Dow having a very bad December, down 1,000+

• An Uncertain Future Requires Uncertain Prediction Skills : Forecasting is both art and science, linking on both rigor and luck—but you can develop a mindset that anticipates and plans ahead. (Wired)

• The 3 Best Inflation Hedges: Technology will help bring down the prices of certain goods (think flat-screen TVs). But the only way we are likely to experience broad-based price declines is during a terrible economy with heavy job losses. Even then it might not be as much relief as some would like. During the Great Financial Crisis the largest year-over-year deflation was -2.1%. (A Wealth of Common Sense)

• What You Can Learn From Young Warren Buffett: A look at 10 of the legendary stockpicker’s early investments reveals his diligence, his patience—and his willingness to bet big (Wall Street Journal)

• Khamenei Loses Everything: The October 7 attack on Israel has now cost Iran its regional proxy forces. (The Atlantic)

• Everybody Loves FRED: How America Fell for a Data Tool: From Facebook political debates to college classrooms, the St. Louis Fed’s data tool has gained a major following. (New York Times)

• The Climate Risk to the Mortgage System: Fannie Mae and Freddie Mac, which backstop most U.S. mortgages, know floods and fires are a growing problem. But little action has been taken. (New York Times)

• Taxpayers spend 22% more per patient to support Medicare Advantage – the private alternative to Medicare that promised to cost less: Medicare Advantage was supposed to find efficiencies, but instead is costing taxpayers an extra $83 billion a year. (The Conversation)  see also Fraud and Fakery at the Country’s Largest Chain of Methadone Clinics: Acadia Healthcare falsifies records at its methadone clinics and enrolls patients who aren’t addicted to opioids, a Times investigation found.. (New York Times)

• It’s Time to Break Up Big Medicine: UnitedHealth Group is not an insurer, it’s a platform. And it’s in the crosshairs as Elizabeth Warren and Josh Hawley propose breaking it apart, severing its pharmacy arm from the rest of the business. (BIG by Matt Stoller)

• The Fraudulence of “Waste, Fraud and Abuse” History repeats itself, the first time as farce, the second as clown show. (Krugman Wonks Out)

• How billionaire Charles Koch’s network won a 40-year war to curb regulation: A seismic Supreme Court ruling has ushered in a new era of diminished federal power. The next Trump administration hopes to capitalize on it. (Washington Post)

• The Quest to Turn Human Waste Into Medicine: After success in early stage trials, MaaT Pharma is on the verge of becoming the first company to have an approved microbiome-related product for cancer care. (Bloomberg) *unlocked

• The Big Guide to Fusion: Nuclear fusion will not be “cracked” in a single breakthrough. Instead, there is a fixed checklist of requirements that it must work through. This guide will walk through the checklist. I call it “The Fusion Ladder”. By the end, you will understand the important milestones in taking fusion from kid to grid. (Ben James)

• You Want That Gift to Arrive Today? This Is What It Takes. Retailers like Amazon, Walmart and Target have figured out that if they get you your online order today, you will probably spend more tomorrow. (New York Times)

• The Billionaire Bully Who Wants to Turn Texas Into a Christian Theocracy: The state’s most powerful figure, Tim Dunn, isn’t an elected official. But behind the scenes, the West Texas oilman is lavishly financing what he regards as a holy war against public education, renewable energy, and non-Christians. (Texas Monthly)

• A Miracle: Notre-Dame’s Astonishing Rebirth From the Ashes: Restorations on that scale could take decades. The country was already rattled by uprisings over gasoline prices and a frayed social safety net that, like Notre-Dame, had long been a source of national pride and identity. The symbolism of the cathedral’s fire was unmistakable. Then came Covid. Yet here we are. (New York Times) see also How Notre-Dame Was Reborn: It took about 250 companies, 2,000 workers, about $900 million, a tight deadline and a lot of national pride. (New York Times)

• Sports gambling in the degenerate economy: Sports gambling in the degenerate economy December 15, 2024 Sports gambling has been legal in many other countries for a awhile now. However since 2018, 38 states (including Missouri) and the District of Columbia, have legalized sports gambling. That is a long enough time period to start to see some knock-on effects. (Abnormal Returns) 

• The Mets Stole Juan Soto From the Yankees. Who’s the Big Spender Now? The Yankees didn’t just lose a superstar; they lost him to the Mets. Is the balance of power shifting in New York? (New York Times)

• Taylor Swift’s Eras Tour Changed Everything: The biggest tour of the 21st century is coming to an end. Will concerts ever be the same? (Wall Street Journal)

https://ritholtz.com/wp-content/uploads/2026/12/batmaan.png

Retail Sales 0.7% vs 0.5% last month and that was revised up from 0.4% but it seems to be all washing machines (durables) and Autos as ex-Auto is only up 0.2% (from 0.5% expected).

https://www.briefing.com/Common/Images/Content/PageContent/EcData/rtlyoy.gif

Industrial Production is down 0.1% from 0.3% expected by Leading Economorons (133% miss) with Cap Utilization falling to 76.8% from 77% and that was revised down from 77.1% and October Business Inventories only gained 0.1% – so what is going to be on the shelves?

https://www.briefing.com/Common/Images/Content/PageContent/EcData/ipnt.gif

https://www.briefing.com/Common/Images/Content/PageContent/EcData/utilrate.gif

These are not encouraging charts…

Dow is down for 9th or 10th consecutive day.

So I guess the Fed should lower rates but will people buy our bonds at lower rates? That can wreck our economy a lot more than closing a few factories.

Oil smashed down to $68.90, Brent $72.53, Gasoline $1.93 and /NG fell too – $3.12

Dollar still 106.90, Gold $2,654, Silver $30.84 and Copper getting weaker at $4.14.

This is mostly due to China not doing anything concrete to juice the economy.

AVGO finally pulled back – was getting scary for our short calls. NVDA from $150 to $130 since Thanksgiving at $200Bn per $10.

https://publish.finviz.com/121724/AVGOh110187814i.png

Lots of Portfolio work for me this week – seems like I just did November….

Market Overview: A Cautious Start Amid Mixed Economic Data and Fed Anticipation

U.S. equity futures are pointing lower this morning as markets digest mixed economic reports and look ahead to the Federal Reserve’s final policy decision of 2024 tomorrow. Treasury yields are climbing modestly, putting pressure on equities, while megacap tech stocks show signs of fatigue after recent gains.

Pre-Market Futures:

• S&P 500 Futures: -0.4% at 6,061.
• Nasdaq 100 Futures: -0.3% at 22,061.
• Dow Jones Futures: -0.6% at 43,596.

Key Highlights:

• The Dow is on track for its ninth consecutive decline, marking its longest losing streak since 2018.
• Bitcoin continues its climb, surpassing $107,000 (+2.6%), reflecting renewed enthusiasm around digital assets.
• Economic data reveals strong retail sales but signs of industrial and capacity weakness, reinforcing concerns about uneven economic momentum.

Economic Data: Mixed Signals

1. November Retail Sales

• Headline Sales: +0.7% (consensus: +0.5%) — Stronger-than-expected, supported by auto purchases.
• Ex-Auto Sales: +0.2% (consensus: +0.4%) — A softer result indicating price-driven gains rather than volume.
• Takeaway: While headline sales were solid, the underlying details suggest weaker consumer momentum outside big-ticket items.

1. Industrial Production

• November: -0.1% (consensus: +0.3%) — Industrial output continues to struggle, with capacity utilization declining to 76.8%.
• Takeaway: The manufacturing sector remains under pressure, highlighting lingering weakness despite resilience in consumer spending.

1. Housing Market Index (NAHB):

• December remained unchanged at 46, below expectations.
• Key Insight: Continued softness in housing sentiment reflects affordability pressures and persistent rates near 4.4%.

Key Themes Driving the Market

1. The Fed Decision Looms

Investors are in wait-and-see mode ahead of the Fed’s policy decision on Wednesday. Markets are pricing in a 97% chance of a 25-basis-point cut, which would bring the benchmark rate to 4.25%-4.50%.

• Market Focus:
• Updated Summary of Economic Projections and the Fed’s dot plot to gauge the 2025 rate trajectory.
• Powell’s tone on inflation risks and economic resilience.

Investor Takeaway: A more hawkish Fed stance, particularly concerns about sticky inflation or slowing growth, could weigh on risk assets.

2. Mega Caps and Divergence in Leadership

• The Nasdaq’s leadership from tech and growth sectors continues, fueled by AI enthusiasm and Bitcoin-related strength.
• Broadcom (AVGO): Continues to climb (+1% pre-market), adding to its post-earnings rally.
• NVIDIA (NVDA): Down another 2% pre-market, extending a 15% pullback since its recent highs — signaling profit-taking and concerns over valuations.

Dow Challenges: The index is weighed down by weakness in industrials, energy, and healthcare, sectors that have underperformed as investors chase growth names.

3. Rising Yields and Dollar Strength

• The 10-Year Treasury Yield is hovering near 4.44%, pressuring equities, especially rate-sensitive sectors like utilities and real estate.
• The U.S. Dollar Index remains elevated near 107, reflecting relative strength amid global economic uncertainties.
• Key Impact: Higher yields continue to temper enthusiasm for value stocks, while tech remains resilient amid optimism for rate cuts.

Stocks on the Move

• Tesla (TSLA): +2.9% pre-market, building on its recent momentum after positive analyst commentary.
• Broadcom (AVGO): +1%, as AI-driven optimism fuels gains.
• NVIDIA (NVDA): -2%, extending its recent declines as profit-taking hits chipmakers.
• Pfizer (PFE): +2.9%, reaffirming FY24 guidance and a positive outlook for FY25.
• Super Micro Computer (SMCI): +1.2%, stabilizing after a sharp selloff due to its impending Nasdaq-100 exclusion.

Sector Watch

• Weak: Technology (-0.7%), Financials (-0.8%), Energy, and Real Estate — pressured by rising yields.
• Strong: Communication Services (+2.2%), supported by gains in Alphabet (GOOG) and other media names.

Market Outlook: Tactical Positioning as Year-End Nears

1. Fed Uncertainty: Markets will take their cues from tomorrow’s Fed decision. A hawkish surprise could disrupt the recent tech-driven rally.
2. Rate-Driven Weakness: Rising yields and dollar strength remain headwinds for cyclicals and value stocks.
3. Mega Cap Momentum: Despite recent tech pullbacks, sectors tied to AI, crypto, and growth remain market leaders.

Investor Strategy:

• Stay cautious on equities near all-time highs, with valuation concerns looming.
• Use any pullbacks in high-quality growth stocks as buying opportunities.
• Focus on diversification across sectors, balancing growth exposure with defensive positions.

The Week Ahead: Key Events

• Wednesday (Dec 18): Fed rate decision, housing starts, Micron (MU) earnings.
• Thursday (Dec 19): GDP (Q3 final estimate), FedEx (FDX) and Nike (NKE) earnings.
• Friday (Dec 20): PCE inflation report (Fed’s preferred gauge), Personal Income/Spending, and Consumer Sentiment.

Bottom Line

The market starts this morning with a weaker disposition as investors process mixed economic data and brace for the Fed’s critical rate decision. Rising yields are adding pressure, particularly to value and cyclical sectors, while mega caps face profit-taking after a stellar 2024. Stay nimble, focus on quality, and prepare for volatility as the year winds down.