📕 December to soar?

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Good morning investors! The world is still talking about upcoming tariffs, designed to protect local industries, address illegal immigration, and control the inflow of drugs into the U.S. However, it’s too early to talk about the impact of such tariffs on the broader economy.​

🇲🇽 Reaction: While Mexico and Canada predictably disagree with the tariff proposal, the Mexican president stated they would seek cooperation rather than escalation, with President Sheinbaum mentioning that illegal migrant caravans would no longer reach the U.S. border, reflecting an attempt to address Trump's concerns.

🇨🇦 Meanwhile, Canadian Prime Minister Trudeau flew to Trump’s home in Mar-a-Lago to discuss trade and border security.

Fun fact: December is traditionally the best month for the S&P 500, with an average gain of 1.6% since 1945, rising more than 75% of the time. According to Sam Stovall, CFRA’s chief investment strategist, December also brings the lowest market volatility of any month

Today we cover:

• What to expect this week

• Stocks to soar in December?

• New inflation report.

📊 Economy and News 

What to Expect this Week

The final month of 2024 begins with high stakes, as markets look to extend an already historic rally.

November Jobs Report and Rate Expectations

One of December’s key catalysts will be the November jobs report, due Friday, December 6. This report, the final major labor market update before the Federal Reserve’s December 17–18 meeting, is expected to show a robust addition of 177,500 jobs, up from October’s unexpectedly low 12,000 jobs. The unemployment rate is projected to rise slightly to 4.2%, a shift that could support expectations for a Fed rate cut.

Markets have been fluctuating in their expectations for a December rate reduction, with recent inflation and GDP data renewing optimism. Currently, the CME FedWatch Tool indicates a 67% probability of a quarter-point cut at the upcoming meeting.

Key Earnings and Events in the Week Ahead

The week will also bring notable corporate earnings reports and economic indicators, including:

• Monday: Manufacturing PMI and construction spending data.

• Tuesday: JOLTS job openings and Salesforce earnings.

• Wednesday: ADP employment report and PMI services data, alongside earnings from Dollar Tree and Campbell Soup.

• Thursday: Jobless claims, trade balance data, and earnings from Ulta Beauty and Dollar General.

• Friday: November jobs report, consumer sentiment, and credit data.

December offers a promising setup for investors, but caution is warranted given elevated valuations and potential macroeconomic risks.

Global hits:

• China’s industrial profits fall by 10% in October as deflation worries linger .

• Just Eat Takeaway to delist from London Stock Exchange in blow to UK market.

• Pharma giant Sanofi opens $595 million vaccine facility in Singapore to prepare for potential pandemics.

Inflation reaches 2.3%, meeting expectations

The personal consumption expenditures price index increased 0.2% on the month and showed a 12-month inflation rate of 2.3%, both in line with expectations.

Core inflation showed even stronger readings, with an increase at 0.3% on a monthly basis and an annual reading of 2.8%, also as forecast.

Spending rose 0.4% on the month, as forecast, while personal income jumped 0.6%, well above the 0.3% estimate.

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📈 Stocks

S&P 500 6,032.38 (+0.56%)
DJIA 44,910.65 (+0.42%)
NASDAQ 19,218.17 (+0.83%)
BRENT CRUDE 71.84 (-1.29%)
* Prices as of Nov 30th, 12:20 AM UTC

November Momentum Sets a Bullish Tone for December

A strong market performance in November often signals a positive end to the year, according to research by Ned Davis Research. Ed Clissold, the firm’s chief U.S. strategist, highlighted this trend in a client note, emphasizing that "momentum leads price." Historical data shows that significant market gains in November are frequently followed by additional gains in December, suggesting a bullish outlook through the end of 2024.

Historical Trends and December's Performance

Clissold's analysis shows that when the S&P 500 has gained more than 20% by the end of November, it has continued to rise in December 76% of the time, with a median return of 2.1%. While December is typically the strongest month for the market, years with such strong momentum earlier do not necessarily see dramatically higher December returns. This is partly because strong annual gains reduce opportunities for tax-loss harvesting, which can otherwise influence year-end selling.

Rare Setbacks in a Positive Trend

The last time the S&P 500 declined in December after gaining 20% by November was in 1996, underscoring the rarity of setbacks in such scenarios. Clissold pointed out that positive December returns have not simply "pulled forward" earlier gains, reinforcing the idea that strong momentum carries into the year's final stretch.

Continuing Optimism Despite High Targets

Ned Davis Research remains bullish on U.S. equities, recommending an overweight position even as the S&P 500 has exceeded the firm's year-end target of 5,950. On Friday, during a holiday-shortened trading session, the index hit an all-time high of 6,043.18, marking a 26.7% rally for the year.

Here’s an interesting video on the topic:

Also check: Elon Musk asks court to block OpenAI from converting to a for-profit.

💵 Personal Finance

Remember these tips for a secure financial life - Part I

Use cash, not credit

The world is changing and we’re now more dependent than ever on plastic money but this has to change. You can control cash but you can’t always control cards, so grow the habit of using cash over cards.

Educate yourself

Make it a point to learn about personal finance and money.

• You’re reading this newsletter? Great.

• You wanna check podcasts? Even better.

• Attending a seminar? That’s awesome.

• Considering an online finance course? Fantastic!

All these are ways to expand your knowledge and learn to manage money.

There’s always something new to learn. Things are changing. We didn’t have cryptocurrencies yesterday, but now we do. We don’t have BTC ETFs today, tomorrow we may.

So stay ahead of the crowd.

Get educated but without loans

Stay away from all kinds of loans, including credit card loans, student loans, and more. A house loan, however, might be a good option but only if you plan it right.

With proper planning, a house mortgage can be very beneficial, i.e.,: you might end up with a house of your own without any financial burden.

But, no matter what kind of loan you apply for, only choose if you are sure you will be able to pay it back in a timely manner.

Don’t make the mistake of ruining your credit score as it can spoil your financial standing.

💰 Be a Better Investor

Resources:

• Calculators

• Retirement Resources

• Dividends

• Make Money in Retirement

• Side Hustle Ideas

• Stock Deep Dives

• Investing 101 videos

👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.

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