Annual Conference to Discuss Current Events & Future Trends by Prominent Leaders
Yesterday was DealBook/Summit 2024 day in New York. CNBC, (the “stock channel” as I call it) aired the event live intermittently all day yesterday. As usual, I had the channel on in my office while working. I was so captivated by some of the interviews that I found myself watching TV. The near hour-long interview with Jeff Bezos was fascinating to me. The interview with Sam Altman on the future of AI and society was also impactful – so much so that I decided to make this week’s ERPE Excerpts about DealBook/Summit 2024. Here is just a little about what the event is and this year’s conference.
The DealBook/Summit is an annual conference hosted by The New York Times. Its 2-day event brings together influential figures from the worlds of business, politics, and technology to discuss current events and future trends. The summit features keynote speeches, panel discussions, and one-on-one interviews with prominent leaders. Andrew Ross Sorkin is the host of the event and leads the day’s live, candid interviews with some of the most consequential leaders in business, politics and culture connect. Sorkin is the founder and editor of DealBook, a financial news service published by The New York Times. He’s a journalist, an author and a financial columnist for The New York Times. Andrew is also a co-anchor of CNBC’s Squawk Box.
DealBook/Summit 2024’s venue is also impressive. The event is being held at the Jazz at Lincoln Center’s Appel Room. It features world-class performance spaces, classrooms, and an atrium overlooking Central Park and the New York skyline — all in the heart of Columbus Circle. But, the most impressive part of the Summit are the truly influential speakers. We know you get what you pay for. Admission to the conference is no exception to that rule. The cost to attend the DealBook Summit this year depends on the type of ticket you purchase. Tickets ranged from $2,950 to $10,000. There were also VIP packages available for $25,000.
This year’s DealBook Summit featured a wide range of influential speakers. Here’s a speaker-lineup by category:
Yesterday’s discussions centered around AI, climate change, economic trends, and geopolitical issues. Andrew Ross Sorkin conducted insightful interviews with various leaders, offering unique perspectives and insights. More key events and interviews are scheduled going on today. Andrew is an excellent interviewer/host. His in-depth interviews include thought-provoking questions and elicit intriguing answers.
Tune in if you can…
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.
Famous Quote on This Day:
“I want it to be known that we’re going to work with grim and bold determination to gain justice on the buses in this city.”
~~ Martin Luther King, Jr., 1955
What Happened On This Day December 5, 1893 – First appearance of an electric car.
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. The current signal is still green. 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. After a market peak July 16 with the SP500 at 5,670, a market correction ensued with a 10% fall to 5,120 on August 5. The market’s trend turned bullish Tuesday, August 13. The fourth day of a new rally attempt confirmed the rally with a follow-through day. Since the August 5th low, the SP500 has surged over 19% through this morning. The SP500 set its 55th record closing high of the year yesterday -marking a significant milestone in 2024’s stock market performance. This places 2024 in the top 10 for the highest number of record closes in a single year since 1954 as the graph below shows.
Here are key market levels as of Monday, December 2.
Recapping Last Week
As I have noted in this section of the last ERPE Excerpts for weeks, the stock market is resilient. That is the nature of bull markets. Often counter-intuitive, stock prices climb to higher highs. This often ends in investor euphoria driven by the emotion of FOMO. U.S equities rose modestly in a shortened Thanksgiving week as technology and retail stocks buoyed markets. The S&P500, Nasdaq Composite, and Russell 2000 indexes all rose 1% with the S&P500 and Russell advancing to new record closes. While U.S. equity indexes have risen in November in spite of rising U.S. Treasury yields and a stronger U.S. dollar, both eased back through support last week, giving equities an extra boost. Their rise has been progressing since the September Fed meeting and rallied right up to major technical resistance, but it took news of President Elect Trump’s pick for the Treasury, Scott Bessent, to finally break it. Ten of eleven S&P500 sectors were positive last week except for energy, which was surprisingly unable to rally after a ceasefire between Israel and Hezbollah militants in Lebanon was agreed upon, reducing uncertainty in the region and putting downward pressure oil prices as well as precious metals and Bitcoin. The Fed helped stall that fall by expressing confidence on easing inflation and a strong labor market indicating further rate cuts are likely. While metals, oil and Bitcoin all recovered from Monday’s drop, Bitcoin sprung back viciously, rising to a new all-time high, with futures surpassing $100,000. U.S. Core PCE increased 0.2% showing a 12-month inflation rate of 2.3%, in line with expectations, although higher than September’s 2.1% rates. Personal income jumped 0.6% vs 0.3% expectation along with jobless claims dropping 2,000 to 213K. The CME Group’s FedWatch tool puts odds of another quarter point cut in December at 66%. U.S. Durable goods orders rose for the first time in 3 months, gaining 0.2%, while the second estimate of Q3 GDP held steady at 2.8% growth, powered by 3.5% in consumer spending. It makes sense then that consumer confidence improved again to 111.7 from an upwardly revised 109.6 in October. Optimism about future job availability reached its highest level in three years. The Richmond Manufacturing index was a blip of negative news staying put at -14. Housing data was mixed as the S&P Case-Shiller House Price Index showed a slight decrease in sale prices over 20 metropolitan areas, down to 4.6% vs 4.7% expectations and 5.2% prior. New home sales dropped 17% last month, largely affected by the two southern Hurricanes. However, pending home sales rose to a seven month high as lower mortgage rates enticed buyers. Still, the supply of previously owned homes is at a four year high.
On the international front, things weren’t quite as rosy. German business morale fell more than expected in the ifo Biz Climate survey, and CPI increased to 2.2% from 2% in October. The Gfk Consumer Climate also declined from -18.4 to -23.3, and retail sales dropped by 1.5%. Eurozone inflation rose as well, coming it at 2.3% vs 2% in October. It’s the same story on the other side of the world with Tokyo’s core CPI rising 2.2% as well, up from 1.8% in October. The BOJ Core CPI came in at 1.5% vs 1.8% expectations, potentially influencing the BOJ’s monetary policy stance. In other news Australia’s CPI came in 2.1%, below forecast of 2.3%, and Canada’s GDP rose a measly 0.1% in September.
Current View
Yesterday’s major market indices climbed to new record highs. The stock market got through new economic data, earnings reports and a public appearance by Federal Reserve Chairman Jerome Powell with ease yesterday as the Nasdaq and S&P 500 climbed for a fourth consecutive day. Both major indexes rose to record highs again and the Dow Jones Industrial Average closed above 45,000 for the first time. The Nasdaq led with a 1.3% jump, making it 11 gains in the past 12 sessions. The S&P 500 climbed 0.6%, also its 11th gain in the past 12 sessions. The technology sector outperformed, giving the Nasdaq plenty of tailwind. The technology sector ETF (XLK) rose 1.8% to an all-time high. Software stocks were particularly strong, led by a massive move up in Salesforce stock. Seven of the 12 best-performing industry groups Wednesday were in that sector.
Industry Group Strength: BULLISH. As of yesterday, 157 out the 197 groups I monitor are up year-to-date. 40 are down.
New Highs vs. New Lows: BULLISH. As of now, there were 296 new 52-week highs and 71 new 52-week lows.
Dow Dividend Yield: BEARISH. The current yield for the Dow Jones Industrial Average is 1.65%. The 10-year Treasury now 4.20%. The benchmark interest rate is up from 3.81% a month ago.
Volatility Index: BEARISH. Volatility has been volatile. The “VIX” is 14. It is down from 17 two weeks ago. 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 57, the Fear & Greed Index is down from 63 a month 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 62.9%, up from 58.2% A month ago. The bear sentiment is now 16.1%, down slightly from 21.7% month ago. This reflects a decrease in bullish and bearish sentiment over the last two weeks. 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 0.62, down from 0.51 two weeks ago. 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
Manufacturing Up: A key barometer of U.S. factories rose to a five-month high in November, and new orders turned positive for the first time since the spring, but there was little sign of a sustained rebound in the industrial side of the economy. The Institute for Supply Management’s manufacturing index rose to 48.4% last month from 46.5% in October, exceeding Wall Street’s forecast. Still, the index has hovered below the key 50% cutoff mark in every month but one for the past two years. Numbers below 50% signal that the manufacturing sector is shrinking.
Service Sector Up: Service-oriented companies in the U.S. grew in November at the slowest pace in three months, reflecting uncertainty about how the incoming Trump administration will affect the economy. The Institute for Supply Management’s survey of service companies slid to 52.1% last month from 56.0% in October. Any number above 50% signals expansion. Companies are hopeful that falling interest rates and a business friendly Trump administration will give the private sector a boost, but they are also worried about the damage from new U.S. tariffs and a potential trade war. The economy has grown at an above-average speed for the past two years and fended off forecasts of a recession. The outlook for the economy in early 2025 is steady growth, but businesses anxiously await the details of President-elect Trump’s policies.
U.S. Trade Deficit Down: The U.S. international trade deficit narrowed 11.9% in October to $73.8 billion, the Commerce Department said Thursday. Economists surveyed by the Wall Street Journal had predicted the deficit would narrow to a seasonally adjusted $74.8 billion. The trade gap in September was revised to $83.7 billion from $84.4 billion. Imports fell 4% in October to $339.6 billion after setting a record in the previous month. Imports of consumer goods and capital goods fell in October. U.S. exports fell 1.6% to $265.7 billion after setting a record in September. Exports of cars and industrial supplies declined.
WEAK INDICATORS
Jobless Claims Up: The number of Americans who applied for unemployment benefits during Thanksgiving rose to a six-week high, but jobless claims stayed at extremely low levels in a clean bill of health for the U.S. economy. New claims rose by 9,000 to 224,000 in the seven days ended Nov. 30 from 215,000 in the prior week, the government said Thursday. Still, any number in the low 200,000s is well below the historical average. Because of the ultra-low number of layoffs, relatively few Americans are losing their jobs and being forced to apply for unemployment benefits. New jobless claims fell in 36 of the 53 states and territories that report these figures to the federal government.
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Equity Research & Portfolio Evaluation
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.
