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Market Headlines 👀 

• US equity markets rally ahead of a expected US Fed rate cut later this week, with the BOE and BOJ also providing rate decisions this week.

• Tesla (TSLA) stock soars again finishing the day up 6+%.

• Softbank (SFTBY) US president elect Trump meets with company CEO Masayoshi Son receiving verbal pledge for a $100b+ investment into the US over the next four years possibly creating over 100k jobs from the CEO.

• Meta Platforms (META) announces company vision for AI, mixed reality and the metaverse for 2025.

• Bitcoin (BTC) cleared all time highs once again, breaching the 107k level.

• Nasdaq 100 (QQQ) announced its rebalance last Friday effective later this month, which include MicroStrategy being included in the index going forward.

• TikTok requests US Supreme court to block US government ban on company which could occur in a month.

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Recap Around the Street 🧠

The Fed Funds Futures market has removed a significant amount of easing from next year’s pricing for the path of the Fed. Bloomberg’s World Interest Rate Probability (WIRP) has 1 cut this week, followed by just two more cuts next year. We have been expecting a cut and a relatively hawkish Dot Plot as well, where the Fed reduces the number of cuts it expects from 4 down to 2 or 3 (based on the median dot forecast).(Contributed by Cameron Dawson, CIO at NewEdge Wealth).

Last week’s inflation data was right in line on CPI (consumer prices), while PPI (producer prices) came in hotter than expected. The core measures of both readings remain sticky and above the Fed’s 2% target, as well as the pre -pandemic range. If this continues, it gives the Fed less room to ease aggressively after the December cut (as some Fed members thought that they could cut much further in order to get to “neutral”). Inflation is not trending towards being hot enough to suggest that the Fed could return to hikes, with key components of inflation like wages, oil prices, and observable rents all remaining contained.(Contributed by Cameron Dawson, CIO at NewEdge Wealth).

And it is not as if growth is plummeting to suggest that the Fed needs to cut rates aggressively. If we take the Fed at their own word (be careful with that one!), they argue that the neutral rate can only be observed looking in the past. Thus, ever since the Fed Funds rate has been above the “neutral rate” (either using the neutral rate in the Dot Plot or using the Real Fed Funds Rate), the U.S. economy has grown above trend, suggesting that the neutral rate is currently higher than what is forecasted by the Fed. The 3.3% growth rate that Atlanta Fed GDPNow is tracking for the 4Q24 is further evidence that U.S. economic growth is not currently being stunted in a significant way by the level of rates.(Contributed by Cameron Dawson, CIO at NewEdge Wealth).

Market Preview 🎞️ 

• Tuesday, December 17th: NAHB housing index; Retail sales data

• Wednesday, December 18th: MBA mortgage applications; US Fed FOMC rate decision; Building permits; EIA Crude oil inventories; Nike (NKE), and FedEx (FDX) earnings

• Thursday, December 19th: Personal income and spending (PCE) data; Quad witching options expiration; University of Michigan consumer sentiment

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That’s all for today, folks! We’ll be back around the same time Thursday with a curated list of important news, economic data and market highlights. 

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