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| |  | | December 1, 2023 | | Daily Notes Dear Leah, Welcome to our end-of-the-week wrapup, where we break down the past week in "Daily Notes." What follows is a brief rundown of each day's notes, so you can quickly stay in the know. You can read each issue in full – including my “Idea of the Day,” Market Health Check, updates on our current model portfolio, and more – at your Innovation Investor subscriber site.
Monday, Nov. 27 - As inflation and interest rates drop, the economy should get a burst of new momentum, which will lead to strong economic growth and a strong stock market performance next year.
- Throw in the AI spending tidal wave coming down the pike, and we have a really bullish setup for the next 12 months.
- November Dallas Fed survey confirms that disinflation is back and here to stay.
- Plunging grain prices confirm the current disinflation trend.
- Strong Black Friday/Cyber Monday Weekend sales highlight the bull thesis on e-commerce stocks.
You can read these notes in full here. Tuesday, Nov. 28 - Fed Governor Christopher Waller departed from the “higher for longer” mantra that the central bank has embraced over the past few months, saying that he thinks rates should move lower in 2024 if inflation declines to 2%, as he expects.
- We think retail stocks will be the biggest winners as the consumer continually surprises to the upside on holiday spending. We feel underexposed to this trend and want to make a play on the resilient consumer.
You can read these notes in full here. Wednesday, Nov. 29 - Third-quarter gross domestic product (GDP) estimates were revised slightly higher, and the core price index was revised lower. That means that last quarter, the economy grew faster than expected while core inflation trends were softer than expected.
- After going deeply inverted, the Treasury yield curve has started to rapidly un-invert since late summer. In October and November, the un-inversion has turned into a bull steepening, which is supportive of a soft landing in 2024 and further stock market strength.
You can read these notes in full here. Thursday, Nov. 30 - The stock market’s holiday rally took a breather today as investors did some end-of-month profit-taking after November’s frenetic climb.
- PCE inflation rose just 3% last month, both lower than expected and below September’s inflation rate.
- The Cleveland Fed’s Nowcasting model calls for a PCE inflation rate of just 2.8% in November. The disinflation trend has returned, and it looks like it’s here to stay.
- Several software companies announced quarterly earnings this week, with most reporting very strong numbers and delivering very strong guidance for 2024. An enterprise AI spending tidal wave is building for next year.
- Combine a soft landing with an AI spending boom, and voila; you have the perfect concoction for a huge AI-powered stock market rally in 2024.
You can read these notes in full here. Friday, Dec. 1 - Today’s rally was inspired by the dovish commentary we heard from Federal Reserve Board Chair Jerome Powell, some easing inflation commentary from manufacturing firms, and more strong earnings from software firms.
- In response to Powell’s comments, the market jumped from pricing in four rate cuts for 2024 to pricing in five rate cuts.
- Small-cap stocks have staged a furious rally off their October lows.If history repeats, small-cap stocks could surge another 10% higher in December.
- Software stocks are very overextended and overbought now. They need to pause and digest their recent gains. Don’t be surprised if these particular stocks take a break from their frenetic rally in December.
You can read these notes in full here.
Go to Your Subscriber Site |  | | Luke Lango
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