Merry Christmas - Market Update Dec. 16-20, 2024
See you in 2025!
This newsletter is 1,476 words a 7-min read
Final Post of 2024!! Thank you all for reading the newsletter each week.
MERRY CHRISTMAS & A Happy NEW YEAR
Welcome back to the Rambling Mind Newsletter. This is your Market Update.
Summary of Topics:
Economic News
🙂Normal Rates in 2025
📃Biden's Administration Final Dash
Stats of the Week
⚕️🏥$5 Trillion spent on healthcare in US with worse outcomes
🌇🏢🏠 You Paid $3.8 Billion in Extra Rent
🤑$80,500 Median Net Worth for 25-39 Year Olds
💧$95 For Water 😵
✈️40 Million Traveling This Holiday Season
Looking Ahead
🎄 Christmas and I'm Gone
Sports I Love
😋Sweet Revenge
😆😊My Joy is Full
Extras
CFPB Sue's Zelle
Netflix Going Live
The government barely avoided a shutdown
Markets
The markets could not wait until Christmas to let loose. Stocks tanked Wednesday afternoon when Jerome Powell spoke about interest rates, and investors were not pleased with his comments (more on that below). The VIX (Volatility Index that measures investors' pessimism and optimism through options trading activity) spiked by 75%, the second largest one-day jump in the history of the VIX. I believe we are at the peak of the Fear/Greed Cycle
I expect next year to be a hell of a ride, especially with an administration as chaotic as Trump's, and add in Elon feeling more emboldened than ever. Chaos will be the name of the game in 2025. But do not overreact to the daily or weekly whims of the market. We play the long game by taking advantage of short-term panic.
Happy Holidays, Investors.
Returns
Tale of the Tape
Economy
🙂Normal Rates in 2025
Investors are the definition of hormonal teenagers. They overreact to everything.
🔎Details: On Wednesday, Jerome held the final FOMC press conference for 2024. Everything was fine initially; he announced the expected 25 basis point interest rate cut. But then followed the FOMC released the statement from their two-day meeting and mentioned that they project only 2 cuts in 2025.
That sent the stock market tumbling down like a booster rocket that just ran out of fuel.
📉Stock Move After Comments: The S&P 500 finished the day down almost 3%
Tech-heavy and high-flying Nasdaq fell almost 4%
Dow (which was already in a 9-day free fall) fell an additional 3%.
🗨️In His Words: Jerome told reporters, "Today was a closer call but we decided it was the right call. It was the best decision to foster the achievement of both of our goals. We are at or near a point at which it will be appropriate to slow the pace of further adjustments."
🫡Takeaway: The Fed realizes that inflation has declined but has remained sticky in certain parts of the economy. This has kept it from going below the 2% target number with some worrying signs that it may be ticking up again. Keeping rates at a normalized 3% position forces consumers to think about certain decisions when taking on debt.
😀My Takeaway: This is a good thing. We do not need another Era of ZIRP (zero interest rate policy). We are not fighting any more economic wars. It is time for things to normalize. Of course, investors hate this.
📃Biden's Administration Final Dash
As time runs out on the Biden Administration, they are pushing through many new rules to fulfill many campaign promises.
🔎Details: The Biden Administration over the last week has instituted new rules on ticket sellers, automakers, and banks:
On Tuesday, the National Highway Traffic Safety Administration finalized a rule that requires automakers to add back-seat seatbelt warnings to the seatbelt warning system and to increase the front-seat warnings.
Also on Tuesday, the Federal Trade Commission finalized and approved a rule to ban "junk fees" charged by ticket sellers and hotels. It requires both to include all costs so customers know the real price they will be paying not the advertised price.
The Consumer Financial Protection Bureau finalized a rule two weeks ago to limit the amount banks can charge for overdraft fees.
🔢By The Numbers: According to George Washington University's Regulatory Studies Center, the Biden Administration has published 292 "significant" rules from October 2024 til date.
🦆Takeaway: October to January 20 is known as a lame-duck session for a sitting president. Because a new administration will be taking over and no lawmaker wants to work on anything that will most likely be repealed in short order. And our new president has been very vocal about repealing and doing away with a lot of rules and policies.
However, a lot of the rules being put in place are very popular from both sides of the aisle. Although the rules may have been passed during a lame-duck session, they were shopped with lawmakers for a while to get to a position that would be popular amongst lawmakers and consumers. Meaning it would be extremely unpopular and hard for the incoming administration to change any of the rules once in place.
Stats of the Week
⚕️🏥$5 Trillion
According to US Health Affairs, the US spends $5 Trillion per year on healthcare. However, on average Americans are less healthy than other countries.
According to the White House Council of Economic Advisers, US Renters paid an extra $3.8 Billion due to algorithmic pricing used by landlords. This follows the DOJ's antitrust lawsuit filed against RealPage, a company that makes software that helps landlords and property managers set prices for their properties. The lawsuit alleges that landlords and property managers use the software as a way to collude and raise prices on renters.
Takeaway: The argument can be made that this algorithm doesn't force anyone to pay certain prices. However, if a large portion of landlords in an area are all using the same tool and pushing prices up in lockstep. It distorts the market and makes it impossible for consumers to have a choice. However, the core issue is a housing shortage from not building enough homes.
My Takeaway: Of course, my city tops the list of the most inflated prices. Sigh
According to the Treasury Department, The Real (meaning adjusted for inflation) Median Net Worth for people ages 25-39 years old is $80,500 as of 2022. It is the highest in over 5 decades.
BUT: Young people have the highest level of anxiety of any generation. The old saying remains true, Money doesn't always buy happiness. If it doesn't come with other things, like community and a sense of fulfillment. A lot of young people, especially YOUNG MEN, do not have both of these things. Leading to a feeling of despair and dejection.
A restaurant is selling water for $95. The restaurant also provides a water Sommelier to certify the water is what it says it is.
People have too much money.
The TSA expects 40 million people to fly during this holiday season. It will break the record that was just set during the Thanksgiving Holiday period.
Looking Ahead
Sports I Love
😋Sweet Revenge
On Saturday, the Ravens beat the Steelers in a rematch of a divisional game. But unlike the first game, this one wasn't close. The Ravens dominated the game from kickoff. The defense completely shut down Russel Wilson and Mark Henry did things only Mark Henry can do. By winning the game, the Ravens clinched a playoff spot and kept the possibility of winning the AFC North open.
On Christmas, Raven will face the Texans on Netflix. Should be a good matchup for the Ravens as the Texans are coming off a tough load to the Chiefs.
😆😊My Joy is Full
And it ain't because Man U won. It's because Man City keeps winning. This is something every Premier League fan who is not a Man City fan has desired for over a decade. We all dreamed of waking up to a Christmas miracle where Pep lost his coaching edge and his team sucked. Seems we finally got our Christmas wish.
On the other hand, Man U is still a hot steaming pile of... I would say garbage but that would be an insult to garbage.
Extras
CFPB Sue's Zelle and the four bank owners (Wells Fargo, Bank of America, and JP Morgan) for not instituting fraud protection on its platform in its pursuit to grow its user base.
Netflix Going Live. Netflix secured the rights to The Women's World Cup in 2027 & 2031.
Government barely avoided a shutdown by passing a stopgap spending Bill. The fact that we regularly have a shutdown as a possibility is INSANE! BUT it shows the state of our democratic officials and their inability to do the basics.