The S&P 500 (SPY) has been on quite a run because the Fed meeting on 11/1. Thus, it is vital to note that the subsequent meeting on December 13th may also be a catalyst for stocks. The most important query is…will that be good or bad for stocks? To assist out, 43 12 months investment pro Steve Reitmeister shares his latest insights available on the market and what investors can expect from the Consumed 12/13 and beyond. This also features a preview of Steve’s top 13 picks for today’s market. Read on below for more.
Ever because the Fed meeting on 11/1, stocks have been on an amazing bull run. That is because investors got simply enough acknowledgement from Chairman Powell that they’re winning their battle over high inflation with no recession forming.
So now is an excellent time to have a look at where we stand coming into the subsequent Fed meeting on 12/13 and what which means for the market going forward.
Market Commentary
The most important positive development because the last Fed meeting in early November has been the tremendous drop in long run bond rates. The chart below for the ten 12 months Treasury rate shows you the dramatic rise that originally cratered stocks followed by the welcome rest in rates and bull rally for stocks that ensued.
This was not only a US centered issue. Other key rates in Europe and Asia saw helpful declines that improved the economic outlook for 2024 as lower rates helps fuel investment in future growth.
Also since that 11/1 Fed meeting now we have seen the US economy properly simmer down from the too hot 5% GDP growth pace from Q3. The Goldilocks level for GDP growth is 1-2% because it keeps us safely above recessionary territory while also reducing inflationary pressures.
At once, the famed GDPNow model from the Atlanta Fed is coming in at +1.2% growth for Q4. This beautiful well matches the outlook for the Blue Chip Consensus view which is the common view of leading economists. This is
Next it is good to have a look at the employment picture because without that faltering…then its not possible to be fearful a couple of recession. However, you don’t need the job market so hot that it stokes sticky wage inflation.
Thus, it was interesting to see that the JOLTs report on Tuesday fell from a high of over 11 million job postings earlier within the 12 months to a recent low of 8.73 million. Within the grand scheme of things, that is still lots of job openings and says the employment market is still quite healthy. Nevertheless it is not boiling hot which should subdue inflationary pressures in wages going forward.
Overall inflation has also continued to ebb lower because the last Fed meeting. This was apparent within the continued reduction within the November CPI report. Even higher was how the forward looking PPI report showed an reduction in month over month inflation that claims that future CPI readings will proceed to be lower.
Add all of this up and also you understand why at once odds are placed at 97.3% likelihood of the Fed NOT raising rates at their next meeting on 12/13. Interestingly some investors are starting to imagine that as early as January is when the Fed will start lowering rates. That stands at 16% likelihood up from 0% only a month ago.
The speed cut parade keeps picking up steam from there with 61% expecting a cut on the March 20, 2024 meeting and all the best way up to 88% on the May 1, 2024 event.
Yes, one could have a look at that and say it doesn’t match the hawkish resolve stated by Chairman Powell and other Fed officials. And thus could arrange the marketplace for some disappointment if these rate cuts should not delivered as early as expected.
That is at all times possible. Nonetheless, to date the market as an entire has done a reasonably good job of prognosticating the Fed’s next move. On condition that rates are currently restrictive and inflation is coming down to trend pretty fast, with little obvious reason seeing why they might spike higher from here…that may point to the Fed being sensible to start lowering rates early in 2024…even when very slowly at first.
Long story short, we’re in a bull market til proven otherwise. And the longer term lowering of rates can be one more catalyst for a move higher.
The important thing is determining which stocks are likely to outperform when so lots of them already had tremendous runs in 2024. I think the recent rotation towards small and mid caps is a precursor of the foremost trend in 2024.
Meaning what worked in 2023 is done. It is time for smaller, growthier and more inexpensive stocks to shine. And we’re definitely leaning into those trends in our portfolio.
More on that within the section below…
What To Do Next?
Discover my current portfolio of 9 stocks packed to the brim with the outperforming advantages present in our exclusive POWR Rankings model. This includes 4 small caps recently added with tremendous upside potential.
Plus I actually have added 4 ETFs which might be all in sectors well positioned to outpace the market within the weeks and months ahead.
This is all based on my 43 years of investing experience seeing bull markets…bear markets…and every little thing between.
In case you are curious to learn more, and need to see these 13 hand chosen trades, then please click the link below to start now.
Steve Reitmeister’s Trading Plan & Top Picks >
Wishing you a world of investment success!
Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, StockNews.com and Editor, Reitmeister Total Return
SPY shares were trading at $458.17 per share on Friday morning, down $0.06 (-0.01%). Yr-to-date, SPY has gained 21.13%, versus a % rise within the benchmark S&P 500 index in the course of the same period.
Concerning the Creator: Steve Reitmeister
Steve is higher known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience within the Reitmeister Total Return portfolio. Learn more about Reity’s background, together with links to his most up-to-date articles and stock picks.
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