US jobless claims fell to an 8-month low last week. “While last week’s data included a long holiday, the drop in new claims, the year’s first important piece of economic data, suggested that the labor market remains resilient,” writes an analyst RSM US LLP.
US equities led global markets by a wide margin in 2024, a year of mixed results overall for the major asset classes, based on a set of ETFs.
The US stock market (SPY) ended 2024 with a strong 24.5% calendar-year total return. By contrast, US bonds (BND) posted a tepid gain last year of just 1.1%.
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American shares are poised for another year of leading global markets by a hefty margin, based on a set of ETFs through Friday’s close (Dec. 20). Echoing results in 2023, US stocks in 2024 will likely take the performance crown with a red-hot gain for a second straight calendar year.
US consumer spending increased in November, reaffirming the economy’s resiliance. Personal consumption expenditures rose 0.4% last month, edging up from a 0.3% gain in the previous month. “The economy continues to grow from strong consumer demand as income growth and the wealth effect from higher portfolio values give consumers capacity to spend,” says Jeffrey Roach, chief economist at LPL Financial. “Inflation was more benign than expected but the stickiness of some categories supports the Fed’s hesitancy to materially lower 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. Whereas the first Cold War was dominated by the threat of nuclear conflict, the new front line is economic and financial, but still dominated by technology. Who controls its future will help decide the outcome of the geopolitical struggle between China and the US. Since the end of the Second World War, the US dollar has been the global reserve currency, which has ensured American dominance of the world economy. But no longer. More than a hundred countries are developing Central Bank Digital Currencies (CBDCs), digital equivalents to cash that will utterly transform how we do business at home and abroad.
The good news is that the engine of growth for the US economy is the private sector. But the government’s share of GDP isn’t trivial, which means that a potential government shutdown that could start at midnight tonight will be a non-trivial event.
US government shutdown approaches after House rejects Trump-backed spending bill. To keep the government running, the Republican House Speaker Mike Johnson must find a way to pass legislation before midnight tonight (Dec.2). Meanwhile, the US 10-year Treausry yield shot higher again yesterday (Dec. 19), rising to 4.57%, the highest since May.
There are several reasons for adopting a cautious near-term outlook for markets, and reflation risk is arguably at the top of the list. That’s old news, but it’s a topic that’s keenly in focus after the Federal Reserve decided on Wednesday to cut interest rates for a third time.