Monday Takeaways: A Pivotal Fed Week

Shah Gilani|December 16, 2024

Markets might look steady, but here’s the reality…

More than half of S&P 500 stocks were down last week, and the Dow’s been sliding for nine straight sessions.

So what’s keep things afloat?

If you “concentrate” hard enough, you’ll get the answer…

On Wednesday, the Fed’s going make a crucial rate decision, right before Friday’s PCE numbers. They wouldn’t risk looking foolish, so they must know something we don’t.

Plus, there’s $6.75 trillion sitting in money market funds and a tsunami of economic data hitting this week – retail sales, GDP numbers, housing data.

We’re looking at a perfect storm of market-moving catalysts.

And the big question we’ll get answered this week…

Why are futures pricing in a rate cut when the economy’s still chugging along?

Tune in for your Monday Takeaways. Don’t miss what’s moving your money… NOW.

Click on the thumbnail below to watch.

Transcript

Hey, everybody. Shah Gilani here with your weekly takeaways on Monday morning.

It was an interesting week last week. The takeaway from what happened was that markets are starting to get a bit nervous.

It’s not really hard to understand. They’ve gone straight up on the Trump bump. The post-election rally has been very strong. Maybe they’re just taking a breather, but last week was a little bit scary in terms of what happened.

First of all, just as an FYI, last week more than half of the stocks in the S&P 500 were down on the week. So it’s really about concentration.

The stocks that are doing well are the leadership – a small, narrow group that’s doing well and taking the S&P and Nasdaq composite higher.

The Dow Jones Industrial Average has been down for nine sessions in a row. So the Dow, yes, a much narrower benchmark we know, has been on a losing streak. That worries me.

The takeaway from last week: Dow down 1.8% on the week. S&P had a decline, down 0.6%. Nasdaq composite had a modest gain, but it was only up 0.3%.

Healthcare stocks got beaten up. Cigna hit a new 52-week low. CVS hit a new 52-week low.

A lot of stocks are getting beaten up, and people aren’t noticing it because the benchmarks are holding up.

When you see the S&P down 0.6% and the Nasdaq up 0.3%, it seems like not much is happening. But then you look at the Dow – it’s down nine sessions in a row, down almost 2% on the week.

What’s going on? It’s about concentration. So a lot of stocks are floundering, and that gives me pause.

We have a busy week ahead, and I think it’s going to be volatile.

Even though the markets are up in the premarket here Monday morning, we’re looking like we’re going to have a decent opening. But, again, that’s just premarket.

The takeaway from what happened last week is that this nervousness is starting to settle in. I still think we’re going to see a year-end rally. We’ve seen a year-end rally. If it fades from here, then maybe we’ve already had it.

Will it continue into year-end?

It certainly can. That’s a matter of concentration. That’s also a matter of nearly $6.75 trillion in money market funds. A lot of money on the sidelines.

Now, we have a busy week coming up here.

Tuesday, we have retail sales for November and industrial production. Wednesday, we have the FOMC, so we have the Fed rate decision. Now, the fed fund futures are indicating a 25 basis point cut.

I’d say they shouldn’t cut anything.

The economy is still moving along. There’s nothing negative happening here. What are we seeing that’s so bad that we need to cut interest rates? Not yet. Maybe they want to get ahead of what they see. Who knows what they’re seeing?

But the FOMC meeting and statement and Q&A on Wednesday is ahead of Friday’s PCE number (Personal Consumption Expenditures).

The Fed has that number in advance because they’re not going to make a rate decision without it.

And then Friday, the market turns around and responds to their decision.

They’re not going to look foolish. So I have to believe that they have advance notice of what PCE is. So maybe that will be indicative – if they don’t cut, then maybe PCE is not so good. That’s Friday.

We also have personal income and spending on Friday. Thursday, we have jobless claims, GDP numbers, and housing data.

Right in the middle is the Federal Reserve.

The takeaway from that is markets are going to be nervous. They’re going to be a little on edge, and I think we could have a volatile week. That’s pretty much what I wanted to say for Monday – the takeaways here for the week are be careful out there.

Last thing I want to say, and I’m just going to throw this out there because I’m fascinated by it, and I think you are: What is going on with the drones?

They’re not UFOs. They’re not foreign drones. We’re not being invaded by the Chinese. This isn’t an Iranian nuclear ship that has launched drones or some kind of carrier.

These things would have been shot down if they weren’t American.

The government knows exactly who they are and where they come from because they’re U.S. military. Otherwise, they’d be shot out of the sky. So don’t adhere to this rubbish about UFOs or this rubbish about foreign invasion. That’s all nonsense.

These drones are up there for a reason, and they’re mostly up at night for a reason.

And I’ll leave you with this.

Here’s something to look up…

Heat signature.

That’s why the drones are up there.

There’s your takeaway on the drones.

I’ll catch you next week. Be careful out there.