Hello Traders,

This week, we celebrated Thanksgiving and reflected on a remarkable November in the markets. Here’s a recap of the key highlights:

Market Overview

• November Performance:
  • Bitcoin: Up 40%.
  • Russell 2000 (Small & Midcaps): Up 10%.
  • S&P 500: Up 4%.
  • Key Sectors: Financials and Energy surged by 9%.
  • 2024 is shaping up to be an exceptional year, with the S&P 500 marking its best performance of the century.

    

     

• Weekly Highlights:
  • US Markets gained 1.1%, exceeding the Thanksgiving week historical average of 0.8–0.9%.
  • Brazil struggled, down 3% due to fiscal concerns and currency challenges.

   

  

  USDBRL since 2021

   

Sector Insights

• Broadening Market Flows:
  • Funds are shifting from tech giants like Nvidia into sectors such as solar, online retail, and biotech. We are seeing rotation.
  • Retail Strength: Companies like Urban Outfitters are performing well, bolstered by Black Friday and Cyber Monday sales. 

    

XRT Retail ETF last 20 sessions

• Energy and Commodities:
  • Energy down 2% for the week, with WTI trading near $70.
  • Gold weakened slightly, while Ethereum showed strength.

Key Macro Developments

• US Treasury News:
  • Trump nominated a new Treasury Secretary, Scott Bessent (formerly of Soros Fund Management). His “Three Arrows” policy focuses on:
    1. Reducing the US deficit to 3% of GDP.
    2. Targeting 3% GDP growth.
    3. Increasing oil production by 3 million barrels/day.
• Interest Rates & Fed Expectations:
  • The US 10-year yield dropped to 4.17%.
  • A 66% probability of a December rate cut remains.
• Global Updates:
  • French budget concerns persist, with widening bond spreads affecting CAC 40 performance.

French CAC 40 / Europe STOXX 600 (lhs) vs FR10y -DE10Y (rhs)

Technical Trends

• S&P 500: The upward trend continues, with new highs being made regularly.
• Russell 2000: Benefiting from sector rotation and strong retail performance.
• Shorted Stocks: Surged 30% in November, driven by short-covering flows rather than fundamentals.

Looking Ahead – Week Catalysts

1. Macroeconomic Data:
   • Manufacturing (Monday) and Services (Wednesday) PMIs, ISM reports, and Non-Farm Payrolls (NFP) on Friday.
   • The job market remains a critical indicator for Fed decisions.

   

   S&P 500 on NFP day.

2. Earnings Reports:
   • Notable names this week: CRM, Marvel, and Lululemon.
3. Fed Speeches:
   • Keep an eye on Jerome Powell’s address on Wednesday.
4. Seasonality:
   • Historically, December starts weak before rallying post-options expiry.

     

     S&P 500 November and December Performances.

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Have a great trading week!

Greg