With the year winding down, posting will be minimal to non-existent for the remainder of the year. The Capital Spectator will return to its regular schedule on January 2. Best wishes to all our readers. Cheers!
American stock markets are set for another successful year, outpacing global markets significantly. According to a selection of ETFs as of December 20, US stocks are expected to dominate returns in 2024, mirroring the trends of 2023 with impressive gains for two consecutive years.
US consumer spending saw an increase in November, highlighting the economy’s resilience. Personal consumption expenditures rose by 0.4% last month, up from a 0.3% increase in the preceding month. “The economy continues to prosper due to strong consumer demand, as income growth and the wealth effect from heightened portfolio values empower consumers to spend,” says Jeffrey Roach, chief economist at LPL Financial. “While inflation remained less vigorous than anticipated, persistent pressures in certain categories cause the Fed to hesitate about significantly lowering rates next year.”
● Smart Money: How digital currencies will win the new Cold War – and why the West needs to act now
Brunello Rosa and Casey Larsen
Summary via publisher (Bloomsbury)
A new Cold War is underway. Unlike the first Cold War, defined by the specter of nuclear conflict, the current battleground is economic and financial, heavily driven by technology. The destiny of this new confrontation between the US and China will be determined by who succeeds in shaping the future of technology. For over seventy years, the US dollar has been the global reserve currency, cementing American supremacy in the global economy. However, this may change as over a hundred countries are now working on Central Bank Digital Currencies (CBDCs) that will revolutionize business both domestically and internationally.
The positive aspect is that private sector growth is driving the US economy. However, the government’s contribution to GDP is not insignificant, which implies that a potential government shutdown, scheduled to begin at midnight tonight, could have meaningful repercussions.
A potential US government shutdown looms as the House rejects a Trump-supported spending bill. Republican House Speaker Mike Johnson faces pressure to secure funding legislation by midnight tonight (December 2). Concurrently, the yield on the US 10-year Treasury has risen dramatically, reaching 4.57%, the highest level since May.
Concerns about near-term market conditions are rising, with reflation risk topping the list of worries. This has been a recurring theme, particularly after the Federal Reserve announced another interest rate cut on Wednesday.
Treasury yields increased significantly following the Federal Reserve’s rate cut of 1/4 point—the third consecutive cut. The 10-year Treasury yield surged after the announcement, closing at 4.52%, the highest level recorded since May.
The market anticipates a 25-basis-points reduction in today’s policy announcement, as indicated by Fed funds futures. However, the considerations surrounding the Fed’s decision to cut rates are multifaceted.
US retail sales experienced a rise for the third consecutive month in November. Spending increased by 0.7% last month, exceeding expectations. “We anticipate a satisfactory holiday sales season for retailers,” states Tim Quinlan, an economist at Wells Fargo, in a client note. “Although it won’t be stellar compared to record pandemic levels, sustained consumer momentum suggests it shouldn’t be weak either.”
