Good morning investors!
The Federal Reserve kept interest rates unchanged at their December meeting, with several members penciling in an additional cut in their 2024 forecast. The dovish announcement led to the S&P surging 1.2% on the day.
In addition to the interest rate decision, the PPI report showed inflation continued to cool for producer prices — another welcome data point for investors hoping for rate cuts in the early months of the new year.
Investors will try and keep momentum going to day, but retail sales and jobless claims data stand in the way as both reports are set to be released later this morning.
Additionally, Costco reports earnings after the bell. The retailers report will give us key insights into the consumer and the economy as a whole.
Don’t miss a thing - head to the Discord to get full breakdowns of all earnings and economic reports.
Market Recap
It was a green day for the major indexes, Bitcoin and oil prices, while treasury yields ended lower.
Fed holds rates steady, indicates three cuts coming in 2024
The Federal Reserve on Wednesday held its key interest rate steady for the third straight time and set the table for multiple cuts to come in 2024 and beyond. With the inflation rate easing and the economy continuing to hold up, policymakers on the Federal Open Market Committee voted unanimously to keep the benchmark overnight borrowing rate in a targeted range between 5.25%-5.5%. Along with the decision to stay on hold, committee members penciled in at least three rate cuts in 2024, assuming quarter percentage point increments. That’s less than market pricing of four, but more aggressive than what officials had previously indicated. Read more
Tesla recalls nearly all U.S. vehicles over lack of Autopilot safeguards
Tesla TSLA 0.00%↑ is recalling over 2 million vehicles in the U.S. to install new safeguards in its Autopilot advanced driver-assistance system, after a federal safety regulator cited safety concerns. The largest-ever Tesla recall appears to cover nearly all vehicles on U.S. roads to better ensure drivers pay attention when using the system. Tesla's recall filing said that Autopilot's software system controls "may not be sufficient to prevent driver misuse" and could increase the risk of a crash. For an Autopilot fix and software update to Autosteer, Tesla plans to roll out “additional controls and alerts,” to “further encourage the driver to adhere to their continuous driving responsibility whenever Autosteer is engaged”. Tesla is rolling out an “over-the-air software remedy” to fix the problem. Read more
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Etsy stock falls after company lays off 11% of its staff, citing ‘very challenging’ environment
Etsy ETSY 0.00%↑ is laying off 11% of its workforce at the height of the holiday season as the e-commerce giant looks to restructure its business and streamline costs against a “very challenging” macro and competitive environment, the company announced Wednesday. Approximately 225 employees will be cut from Etsy’s workforce, which will bring the headcount for the core Etsy marketplace to about 1,770 people, similar to the company’s headcount in early 2022 and above 2020 levels. Etsy CEO Josh Silverman noted in a letter to employees that Etsy’s “gross merchandise sales have remained essentially flat since 2021. At the same time, employee expenses have grown, even as we have introduced significant cost-cutting measures and adjusted or paused hiring plans. This is ultimately not a sustainable trajectory and we must change it.” Read more
U.S. producer prices muted as energy costs drop
U.S. producer prices were unexpectedly unchanged in November amid cheaper energy goods, and underlying inflation pressures at the factory gate were muted. The report from the Labor Department on Wednesday, which also showed services prices flat for a second straight month, strengthened optimism that overall inflation would continue to subside and allow the Federal Reserve to start cutting interest rates next year. Here are the numbers from the report:
PPI (YoY): 0.9% vs. 1.0% est. (1.2% prior)
PPI Core (YoY): 2.0% vs. 2.2% est. (2.4% prior)
PPI (MoM): 0.0% vs. 0.2% est. (0.0% prior)
PPI Core (MoM): 0.0% vs. 0.2% est. (-0.5% prior)
Mortgage refinance demand jumps 19% after rates hit lowest level since July
Homeowners looking to refinance are finding savings after mortgage rates dropped again last week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 7.07% from 7.17%, , according to the Mortgage Bankers Association. That was the lowest level since July. As a result, applications to refinance a home loan increased 19% last week from the previous week, according to the seasonally adjusted index. Refinance demand was 27% higher than the same week one year ago. Read more
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Thank you for taking the time to read today’s newsletter. Until next time investors!
Chris
CMG Venture Group
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In response to the part about Tesla cars being recalled. What the news, in their hatred of Musk, fail to say is that the cars aren't being recalled to garages or anything like that for repairs. It's all software updates.