From the Desk of Todd Cuccia 1/13
Business & Markets Update
We.. are.. BACK! After a slower last couple weeks of ‘24 during Christmas and New Years (HNY everyone!!), 2025 is off & running and there is no shortage of news flow or market volatility to kick things off.
This past week was a 4-day trading week with equities closed on Thursday for our 39th President Jimmy Carter's Funeral, a long-standing tradition known as a ‘National Day of Mourning’. Stocks were lower on the week, with the S&P posting a -2% move and the tech-heavy Nasdaq -2.34%. This marked the 4th down week in the last 5 for the S&P. The small-cap Russell 2000 (a point of focus here in previous newsletters) is now back to pre-election levels. Friday’s December payrolls number was the big data event of the week. Payroll growth of +256k jobs was a (big) upside surprise, which did 3 things that day: Moved the Dollar index higher, bond yields also tracked higher, and stocks got hammered across just about every sector.. particularly mega-cap tech. Concerns around elevated valuations, along with headwinds from strength in the Dollar (and how that affects earnings/revenue) seemed to be the go-to talking points into the weekend. The other takeaway from a stronger jobs report, is the impact on rate cuts for 2025. Sell-side strategists at places like Bank of America and Goldman Sachs are now pointing to the first rate cut of the year coming in either June or October (vs the previous March cut that investors were focused on last year). Stocks took this all as a negative, hence the down ~ 1.5% move on Friday.
Earnings for the 4th quarter will start to ramp up this week, with bank earnings leading the way starting on Wednesday & Thursday. Hearing from companies over the next handful of weeks on what they saw last quarter, from a macro perspective, and from a state-of the-consumer perspective will help pave a path for stocks. That, combined with Trump’s upcoming inauguration and all of the legislative items that will more officially be implemented in the coming months, will help provide a roadmap and get a better grip on what’s to come in ’25.
*I’ll keep it tight/brief but a few charts that stuck out last week:
10-year yield on US Treasury (4.77%), now at its highest level since Nov ‘23
Good 1 on valuation sensitivity on the move higher in rates
Will we continue to see total domination from the ‘Magnificent 7’ in ’25 that we’ve grown accustomed to last couple years or are these stocks set to make a longer-term correction? (if you have the answer, let us know.. 😊)
Snapshot at the (very) early 2025 year-to-date S&P sector returns, which looks a LOT different from the sector leadership we are used to seeing
Top Reads
Bitcoin falls to lowest level since Nov, Trump rally loses steam into inauguration (Link)
Musk, Ramaswamy unveil the DOGE roles they’re trying to fill (Link)
Arctos co-founder on the future of private equity in sports (Link)
Alcohol stocks sink after cancer alarm bell (Link)
The Trump border czar who wants to combine MAGA with realism (Link)
Rising treasury yields prompt more US corporate bond issuance (Link)
Quick Book Recommendation
The Buddha and the Badass; The Secret Spiritual Art of Succeeding at Work
*This book rocked, it's (very) rare that I fly through a book and I flew through this one. It provides practical strategies to help folks thrive in both their personal + professional lives. It introduces two frameworks: The ‘Buddha’, representing mindfulness and purpose… and the ‘Badass’, embodying action and impact.
You’ll read about modern tactics to use in order to find success without compromising your values or your well-being.
