By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch
- Earnings reports continue to roll in. This week’s reports include Salesforce, Dollar Tree and Macy’s, among others. Third-quarter earnings can best be characterized as surprisingly strong and better than expected. With 97% of the S&P 500 members reporting, positive earnings surprises numbered 83%.
- Inflation both here and abroad will be front and center this week. In the United States, the Federal Reserve’s favored inflation measure for September (core personal consumption expenditures, or PCE) will be released on Friday, giving the Fed another data point prior to next week’s policy meeting. Core PCE is expected up 2.8% versus a year ago, above the Fed’s target where it has been consistently. Consumer prices in the Eurozone are expected to have risen 2.1%, which should leave the European Central Bank in a holding pattern when they meet on December 18.
- The government shutdown continues to play havoc with economic data, but the markets will get some “real time” readings in the form of both the manufacturing and services surveys from the Institute for Supply Management (ISM). The manufacturing ISM is expected to continue to be soft with an overall reading of 49, with elevated prices (57.5), while the services index is expected to ease slightly to 52.
Three Things to Know
- ChatGPT was launched on November 30, 2022, and hit 1 million users in five days. Three years later, parent OpenAI has a $500 billion valuation. (Source: Seeking Alpha)
- Then and now—price increases for a few McDonald’s menu items in 2019 versus 2024: Medium French Fries, $1.79 -> $4.19; Big Mac, $3.99 -> $7.49; and 10 McNuggets, $4.49 -> $7.58. (Source: Markets and Mayhem)
- December is a historically strong month for stocks: Since 1928, the S&P 500 has risen 73.2% of the time in December, the highest win rate of any month. In other words, only 26 of the last 97 years have seen negative returns. Over this period, the index has returned an average gain of +1.28%. Since 1945, the S&P 500 has gained +1.50% in December on average. (Source: The Kobeissi Letter)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.