 50 reflects a shrinking economy. Manufacturing has contracted for 14 straight months.
The contraction in manufacturing is the longest since 2000-01, after the dot-com bubble exploded. Economists said that depressed capital spending has been the key drag on the factory sector, along with weak global trade. They expect that a sharp drop in long-term interest rates will improve the picture, but the change won’t happen overnight.
Call me if you have any questions. I am always happy to help!
For my Market Monthly podcast, click on the link below. I provide a review of global stock market highlights over the past month and preview of the month ahead. Forward insights and perspectives are based on current financial market and economic trends with an emphasis on relevant developments in various areas from Fed policy to company earnings announcements.
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Equity Research & Portfolio Evaluation (ERPE) utilizes its propietary approach in analyzing investments. Its proven success researching equities is based on a blend of fundamental and technical analysis. ERPE's time-tested Top 10 Tenets guide the investment process to achieve Portfolio Optimization: This is through minimizing risk without sacrificing return.
