Monday Takeaways: The S&P Hits a New Milestone

Shah Gilani|November 25, 2024

There’s a new sheriff in town…

That’s right… Trump has finally chosen his Treasury Secretary nominee.

Elon Musk may not have been happy with it… but the markets were.

Plus… investors shrugged at Nvidia’s excellent earnings…

And in this short week, we have a few key earnings reports… and inflation data.

Here’s what I think it all means for the end of 2024…

Tune in for your critical Monday takeaways during Thanksgiving week. Don’t miss what’s moving your money… NOW.

Click on the thumbnail below to watch.

Transcript

Hey, everybody. Shah Gilani with your Monday Takeaways.

It’s going to be brief today. We have a shortened week since Thursday is Thanksgiving. Happy Thanksgiving, everyone, in advance.

Last week, what’s the takeaway?

All eyes were on Nvidia, and Nvidia didn’t disappoint. I thought it was fabulous, but markets and investors weren’t so sure – the stock popped on earnings and then came right back down and ended lower. Yikes.

I don’t get it, people.

It had 150% growth.

What? That doesn’t get rewarded?

Expectations are for more than that next time, but investors are thinking, “How can they keep that up?”

I think that’s the backwash there – the taste in investors’ mouths. How can they possibly keep it up?

Well, they’ve been keeping it up.

Eventually, others will catch up. And who will catch up? The likes of Microsoft with its own chips, Apple with its own chips, AMD with new chips, Intel with new chips.

Eventually, semiconductor firms and tech firms will catch up, but it’s going to take a while.

So Nvidia still rocks, just outperforming everything… but wasn’t rewarded last week. The markets didn’t care.

The Dow Jones Industrial Average saw a new record high, up 1.96% on the week. The S&P and the Nasdaq Composite were both up 1.7% on the week.

It’s all good people. It’s all good until it isn’t.

Bonds rallied last week, not because there was any good news on inflation. We get some of that this week, but bonds rallied last week because of nervousness. Ukraine fired U.S.-made long-range missiles into Russia, and that sparked something of a Treasury rally. Not a big rally, but enough of a flight-to-quality rally that if you were looking at yields come down and maybe you wanted to grab yields because you think they’re going lower, that started that.

Will we see more of that this week? Remains to be seen.

Another takeaway over the weekend is that President-elect Trump has nominated Scott Bessent for Treasury Secretary. Now, he is the, shall we call it, safe hands pick, or as Elon Musk called him, the business-as-usual choice.

And not in a good way because Musk wants to see more disruptive people in the President-elect’s cabinet, but he didn’t get his way. And he was a fan of some others, but Scott got in. Hedge fund manager, billionaire, ran George Soros’ fund, smart guy, all around a steady guy, and I think that’s what we need at Treasury.

And I think the Treasury market’s going to appreciate that, and we’ll see perhaps more stability in the Treasury market considering that the United States has $28 trillion of bonds out there. And there’s a lot of issuance, reissuance going to go on forever.

A steady hand at Treasury will likely help smooth that issuance process out. That’s the way people are looking at Scott Bessent.

I think he should do a good job. He’s, again, the safe choice. He is the voice of moderation, if you will, on President-elect Trump’s tariffs. He’s for tariffs, but he’s not for “let’s just pile them on.” He’s for layering them on to see what you get and then basically negotiate, which is what a lot of people have thought that Trump will likely do as opposed to just start throwing down tariffs on everybody.

So Bessent looks like a good choice, and the market thinks he’s a good choice. But it doesn’t matter what I think. It’s really what the market thinks.

We are rallying this morning premarket.

The big winner in the premarket is the Russell 2000. Why? Because if rates are coming down, the Russell’s going to be the biggest beneficiary in terms of small and mid-cap stocks doing better when rates come down.

So here we go. It’s going to be a shortened week because Thursday is a day off. Friday is going to be pretty dead in the water as it usually is the day after Thanksgiving.

What do we have going on? Well, today after the close, Monday, we have Zoom Communications.

Zoom is a stock I have been touting for some time when it was trading in the $60s. It’s had a significant move.

We have earnings after the close today. It’s already had a nice run-up. I think it can have another run-up. The balance sheet on this company is really good. Take a look at it. It’s got almost a 20% profit margin. Hardly any debt, about $64million to $65 million debt relative to the billions it has on its balance sheet and it operating cash flow, in the billions.

It’s a very good-looking company all around. So if the earnings beat, it’s going higher. If they disappoint and stock comes down, it might be an opportunity to buy. So there’s a heads-up on something that might happen with Zoom today.

We also have earnings tomorrow.

We have CrowdStrike tomorrow. CrowdStrike is the company that basically messed up and ended up causing Microsoft stuff around the world to stop working. So is that going to show up in their earnings this quarter? CrowdStrike is one to watch tomorrow.

We have Dell tomorrow. That’s certainly one to watch also. And HP. We certainly want to watch those tomorrow.

But also tomorrow, we have the Fed minutes from their last meeting. Let’s see if there’s anything in there worth taking away.

Wednesday is the big day for the week. PCE. This is the Fed’s preferred inflation measure. As you all know, the expectation consensus expectations are for 0.3% in October. Expectations for year-over-year are for inflation and core inflation to have risen 2.8%. That’s more than it was in September, which was 2.7%.

So that’s going the wrong way. We’ll see how markets react to that and what the real number is. Again, expectations consensus for core PCE on Wednesday is for a 0.3% in October and for the annual to be 2.8%. So if we’re there and markets don’t like it, they might sell off a little bit.

If we’re much higher than that, they probably will sell off, and that might make Wednesday interesting. Otherwise, Wednesday is really just about getting your last bit of shopping in to make your Thanksgiving turkey and all the stuffing, all the good stuff that comes with it. So, Wednesday is all about PCE. Thursday, enjoy yourselves.

Friday’s probably going to be dead, maybe dead cat bounce. But the takeaway from all of this is markets are strong. Stocks just look like they want to go up. I’m calling for a year-end rally.

I’m calling for well over 6,000 on the S&P.

I think we’re going to have a good 2025, but right now, it doesn’t matter if something comes out of left field. If you can’t see it, you can’t trade it. So if you don’t trade it because you can’t see it, then don’t worry about it. Doesn’t mean that everything is always going to be good. Things are good until they aren’t.

I’ll catch you guys next week. Happy Thanksgiving all. Cheers.