The market taketh away. For the week the Dow lost 544 points or 1.24%, the NASDAQ fell 607 points or 3.15% while the S&P 500 lost 125 points or 2.08%. In the post-election period, the market giveth to cryptos with Bitcoin posting solid gains. The market taketh away from gold as it is considerably off its highs. As the smoke begins to clear post election. The markets recent pause and return of gains. Suggests that Trumps pro-growth and pro US campaign promises have failed to convince Mr. Market so far.
Inflation
The Fed’s pre election ½% surprise cut to interest rates is increasingly looking like a mistake. In fact Fed Chair Powell is now signaling a willingness to slow the pace of rate cuts. As a result, the odds of a December cut fell to just under 60% in late trading. As various inflation metrics have remained sticky, or worse show signs of increase. The Cleveland Fed median Consumer Price Index advanced .3% in October and 4.1% from a year ago. The 16% trimmed mean CPI, advanced .3% for the month and 3.2% from a year ago. Indicating that core prices remain elevated. Thanks to Calculated Risk for the chart.
Earnings
3rd quarter earnings continue to roll in. Recent market advances have pushed the S&P 500 to the highest forward 12-month P/E ratio to a more than 3-year high. When it hit 22.2 on November 7th. Although high by historical standards it remains below the recent peak of 24.4 reached March 23, 2000. Just before the Dot-Bomb crash for those of you too young to remember. The market giveth strong earnings this year preventing the forward P/E from going even higher. Solid earnings will be required in 2025 to bring valuations back to a more reasonable level. Thanks to FactSet for the chart.
That’s all for this week folks, I’ll see you again next Friday.
Best, Caleb
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