CMG Daily - December 11th, 2023
Inflation, retail sales and a Fed rate hike decision - another big week ahead
Good morning investors!
Inflation will be a key driver of market action this week as both the CPI and PPI reports are set to be released. But the Fed’s rate hike decision and commentary on the future of rates will be the main catalyst for how the market trades overall.
To see what I’m watching, including all of my research, graphs, stock charts and more, check out the Weekly Drop. It’s a must read if you want to be ready for the week.
The Weekly Drop - December 11th, 2023
Good morning investors! The labor market is cooling which obviously means stocks should go lower, right? Wrong! Stocks moved higher again last week after a number of weak jobs reports. Confused? Don’t worry, I’ll break it all down for you. That’s why you subscribe to this newsletter — I cut through all of the BS and give you what you need to know in easy to digest, bite sized pieces of content.
Don’t miss a thing this week! Join the Discord and get full breakdowns of all earnings and economic reports.
The week ahead: Grinch or Santa - which Fed will it be?
The last big central bank push of the year is here with the Fed announcing its latest rate hike decision, while markets try to discern if a U.S. recession is unavoidable or a distant prospect. Holding rates seems a done deal, with investors laser focused on comments from Chair Jerome Powell that could indicate when the Fed might look to cut rates after 525 basis points of hikes since March 2022. Projections the Fed is poised to start lowering rates early in 2024 have helped fuel that huge rally in stocks and bonds, sending the S&P 500 to a new closing high for 2023 and pulling 10-year Treasury yields back down closer to 4%.
Recession roulette has been a high-stakes game since late 2021 and it's not getting easier. Forecasters at top investment banks are deeply divided between those sticking to predictions of a long-expected U.S. downturn and rapid Federal Reserve rate cuts and others recommending folding on the bet. Uncertainty seems to have risen despite November's red-hot rally for stocks and bonds. Read more
*For a look into my observations, a deep dive into the companies reporting earnings and my personal strategies for the week ahead, don't miss the latest Weekly Drop.
Cigna abandons pursuit of Humana, plans $10 billion share buyback
U.S. health insurer Cigna CI 0.00%↑ has ended its attempt to negotiate an acquisition of rival Humana HUM 0.00%↑ after the pair failed to agree on price, two sources familiar with the situation said on Sunday, as the company announced plans to buy back $10 billion worth of shares. A Cigna-Humana combination would have created a company with a value exceeding $140 billion, based on their market values, but was certain to attract fierce antitrust scrutiny. The discussions came six years after regulators blocked mega-deals that would have consolidated the U.S. health insurance sector. Read more
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Baseball phenomenon Shohei Ohtani agrees to record $700 million 10-year contract with Dodgers
Shohei Ohtani agreed to a record $700 million, 10-year contract with the Los Angeles Dodgers on Saturday. The deal was announced after days of speculation where the unique, two-way star would continue his career after six seasons with the Los Angeles Angels. “This is a unique, historic contract for a unique, historic player,” Ohtani’s agent, Nez Balelo of CAA Sports, said in a statement. “He is excited to begin this partnership, and he structured his contract to reflect a true commitment from both sides to long-term success.” Ohtani’s total was 64% higher than baseball’s previous record, a $426.5 million, 12-year deal for Angels outfielder Mike Trout that began in 2019. Read more
What the billion-dollar battle over bankrupt freight company Yellow means to truckers and the economy
Executives from the bankrupt trucking company Yellow turned down a billion-dollar bid from investors that could have resurrected much of the iconic freight company’s network. But the group of investors led by trucking executive Sarah Riggs Amico vowed to continue, hoping that in the end the courts and the Treasury Department allow them to prevail. One of the sticking points has been Amico’s request to restructure a $700 million CARES Act loan repayment, which helped keep the trucking giant afloat during the pandemic. A bi-partisan group of senators including Sen. Josh Hawley and Elizabeth Warren, support the investor rescue plan and pressing the Treasury Department to restructure the loan repayment plan. When Yellow, which dates back to the 1920s, ceased operations, it left 12,000 trucks, 35,000 trailers and 30,000 workers idle. Read more
More retirement savers are borrowing from their 401(k) plan, a leading indicator of economic stress
More retirement savers have taken loans from their 401(k) accounts over the past year, suggesting that U.S. households are borrowing more readily as they feel the pinch of inflation. “I think 401(k) loans — like credit card debt — are kind of leading indicators of economic stress in America,” said David Blanchett, a certified financial planner and head of retirement research at PGIM, the asset management arm of insurer Prudential Financial. “Individuals are having to tap their retirement savings because they have to pay for or pay back something,” he added. Workers generally can’t touch their 401(k) savings without penalty before retirement age. Loans are one, but not the only, exception. Investors can borrow against their account balance and the loan, if repaid properly, is tax- and penalty-free. Read more
Thank you for taking the time to read today’s newsletter. Until next time investors!
Chris
CMG Venture Group
Disclaimer
I am not a licensed financial advisor or financial professional. This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.
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