Monday Takeaways: Something’s Afoot

Shah Gilani|December 9, 2024

Something big is happening in the auto industry…

As Volkswagen announces factory closures in Germany for the first time in 90 years.

But that’s just one piece of a larger puzzle I’m seeing in the market right now.

We’ve got surprising job numbers, Bitcoin’s $100,000 milestone, and BlackRock’s massive move into private credit…

The markets look good now – but it’s all good until it isn’t.

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 Monday Takeaways.

First up on your takeaways is last week. We always have to look back before we can see what’s ahead of us.

Last week, the markets did a whole lot of nothing. I think the Dow was down 0.6%… a whole lot of nothing. S&P up 1%. Nasdaq Composite was up 3.3% on the week.

Yes, tech stocks again leading the charge. Big cap tech stocks were once again in the leadership position.

So far so good. Markets just look like they want to keep going up.

Last week – on Friday – we got jobs numbers. They looked good… better than some expected, and I think better than Fed fund futures traders are betting.

What do I mean? 227,000 jobs created in November. That was well above the estimate for 200,000.

That’s pretty good. What was even more interesting was the September jobs numbers were revised upward by 32,000 to 255,000. That’s a big upward revision. And something that rarely happens.

Not only that, October’s numbers – the paltry 12,000 because of the hurricanes – was revised up to 36,000.

Two upward revisions, then we have the November’s better-than-expected number.

The labor market is strong. So I don’t get why the Fed fund futures traders started to bet that we were more likely to see a Fed rate cut in December. It should be the opposite.

Perhaps the traders were hanging their hats on was the uptick in the unemployment rate to 4.2% from 4.1%.

But digging into the numbers, labor market’s strong. Why would the Fed cut? They don’t need to cut.

But the trading action indicates there’s a greater likelihood that we will see a December rate cut.

We’ll find out who’s right on that one. Not that I’m right or wrong. I just don’t think it’s necessary. But then again, it’s the Fed. They want to lower rates. So we’ll see.

It was a slow week last week unless you were in the big cap stocks.

And it was dead, horrible, slow, and worse for the automakers. It’s been bad for the automakers. Forget about GM. I’m not going to even go there. But Volkswagen last week said they were – and by the way, their workers have walked off the job at Volkswagen plants in Germany – going to lay off workers and close factories. That’s never happened in Volkswagen’s 90-plus-year history. I don’t think they’ve ever closed a factory in Germany.

Not good.

Stellantis’ CEO quit. Things are just not good for the EV makers. So you’ve got to be careful. If you’re in any of the EV stocks – except for maybe a couple of Chinese stocks that are EV players – be careful out there because President Trump is not a big EV fan (except for maybe Tesla).

What else did we get from President-elect Trump?

We got a boost for crypto again. On Wednesday, Bitcoin hit $103,000 and change. That’s a new record high – and made for a good week for Bitcoin, no doubt.

Trump also named his crypto czar. The SEC is going to get Paul Atkins, a really sharp attorney, by the way, who is pretty pro-crypto. So the crypto bros are looking pretty good.

Is that speculative? In my opinion, yes. But that’s OK. Whether or not you believe in Bitcoin or cryptos as an asset class, that’s OK, because that’s what they are. They’re their own asset class.

They’re good trading instruments. You can make money off them. I’m not going to pass judgment on good, bad, indifferent, on intrinsic value or anything like that.

Most of you know what I think about them… I’ve always said they’re good trading instruments. Leave it at that.

It is a sign of speculative hype? Yes, I’m going to have to say so.

What else? What other signs are there?

BlackRock last week buying HPS, a private credit manager.

Pay attention here… because they aren’t making bank loans. These are private loans. And this company creates, originates, sells, places, and lends to private companies in the private credit market.

HPS was bought by BlackRock for $12 billion or so.

That’s all speculative because the private credit market is now becoming public.

Why did BlackRock buy HPS? Because it wants access to private credit, to the loans, to the portfolios, and the products that they can create out of HPS’ private credit loans.

That means we’re going to see ETFs stuffed with private credit loans.

That’s speculative.

Mark my words on this one. You’re going to start seeing a lot more deals in private credit. You’re going to start hearing a lot more about it, and private credit is going to become the next big thing.

But guess what? It’s not a good thing in the end. You’ve been warned.

We have some earnings coming in this week. We have Oracle at the close today, and we’ve got Adobe on Wednesday, along with Broadcom and Costco. So those are going to be the big earnings this week.

On Wednesday, CPI is coming out. The expectations are for 2.7% year over year and up about 0.1% from the previous month’s estimate. Core CPI is supposed to come in at 3.3%. That’s in line with estimates of 3.3%.

But that’s still well above the Fed’s 2% target. Two percent inflation would be nice, but it’s significantly above that.

Another reason not to cut… but what do I know?

That’s what we’ve got this week.

Be careful out there, people, because things are really good… but it’s all good until it isn’t. So enjoy the ride.

Just remember that not everything goes up forever.

In the meantime, let’s make some money.

I’ll catch you guys next week. Cheers.