Weekly Wrap-Up: Market Insights and Highlights
Highlights of the Week: December 7–13, 2024
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I’m Jimmy, and I’m excited to introduce a new series in our newsletter! Each week, we’ll bring you a concise summary of the top market news, along with our insights and perspectives to help you stay informed and ahead of the curve. Let’s dive into this week’s highlights.
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Phrase of the week:
“It’s not whether you’re right or wrong that matters, but how much money you make when you’re right and how much you lose when you’re wrong.”
– George Soros
🇺🇸 | US News: Inflation moderates, but Fed signals cautious monetary easing
Last week, the Nasdaq reached a major milestone, briefly crossing the 20,000 mark—a testament to the stock market’s resilience and optimism this year. Powered by steady economic growth, rising corporate profits, moderating inflation, and early central-bank rate cuts, investor confidence remains robust. This winning formula has bolstered markets despite signs that the pace of inflation’s decline has started to slow.
November's CPI report reflected this mixed outlook, with core consumer inflation holding steady at 3.3% for the third consecutive month, a notable improvement from the 2022 peak of 6.6%. However, headline inflation edged higher to 2.7%, driven by food, gas, and discretionary goods like airfare and furniture. Even so, a slowdown in housing inflation offered some optimism, signaling that broader price pressures may ease further in the months ahead.
The Federal Reserve is expected to announce another quarter-point rate cut during its December meeting, continuing its cautious approach to monetary easing. With inflation moderating but still above target, the Fed appears set to prioritize stability over speed as it looks to guide rates toward a neutral range. Projections for 2025 indicate a slower pace of cuts, with policymakers aiming to bring the federal funds rate to between 3.5% and 4% by year-end. This reflects the balancing act of cooling inflation without risking overstimulation or economic disruption, particularly as fiscal and global uncertainties loom.
Meanwhile, international central banks are advancing their own easing cycles. The Bank of Canada has led with aggressive rate cuts, while the European Central Bank and Switzerland’s central bank also eased policies to support flagging growth and inflation in their regions. These moves have strengthened the U.S. dollar, making imported goods cheaper and aiding the inflation fight at home. Domestically, strong corporate profits, steady job creation, and innovation in areas like artificial intelligence have further bolstered the U.S. economic outlook, reinforcing investor optimism heading into 2025.
US Click-Worthy Headlines:
🧑🏼🏭| US weekly jobless claims unexpectedly rise
🚔| Luigi Mangione, Suspect in CEO Killing, Withdrew From a Life of Privilege and Promise
💰| US announces new arms aid package for Ukraine worth $500 million
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🇧🇷 | LatAm News: Selic Rate Rises to 12.25% in Campos Neto’s Last Dance
Last week, Brazil’s Central Bank surprised markets by raising the Selic rate by 1 percentage point, bringing it to 12.25% per year. This unexpected decision, exceeding analysts’ expectations of a 0.75-point hike, marks the third consecutive increase and comes during the final meeting under Roberto Campos Neto's leadership. The move reflects a firm stance on combating inflation, which reached 4.87% in the 12 months ending in November, surpassing the 4.5% target for 2024.
The hike is expected to have a cooling effect on the economy, as higher borrowing costs may suppress consumption and investment, potentially slowing growth. Additionally, the increase adds pressure to Brazil’s public finances, as the Selic rate serves as the benchmark for debt servicing. In October alone, public sector spending on debt servicing reached BRL 111.6 billion, up 80% compared to the same period last year. Projections suggest that this latest rate hike could add over BRL 50 billion to annual debt servicing costs.
This aggressive monetary tightening comes amidst broader economic challenges across Latin America, where inflationary pressures and slowing growth have prompted central banks in the region to maintain restrictive policies. Brazil’s move highlights the difficulty of balancing inflation control with economic growth, particularly in a global environment fraught with uncertainty.
LatAm Click-Worthy Headlines:
🏦| Brazil's Lula has head drain removed after second surgery, doctors say
📉| Argentina monthly inflation seen under 3% in November, but sticky
🛵| Mexican senate approves work benefits for app drivers
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Corporate News:
Alphabet's technological advancements boost stock performance
Alphabet Inc., Google's parent company, has unveiled two significant technological advancements: the Gemini 2.0 AI model and the Willow quantum computing chip. Gemini 2.0, described by CEO Sundar Pichai as the company's "most powerful model to date," offers enhanced capabilities in image and audio processing, building upon the foundation of its predecessor, Gemini 1.0. The Willow chip represents a major breakthrough in quantum computing, capable of performing complex computations in under five minutes—a task that would take current supercomputers an impractical amount of time.
These developments have positively impacted Alphabet's stock performance. Following the announcements, shares reached a record high of $194.11, marking an 11% increase over the week. Analysts from Bank of America suggest that Willow could significantly enhance computational performance, with potential applications in drug discovery, advanced material design, and next-generation encryption solutions. They also note that Willow may accelerate Google's AI model training capabilities, reinforcing the company's competitive position in the technology sector.
Warner Bros. Discovery restructures to navigate evolving media landscape
Warner Bros. Discovery (WBD) announced a major restructuring, splitting its operations into two divisions: Global Linear Networks, which includes traditional TV channels like CNN and TNT, and Streaming & Studios, combining platforms like Max and Discovery+ with its film and TV production units. This move, aimed at increasing flexibility and adapting to the shifting media landscape, positions the company for potential future deals while streamlining its focus on both traditional and digital businesses.
Set to be completed by mid-2025, the restructuring reflects WBD's strategy to navigate challenges in cable television while leveraging growth opportunities in streaming. The announcement was well-received by investors, with WBD shares rising sharply, signaling confidence in the company's proactive approach to staying competitive in the evolving entertainment industry.
Corporate Click-Worthy Headlines:
🍎| Apple nears switch to in-house Bluetooth and Wi-Fi chip for iPhone, smart home, Bloomberg reports
💵| McKinsey settles opioid marketing case for $650 million
🏢| Major U.S. companies implement significant layoffs
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Editor's Choice: Weekly Recommendation
This week, we highly recommend checking out the fascinating video: How JP Morgan Chase Became The Largest Bank In The US. Dive into the history of one of the most powerful financial institutions in the world and discover the key moments that shaped JP Morgan Chase into the banking giant it is today.
Whether you're interested in finance, history, or business, this video offers an insightful look at the legacy and growth of the bank that has played a pivotal role in shaping the American economy.
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