Morning News: January 24, 2025
Posted by Eddy Elfenbein on January 24th, 2025 at 7:01 am

Brazil Inflation Slows Less Than Expected Despite Cheaper Energy

Japan Hikes Rates, Solidifying Exit From Rock-Bottom Borrowing Costs

Hawkish Bank of Japan Signals Will Buoy Yen, Strategists Say

Dividend Surge Signals Culture Shift in China’s Markets

European Commission Calls For Sweeping Red-Tape Reforms To Compete With U.S., China

How the World Is Preparing for Trump’s Tariffs

Trump Would ‘Rather Not’ Put Tariffs on China, Maintains Threat

Strong Dollar Could Worsen U.S. External Deficit

Will the Dog That Barked in the Nighttime Also Bite?

Wall Street Enters Darker Age With Most Stock Trading Now Hidden

Larry Fink Ponders If US Economy Is Pointing to Rate Hikes Later

American Express Earnings Expand With Holiday Shopping Boost

Why Trump’s Inner Circle Is So Divided on H-1B Visas

Egg Prices Are High. They Will Likely Go Higher.

Trump’s Inflation Fix Centers on Energy Emergency That Doesn’t Exist

LA Fires ‘Not Likely to Be Material’ for Reinsurers, Fitch Says

If You Need to Escape a Wildfire in an EV, Here Is What to Know

Polestar Boss Contends With Trump Shaking Up the EV Race

For Investors, the Business of America Is Still Business

How Trump’s Assault on DEI Will Ripple Across Corporate America

Billionaire Ambani is Building World’s Biggest Data Center

Meta, TikTok Set for EU Stress Test Ahead of German Elections

Oracle, Apple, Google Diverge on Whether to Keep Serving TikTok

$3,000 for a Used iPhone? If It Has TikTok, Maybe.

Elon Musk’s Air Force One Scrutiny Tests Boeing’s Path to Recovery

Luxury Needs Its Logos Back. Trump Can Help

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Morning News: January 23, 2025
Posted by Eddy Elfenbein on January 23rd, 2025 at 7:01 am

Mideast Billions Turn Heads in Davos, From Blackstone to Beckham

One by One, World Leaders in Davos Fall in Line in Trump Era

WTO Chief Ask Everyone to ‘Chill’ as Tariff Threats Swirl

Cheap, Not Trump, Is Why European Stocks Are Spiking

Turkey Central Bank Cuts Rates Again as Inflation Cools

China’s Latest Bid to Boost Stocks Barely Moves the Needle

Where Economists Think the Trump Economy Is Headed

Trump Will Regret Designating Narcos as Terrorists

Are US Taxes Too High or Too Low? Choose Your Chart

Trump Sees National Emergencies Where Experts Say There Are None

Trump Maps Pivot From Quick Wins to Harder, ‘Solvable’ Problems

Trump’s Death Penalty Order Is a Message to the Supreme Court

Crop Trader Declares Force Majeure Along US Gulf During Rare Southern Snow

A New Era of Fire Diplomacy

California’s Recovery Must Price In the True Cost of Risk

Trump’s D.E.I. Order Creates ‘Fear and Confusion’ Among Corporate Leaders

Why Trump Pardoned ‘Silk Road’ Founder Ross Ulbricht

When A.I. Passes This Test, Look Out

Abu Dhabi’s MGX Helps Bankroll Trump’s $100 Billion AI Plan

Oracle Takes Run at Cloud’s Big Three With Trump-Backed AI Pact

GE Aerospace Tops Profit Estimates, Plans $7 Billion Buyback

American Air Sees Surprise Loss in Break From Bullish Rivals

American Airlines Outlook Clouds 4Q Results That Beat Wall Street’s Estimate

Forget Factories, Small US Towns Want Buc-ee’s Gas Stations

Some Walmart Managers Get a Raise, Lifting Their Max Pay Above $600,000

Bitter Boardroom Feud for Korea Zinc Takes a Dramatic Turn

A Start-Up Claimed Its Device Could Cure Cancer. Then Patients Began Dying.

Wembanyama Prepares to Become ‘Genuine’ Face of the N.B.A.

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Morning News: January 22, 2025
Posted by Eddy Elfenbein on January 22nd, 2025 at 7:03 am

India’s Economy Slows Down Just When It Was Supposed to Speed Up

Investors Hopeful for Ukraine But Need Security, Deputy PM Says

Trump’s Paris Accord Abandonment Is a Moral Disgrace

Trump’s Climate Pullback Endangers Crucial Funds for Poor Nations

Trump Wants to Unleash Energy, as Long as It’s Not Wind or Solar

Trump Aim of Bringing Home Manufacturing a Questionable Strategy, Lagarde Says

EU Sees Deals to Be Done With Trump and Sparring Over Tech

Davos Is Learning the ‘Art of the Deal’ With Trump

Trump Says He Intends to Impose 10% Tariffs on Chinese Imports on Feb. 1

Taking Trump’s Tariffs Threats Seriously and Literally

North American Free Trade Is Already Great Again

Trump’s Sharp Turn for US Policy Faces a Slower Road in Congress

How the Debt Could Hamstring Trump’s Agenda

Trump and Biden Find Common Ground in Abusing Their Pardon Powers

LA Fires Revive Trauma for Homeowners Battling Insurance Claims

Norway $1.8 Trillion Fund CEO Sees Contrarian Bet in US Tech

Trump’s All-In AI Push Aims for Global Mastery: Balance of Power

Elon Musk’s Silence on the Risk of AI Doom Is Deafening

Google Invests Another $1 Billion in AI Developer Anthropic

Trump Says He’s Open to Elon Musk or Larry Ellison Purchasing TikTok

MrBeast, Internet’s Top Creator, Joins New Bid to Buy TikTok

Netflix Explodes Into a New Era

J&J Tops Quarterly Profit Estimates on Cancer Drug Sales

Abbott’s First-Quarter Outlook Misses Estimates, Shares Down

Procter & Gamble Earnings Beat Estimates as Shoppers Buy More Household Staples

China Welcomes Back Hollywood Films in Bid to Boost Spending

Barry Callebaut Stock Melts as High Cocoa Prices Weigh on Sales Volume

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CWS Market Review – January 21, 2025
Posted by Eddy Elfenbein on January 21st, 2025 at 6:45 pm

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

Last year, the stock market averaged one new high a week, but over the last six weeks, there have been zero new highs. Not a single one. For the first time in a while, the stock market appears apprehensive. The market isn’t good or bad, but it’s choppy. It seems like the index can’t muster enough momentum to go in either direction for very long.

Of course, by historical standards, this is perfectly normal. This is what markets do: they bounce around. The unusual period is the one we recently left. Consider that from October 2022 until last month, the S&P 500 Total Return Index gained 75%. That’s not bad for a little over two years’ work.

Just understand that from an investor’s perspective, that was the odd period, not what we’re seeing now. As of Tuesday’s close, the S&P 500 was about 0.75% away from a new all-time high close. It may come tomorrow. As we know, the market gods have a habit of doing the unexpected.

There are a number of signs that suggest that the U.S. economy is healthier than many think. It’s odd how not that long ago, it was assumed that the economy was about to fall on its face. I continue to be amazed by the very poor relative performance of the defensive sectors. Consumer staples and health care stocks, in particular, have badly lagged the market. That’s not what you’d expect to see in a recession or even a late-cycle market.

When you see stalwart blue chips Colgate-Palmolive (CL) and Johnson & Johnson (JNJ) lag the market, I’m inclined to think it says something about the market’s appetite for risk and not much about Colgate and J&J themselves.

While the Mag 7 gets a lot of attention, the tech sector as a whole hasn’t done that well, in a relative sense, over the past year. Instead, we’ve seen impressive relative strength in areas like industrial stocks. Materials are also doing well. These are classic cyclical areas of the market. No one, it seems, wants to hold the steady stalwarts.

On our Buy List, stocks like Miller (MLR) and Mueller (MLI) are both up more than 4% this year. Allison Transmission (ALSN) is already an 11% winner for us this year.

How about IES Industries (IESC)? The company has a market value of $5 billion, 9,000 employees, and it’s not followed by any analysts on Wall Street. It’s up 37% this year!

We’ll soon learn a lot more about these companies when they report earnings. Now let’s look at some details from earning season.

It’s Early but Q4 Earnings Are Looking Good

The Q4 earnings season is starting to heat up. We’ve already had our first few reports, and that will soon turn into a flood.

I should explain that Q4 earnings season is slightly different than the earnings seasons of the other quarters. Companies are allowed a little more time to report their full-year results. That means that Q4 earnings season is longer, and it stretches well into February.

After the closing bell today, we got a very good earnings report from Netflix (NFLX). The stock is up $115 per share, or 13% in after-hours trading.

For this earnings season, we have some early numbers. According to FactSet, 9% of the S&P 500 has reported so far. Of that, 79% have beaten their earnings reports and 67% have beaten sales. That’s quite good.

So far, earnings growth is tracking at 12.5%. Again, that’s early, but if that number holds, it will be the strongest growth we’ve seen since Q4 of 2021, which was severely impacted by Covid.

Only one stock so far has issued negative guidance, but four have issued positive guidance.

The forward P/E Ratio for the S&P 500 now stands at 21.6. That’s not extreme, but it’s higher than the market’s five and ten-year averages (19.7 and 18.2, respectively). Overall, there’s little reason for alarm, especially if earnings continue to grow as they have.

Watch Out for Value Traps

Shares of Walgreens Boots Alliance (WBA) got knocked down by 9% today. The Justice Department said it’s suing Walgreens claiming that the pharmacy chain unlawfully filled prescriptions for addictive painkillers.

The DOJ has already gone after CVS. The opioid epidemic has been a major problem for several years. According to the U.S. government, from 1999 to 2022, there were nearly 727,000 deaths from opioid overdosing.

The lawsuit alleged that by knowingly filling unlawful prescriptions for controlled substances, Walgreens violated the Controlled Substances Act. The government also alleged it violated the False Claims Act when it then sought reimbursement from federal health care programs, like Medicare, for the prescriptions.

The lawsuit was announced after Walgreens filed its own lawsuit on Thursday challenging what it said were new policies the U.S. Drug Enforcement Administration had unlawfully adopted, seeking to ensure pharmacies do not dispense controlled substances for medically illegitimate purposes.

CVS had to write a big check, and I suspect that Walgreens will have to do the same. Two weeks ago, WBA reported good earnings for its fiscal Q4. The company made 51 cents per share which topped expectations of 38 cents per share.

I’m highlighting WBA because it’s a good example of a “value trap.” By that, we mean a stock that has the outward appearance of being an inexpensive stock based on conventional valuation metrics. WBA certainly fits that. It’s going for seven times this year’s earnings, but it’s not a value stock. It’s wildly overvalued once you factor in its legal realities.

Over the last 10 years, the S&P 500 has more than tripled while Walgreens is down by 80%. This is an important lesson for investors. Whenever we see a stock that seems to be going for a low valuation, we need to ask why. There may be a very good reason why.

Don’t Count the Economy Out

We recently got a good jobs report. The government said that the economy created 256,000 net new jobs last month. That beat expectations of 155,000. The unemployment rate fell by 0.1% to 4.1%. The jobless rate has been below 4.3% for the last 38 months in a row.

Last week, the Bureau of Labor Statistics said that inflation increased by 0.4% last month. Despite the higher headline rate, core inflation, which excludes food and energy, increased by 0.2% last month. That was 0.1% below expectations. Over the past year, core inflation is running at 3.2%.

Not too long ago, Wall Street assumed that the Federal Reserve would be slashing interest rates this year. That may not be the case. The Fed meets again next week, and you can forget about any rate cuts coming. The futures market currently thinks there’s a 0.5% chance of an interest rate cut. I think that’s about 0.49% too high, but that’s only a guess.

For the meeting after that, coming in March, futures traders think there’s only a 26% chance that the Fed will cut interest rates. Traders don’t see a cut coming at the May meeting, either. They think the first cut will come in the middle of June.

Remarkably, that’s the only Fed interest rate cut that traders expect all year. This is a huge change in sentiment from just a few weeks ago. If earnings continue to grow as they are now, what’s the point of cutting rates?

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Morning News: January 21, 2025
Posted by Eddy Elfenbein on January 21st, 2025 at 7:05 am

India’s Economy Slows Down Just When It Was Supposed to Speed Up

German Economic Hopes Slump Amid Uncertainty at Home and Abroad

Trump Effect on Crypto Undeniable, Will Lure Investment, Coinbase CEO Says at Davos

Milei ‘The Madman’ Is Back in Davos After Racking Up Victories in Argentina

China Warns Against Trade Wars In Davos Speech

Xi Dodges Early Trump Tariffs, Buying China Time to Influence US

US Bonds Rise as Tariff Respite for China Eases Inflation Fears

Trump’s Tariff Shifts Are a Warning for Corporate America to Expect Whiplash

Trump’s Tariff Whiplash Puts Top Trading Partners on Edge

He’s Ba-a-a-ck. Get Used to the Roller Coaster

Surprise: Trump’s Inauguration Didn’t Offer Unity After All

Elon Musk’s Antics Are Too Much for Germany’s Central Bank

JPMorgan ‘War Room’ Examining First Days of Trump Presidency

C.E.O.s, and President Trump, Want Workers Back in the Office

Trump Sued Over Order Making It Easier to Fire Federal Workers

US Retreats From Global Climate Fight

Donald Trump Isn’t the Biggest Threat Facing Greenland

Europe Must Not Rely Too Much on US Energy, Habeck Warns

Oil Majors Flirt With Electricity

Orsted Shares Sink on Writedown and Trump’s Anti-Wind Orders

Taliban Rebuff Trump’s Call to Return US Arms Worth Billions

Apple’s iPhone Sales in China Plunged 18% in Holiday Quarter

Trump Signs Executive Order in Attempt to Stall TikTok Ban

Bain Capital in Talks to Buy Mitsubishi Tanabe Pharma

Paris Olympics Medals Are Tarnishing, Putting LVMH in the Spotlight

The Alcohol Industry Is Hooked on Its Heaviest Drinkers

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Morning News: January 20, 2025
Posted by Eddy Elfenbein on January 20th, 2025 at 7:09 am

Saudi Crown Prince MBS Moves to Exploit Vacuum Left By Iran

Saudi Arabia Is Still Assessing BRICS Membership, Minister Says

Japan Central Bank Rate Hike Odds Could Turn on Trump Address

Chinese Investors Pile Into Bridgewater-Style Funds, Eying Trump Return

‘Which Time Were You Lying?’: The Great CEO Flip-Flop Over Trump Hits Davos

Old MAGA vs. New MAGA’s Cage Match Begins

Hildebrand Worries that Global Inflation Is Stubbornly Sticky

Is It Better to Have High Growth or Low Debt?

How Trump’s New America Compares With 2017, in 11 Charts

‘God Candle’ Suddenly Sends Bitcoin To All-Time High Price As Trump Stuns Crypto

Crypto Executives Warn Trump’s Memecoins Harm the Industry

How Mexico Is Preparing for Trump’s Promises of Mass Deportations

Christian Legal Group That Helped Topple Roe Shifts Fight to DEI

The Federal Work Force Grew Briskly Under Biden. It’s Still Historically Low.

Trump to Declare National Energy Emergency, Unlocking New Powers

Trump Can’t Turn Back the Clock on US Climate Emissions

Copper Market Sees Half Chance of 10% US Tariff by First Quarter-End, Goldman Says

Big Banks Quit Climate Change Groups Ahead of Trump’s Term

Los Angeles Fire Victims Turn to Prefab Homes for Quick Builds

TikTok, RedNote and the Crushed Promise of the Chinese Internet

TikTok Survives as an App too Popular to Ban

TikTok Got a Reprieve, but Americans and Chinese Are Still on RedNote

Nintendo Is Taking a Page From Sony’s Playbook With New Switch

Telefonica Appoints Marc Murtra as Executive Chair, Replaces Ousted Jose Maria Alvarez-Pallete

Does a Strong Holiday Shopping Season Mean a Better Year Ahead?

Kohl’s Shoppers Want Its New CEO to Undo What the Last One Did

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Morning News: January 17, 2025
Posted by Eddy Elfenbein on January 17th, 2025 at 7:03 am

Dalio, Fink and Benioff Join World’s Mega-Rich Arriving in Davos

China Hits 5% GDP Target But Trump Tariffs Threaten Further Growth

US-China Trade Fight Starts Early, Paving Way for Trump Tariffs

What’s Behind China’s Coal Boom

Rio Tinto, Glencore Discuss Mining’s Biggest-Ever Potential Merger

Bessent Says He Would Support Sanctioning Russian Oil Majors

What Did the Trump Tax Cuts Do? Nobody Really Knows.

Trump’s Tariff Threat Is Already Panicking the Junk Debt Market

Trump’s Own Plans Stand in the Way of Repeating His Economic Success

Wall Street’s New Trump Playbook: Ignore The Noise and Carry On

The Dollar’s Smile Can Change the World for Trump

‘We Still Have an Inflation Problem.’ A Fed Newcomer Wants to Go Slow on Rate Cuts.

Mortgage Rates Top 7% for First Time Since Mid-2024

Heir to Finance Billions Builds New York Private Credit Firm

TikTok Makes Last-Minute Push as Supreme Court Is Poised to Rule on Ban

Instagram and YouTube Prepare to Benefit if TikTok Is Banned

Musk’s X Gets New EU Demand for Data as Regulators Expand Probe

Saab Expects Sales Growth to Top Guidance

Why Electric Vehicles Are Poised for Another Record Year

Medicare to Negotiate Lower Prices for Weight-Loss Drugs

UnitedHealth’s Revenues Rise, in First Earnings Report Since C.E.O.’s Killing

The Big-Budget Rom-Com Is Dead. Long Live the Rom-Horror

Unrivaled Charts a New Path for Women’s Basketball

Tiger Woods Wants You to Watch Him Hit Balls Into a Big Screen

NFL Adding 18th Game Is ‘Logical’ Next Step, Goodell Says

As the Detroit Lions Surge, Fans Flock to an Unofficial Uniform

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Morning News: January 16, 2025
Posted by Eddy Elfenbein on January 16th, 2025 at 7:07 am

The Israel-Hamas Ceasefire Deal and What Comes Next

Brazil’s Economic Activity Downshifts as Key Rate Goes Higher

Why Latest US Sanctions on Russian Oil Are a Big Deal

Canada Readies Tariffs on $105 Billion of US Products If Trump Hits First

Biden Cites Threat From ‘Extreme Wealth’ in Farewell Address

‘Making The World a Better Place’ Is So Last Year

Eight Years of Populism Hasn’t Gotten America Very Far

H-1B Clash Exposes a Tough Choice for Trump: MAGA or Musk

Hegseth and Rubio Show Substance Won’t Win in Trump’s Cabinet

The Inflation Genie Is Moving to the White House

Trump Faces a Powerful Check on His Power: Bond Vigilantes

US Bond ‘Death Spiral’ Risk Brushed Aside by Foreign Funds

Morgan Stanley Profit Doubles as Stock Traders Notch Big Beat

Time Is Running Out to Recover Up to $135 Billion in Pilfered Jobless Benefits

TSMC’s Upbeat Outlook Fuels Hopes for 2025 AI Spending

Zuckerberg’s Aggressive Return to Political Debate Raises Stakes for Meta

Apple in Talks with Barclays, Synchrony to Replace Goldman in Credit Card Deal

On TikTok, Users Thumb Their Noses at Looming Ban

BP to Eliminate About 5% of Workforce to Cut Costs, CEO Says

What to Know About the E.V. Tax Credit That Trump Might Repeal

Why the FDA Finally Banned a Cancer-Linked Food Dye

UnitedHealth Revenue Falls Short, Sending Shares Lower

Walgreens Replaced Fridge Doors With Smart Screens. It’s Now a $200 Million Fiasco

Young Americans Are Drinking Less—But Can It Last?

It’s a Good Time to Be Making Mocktails

Cartier Owner Richemont’s Sales Beat Buoys Luxury Stocks

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Morning News: January 15, 2025
Posted by Eddy Elfenbein on January 15th, 2025 at 7:05 am

South Korean President Yoon Arrested Over Martial Law Fiasco

Economy May Grow 20% With Female Participation, World Bank Says

Nigeria Inflation Rate at Near 29-Year High Before Data Overhaul

US Inflation Data to Remain Firm, Feeding Fears of Higher Rates

Russell Vought Poised to Expand Power of White House Budget Office

How Scott Bessent Won Over MAGA and Wall Street

Mister C.E.O. Goes to Washington

Goldman Surpasses Estimates as Stock Traders Score Record Haul

JPMorgan Traders Notch Record Fourth Quarter on Election Swings

Who Will Succeed Jamie Dimon? The List of Contenders Narrows.

Wells Fargo Takes $647 Million Severance Charge as Expenses Cut

BNY Fourth-Quarter Profit Rises on Boost from Higher Fee Income

BlackRock Assets Hit Record $11.6 Trillion in Fourth Quarter

U.S. Watchdog Sues Capital One, Alleging Bank Cheated Customers Out of $2 Billion

Economic Toll of Los Angeles Fires Goes Far Beyond Destroyed Homes

Panama Wants to Preserve U.S. Alliance, but Trump Could Push It Closer to China

Trump’s Folly? Greenland for Critical Minerals Is Utter Nonsense

How Long Can Toyota Put Off Figuring Out EVs?

Retailers Helped Fuel an EV Charging Station Blitz

GM Signs Multibillion-Dollar Deal for Supply of EV Battery Materials

US Aims to Tighten Flow of TSMC and Samsung Chips to China

Musk Accused by SEC of Cheating Twitter Investors Out of Millions

EU Tech Advocates Call for Greater Self-Reliance With EuroStack

Albertsons Shouldn’t Make the Same Mistake as Walmart

Why Costco Isn’t Joining the Backlash Against DEI

How a Company Makes Millions Off a Hospital Program Meant to Help the Poor

The Swiss Sneaker Brand Outrunning Nike and Adidas

Thailand’s Lower House Passes Bill to Free Up Liquor Production

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CWS Market Review – January 14, 2025
Posted by Eddy Elfenbein on January 14th, 2025 at 6:22 pm

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

One hundred and fifty years ago today, Congress passed the Specie Resumption Act. This act put the country back on the gold standard. The idea of the act was to get everything back to normal following the hectic and inflationary policies of the Civil War. I can’t help but think of the similarities between that era and today.

When you’re at war, anything not directly related to the war effort gets tossed aside, and that includes fiscal discipline. For them, it was a war; for us, it was a pandemic. During the Civil War, the government stopped paying gold or silver in exchange for currency. Instead, it started printing greenbacks which weren’t backed by anything.

Now that the war was over (we won), Congress wanted to get back to exchanging gold or silver for dollars, hence the name Specie Resumption. I bring this up not to do a lesson on economic history but to show the centrality of inflation’s role in our economic life.

Tomorrow, the government will release the CPI report for December, and I’m concerned that it will show more evidence that inflation isn’t melting away. The consensus on Wall Street is that consumer prices rose by 0.3% last month. The Street also expects an increase of 0.3% for core prices.

The funny thing is that if any of the politicians who debated the act in 1875 were magically transported to our time, they certainly would be astounded by many things in our modern age, yet they would largely understand our current monetary predicament. They had a war. We had a pandemic. They printed greenbacks. We let inflation fly, and now we’re trying to reel it back in, and that’s proving to be more difficult than we thought.

The damage of inflation stings. Consider that over the three-year period covering 2022, 2023 and 2024, the S&P 500 gained 29.3%, not counting dividends.

Inflation, however, increased by 13.2%, and that doesn’t include the final month of 2024. We’ll get the data tomorrow. In simple terms, inflation ate up nearly half the market’s profits over the last three years. It’s like having a silent partner who takes half your winnings, before taxes.

Investors in the 1970s certainly recall how troubling inflation can be. In fact, it was 50 years ago tomorrow that President Gerald Ford began his State of the Union Address by saying, “The state of the union is not good. Millions of Americans are out of work. Recession and inflation are eroding the money of millions more. Prices are too high, and sales are too low.”

Incidentally, this is a big time of year for gold-related milestones. (Hat tip to my friend Gary Alexander who is a fountain of market history.) In January 1975, gold was finally legalized for Americans to own, and it was 45 years ago, in January 1980, that gold peaked at $850 per ounce.

In the 1964 film, Goldfinger, Auric Goldfinger planned to irradiate all the gold in Fort Knox thus increasing the value of his gold. He would have been a lot better off doing nothing since gold increased dramatically over the next 16 years.

The 1980 gold rally was extreme. Adjusted for inflation, gold was going for over $3,400 per ounce. This was the time when the Hunt Brothers tried to corner the world silver market. In real terms, gold has lost more than 20% of its value over the last 40 years. If you had paid $25 for an ounce of gold instead of $850, you still would have lost to the dividend-adjusted S&P 500.

Twenty-five years ago, the Dow peaked at 11,723. It wouldn’t top that for another seven years. Still, the market is up fourfold in 25 years. Gold has endless appeal for some investors, but for the long run, I’m on the side of stocks.

Strong Jobs Report

On Friday, the Bureau of Labor Statistics said that the U.S. economy created 256,000 nonfarm payrolls last month. That was well above Wall Street’s forecast for a gain of 155,000 jobs.

The unemployment rate fell by 0.1% to 4.1%. The jobless rate has been below 4.3% for the last 38 months in a row. The economy also added 212,000 net new jobs in November. Last year, the U.S. economy added over 2.2 million jobs. The broader U-6 measure of joblessness fell by 0.2% to 7.5%.

Here are some details from the report.

Job growth came from the familiar sources of health care (up 46,000), leisure and hospitality (43,000), and government (33,000).

Retail also saw a sizeable gain, up 43,000 after losing 29,000 in November heading into the holiday shopping season. The sector saw payroll growth of 2.2 million for the full year, down sharply from the 3 million gain in 2023.

Revisions for prior months were less substantial than has been the recent trend. The October count saw an upward change of 7,000 to 43,000, while the November number was cut by 15,000 from the prior estimate.

The household report showed that full-time jobs increased by 87,000, and part-time jobs rose by 247,000.

Thanks to the strong jobs report, the bond market got knocked down. In two days, the yield on the two-year Treasury rose 13 basis points. The yield on the 10-year Treasury is up over 100 basis points in four months, and it’s at its highest yield since late 2023. The 2/10 Spread just hit a 2.5-year high.

On Tuesday, we learned that producer prices rose 3.3% over the last year. That’s the steepest increase in nearly two years.

You can expect the Fed to take a breather later this month. The odds for another rate cut are now around 2%, and for March, the odds are at about 22%.

The jobs report was a classic good news/bad market event. Higher jobs growth means there’s no need to cut rates, and stocks don’t like that.

Thanks to a late-day rally, the S&P 500 closed higher today, but earlier in the day, the index was on pace for its lowest close in over two months. The S&P 500 recently dipped below its 100-day moving average, and since the end of the third quarter, the stock market has gained just 1.4%.

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

P.S. I was recently on the “We Study Billionaires” podcast with Clay Finck. I had a lot of fun. Check it out.