December 2024 Market Brief – S&P’s Letter to Santa
December 2024 Market Brief
S&P’s Letter to Santa
With the holidays approaching, I thought it might be amusing to write a letter to Santa from the view of the equity markets
Dear Santa,
I have been very good this year, with minimal volatility and producing 20% returns for the second year in a row! I included more friends in my rally this year, not just the Magnificent 7, and I brought along utilities, financials, and industrials. I even invited some of the old-school blue-chip names like WMT and AXP to join the rally party. I only dropped -8% one time all year, not even the normal -10% correction that would be expected. And with the VIX below 15, you can tell I have been consistent and upward trending. I was very nice this year, not naughty!
For Christmas this year I would like the following:
Growing GDP and economic expansion; let’s avoid the recession and economic slowdown – we have had those recently and did not like them. Strong economic growth is key to keeping the rally going.
A few rate cuts would be nice, but not too many!
Stable or falling inflation so the consumer can spend lots of money on goods and services! And businesses can run their companies without the threat of inflation eroding profits or supply shocks.
A Consumer that continues to have growing income and increased spending power. All those dollars spent on clothing, hotels and airfare really help my discretionary companies.
A housing and rental market that is more affordable and less of a burden on the consumer as well as reducing inflationary pressures.
Growing profit margins due to technological efficiencies.
Expanding earnings and sales – hard to keep rallying if earnings are not growing!
A stable US dollar, not too strong, but not too weak to support all the large multinational companies.
A Fed that communicates well and is patient. Not looking to rewrite how the Fed is operating, from my perspective a bit of status quo and consistency in the Federal reserve would be nice.
A more friendly tax and regulatory environment which allows companies to continue to grow and expand responsibly while rewarding shareholders with more buybacks and dividends and less spent on compliance and taxes.
Stability in politics would be nice. Less war, more trade, and more collaboration. World peace? Might be too much to ask for, but worth mentioning.
