THE WELL-TH NOTES

By Yvette Fernandez on January 26, 2024

Weekly data-driven insights on the markets and economy

Fourth Week of January 2024

1. Rally Caps – The S&P 500 rose 0.5% on Wednesday, continuing its push to record highs. Netflix led a rally in technology names after it reported an all-time high subscriber count of 260.8 million, leading its shares to surge 12%. Of the more than 16% of S&P 500 companies that have reported quarterly financials thus far in the earnings season, over 71% have surpassed Wall Street expectations.[i]

2. Waiting & Anticipating – The 10-year and 2-year Treasury yields lowered by less than 1 bp each on Wednesday to 4.14% and 4.36%, respectively. [ii] The market was anticipating the fourth-quarter gross domestic product figure Thursday morning, which came in at an increased annualized rate of 3.3%, far exceeding the expected 2%.[iii] The market is still anticipating the release of the Commerce Department’s personal consumption expenditures price index for December on Friday.

3. Making Moves – Blackstone has made two interesting moves in the past week. Its CEO Stephen Schwartzman said that data from his portfolio companies suggest that inflation is already near 2%, rather than the government’s report of 3.4%.[iv] Blackstone also announced that it is taking Canadian real estate firm Tricon Residential private for $3.5 billion, leading U.S.-listed shares of Tricon to jump 28%. After the acquisition, Tricon plans to complete its $1 billion development pipeline of new single-family rental homes in the U.S. and $2.5 billion of new apartments in Canada.[v]

4. Walking on Sunshine – U.S. consumer sentiment has made its biggest two-month jump since 1991, according to the University of Michigan’s Survey of Consumers. The consumer sentiment reading was 78.8 for January, its highest level since July 2021, up 21.4% from a year ago. Meanwhile, inflation expectations for the coming year fell to 2.9% from 3.1% in December, the lowest since December 2020. Analysts say lower gas prices and a stock market rebound helped boost the mood.[vi]

5. Murky Waters – The number of vessels passing through the Suez Canal and Panama Canal have dropped 50% from normal levels, according to Apollo’s Chief Economist Torsten Slok. The number of ships traveling through the Suez Canal has dropped from 200 to 100 per week, and the number of ships traveling through the Panama Canal has dropped from 90 to 45 per week. Higher transportation costs are putting upward pressure on goods inflation.[vii]

6. Primary Update – Former President Donald Trump won the Republican primary contest in New Hampshire and President Joe Biden won the Democratic primary, despite not actually appearing on the ballot. Trump defeated Nikki Haley 54.3% to 43.4%. Biden defeated Dean Phillips 65.5% to 20%.[viii]

7. Mind the Gap – The market capitalization of the U.S. stock market is now a record $38 trillion greater than that of Hong Kong and China put together. While U.S. stocks have hit record highs, Chinese stocks have lost more than $6.3 trillion in market value from the peak in February 2021. During this same time period, U.S. stocks have gained $5.3 trillion.[ix]

8. Applebee’s Golden Ticket – Applebee’s yearlong subscriptions for the $200 “Date Night Pass” sold out within minutes of becoming available. The passes included up to $30 of food and non-alcoholic beverages per use and are valid 52 times between February 1 and January 31, 2025. When all 52 discounts are redeemed, the pass has a value of roughly $1,500.[x] The lucky subscribers are going to be “eatin’ good in the neighborhood.”

[i] Harring, Alex and Hakyung Kim, “Nasdaq rises nearly 1%, S&P 500 hits another record as Netflix leads tech rally: Live updates,” CNBC< January 24, 2024, https://www.cnbc.com/2024/01/23/stock-market-today-live-updates.html. Accessed January 24, 2024.

[ii] Harring, Alex and Elliot Smith, “Treasury yields little changed as big economic data releases come into view,” CNBC, January 24, 2024, https://www.cnbc.com/2024/01/24/treasury-yields-pull-back-as-big-economic-data-releases-come-into-view.html. Accessed January 24, 2024.

[iii] Cox, Jeff, “The U.S. economy grew at blistering 3.3% pace in Q4 while inflation pulled back,” CNCB, January 25, 2024, https://www.cnbc.com/2024/01/25/gdp-q4-2023-the-us-economy-grew-at-a-3point3percent-pace-in-the-fourth-quarter.html. Accessed January 25, 2024.

[iv] “Don’t Look at the CPI. Inflation Is Lower, Says Blackstone CEO,” Barron’s, January 18, 2024. https://www.barrons.com/video/dont-look-at-the-cpi-inflation-is-lower-says-blackstone-ceo/ABEE5987-D259-490B-BAE0-B870625C8AB0.html. Accessed January 24, 2024.

[v] “Blackstone to take Tricon Residential private for $3.5 billion,” Reuters, January 19, 2024, https://www.reuters.com/markets/deals/blackstone-take-tricon-residential-private-value-35-billion-2024-01-19/. Accessed January 24, 2024.

[vi] Cox, Jeff, “Consumer sentiment surges while inflation outlook dips, University of Michigan survey shows,” January 19, 2024, https://www.cnbc.com/2024/01/19/consumer-sentiment-surges-while-inflation-outlook-dips-university-of-michigan-survey-shows.html. Accessed January 25, 2024.

[vii] Soni, Aruni, “These charts show how much traffic has plunged in the Suez and Panama canals — and the potential impact on inflation,” Business Insider India, January 22, 2024, https://www.businessinsider.in/policy/economy/news/these-charts-show-how-much-traffic-has-plunged-in-the-suez-and-panama-canals-and-the-potential-impact-on-inflation/articleshow/107061057.cms. Accessed January 25, 2024.

[viii] “New Hampshire Presidential Primary Election Results 2024: Trump, Biden win,” NBC News, January 23, 2024, https://www.nbcnews.com/politics/2024-primary-elections/new-hampshire-president-results. Accessed January 25, 2024.

[ix] Vishnoi, Abhishek, “China Selloff Leads to Record $38 Trillion Gap With US Stocks,” Bloomberg, January 22, 2024, https://www.bloomberg.com/news/articles/2024-01-23/china-selloff-leads-to-record-38-trillion-gap-with-us-stocks?embedded-checkout=true. Accessed January 25, 2024.

[x] Hernandez De La Cruz, Melissa, “Applebee’s $200 date night pass sold out in one minute,” 9News, January 23, 2024, https://www.9news.com/article/news/nation-world/applebees-date-night-pass-sells-out/507-ec5ad9ea-9d0e-47cc-8c37-71ededdd3248. Accessed January 25, 2024.