In This Issue

• Market-On-Close: All of last week’s market-moving news and macro context in under 5 minutes + futures-snapshots

• Special Coverage: Bitcoin: Breakout or Bubble?

• The Latest Investor Sentiment Readings

• Institutional Support & Resistance Levels For Major Indices: Exactly where to look for a turn in markets this week in SPY, QQQ, IWM & DIA

• Institutional Activity By Sector: Institutional flow by sector including the top names institutionally-backed names in those sectors

• Top Institutional Orderflow In Individual Names: All of the largest sweeps and trade blocks on lit exchanges and dark pools

• Investments In Focus: Bull vs Bear arguments for FDX, LULU, TGT, ALT, FIS, TSM, GFS

• Top Institutionally-Backed Gainers & Losers: An explosive watchlist for day traders seeking high-volatility

• Normalized Performance By Thematics YTD (Sector, Industry, Factor, Energy, Metals, Currencies, and more): which corners of the markets are beating benchmarks, which ones are overlooked and which ones are over-crowded

• Key Econ Events and Earnings On-Deck For This Week

Market-On-Close

As the year concludes and the holiday season envelops us, investors find much to celebrate. The financial markets have climbed to unprecedented heights, with record-breaking stock performances and favorable bond yields reflecting a buoyant economic landscape. Underpinning this strength is a U.S. economy that continues to grow at or above trend, defying predictions of recession.

This resilience has been a hallmark of 2024, supported by a robust labor market, strong consumer spending, and sector-specific expansions. However, looming challenges—from policy shifts to global uncertainties—pose significant hurdles. Let’s take a brief look into the economic and market dynamics of the past year, highlighting key drivers of growth, areas of concern, and potential paths forward for 2025.

Consumer Spending: The Bedrock of Growth

The U.S. economy, with consumer spending accounting for approximately 70% of GDP, has proven its resilience despite challenges such as elevated inflation and higher interest rates. A significant dichotomy has emerged within consumer behavior, with middle- and upper-income groups maintaining robust spending due to wealth effects from higher stock market valuations and stable real estate prices.

Real wage gains across households have further supported consumer confidence. Wage growth has consistently outpaced inflation, a trend expected to persist into 2025 as inflation moderates to the 2%-3% range. These dynamics have particularly bolstered service-oriented sectors, including leisure, hospitality, and dining, which have seen strong demand. The consumer's resilience remains a cornerstone of economic stability, providing a vital buffer against external shocks.

The Labor Market: A Pillar of Strength

Employment trends in 2024 showcased a labor market adjusting to post-pandemic normalization. November's addition of 227,000 new jobs surpassed expectations, underscoring a rebound from October's weather-impacted figures. The average monthly job creation of 180,000, while below 2023 levels, remains above historical norms.

The unemployment rate, ticking slightly higher to 4.2%, reflects a balancing act rather than underlying weakness. Broader labor market metrics, including wage growth and job openings, point to sustained strength. Employment in manufacturing, healthcare, and leisure sectors has been particularly robust, with manufacturing showing signs of recovery from earlier contractions.

As interest rates trend downward and corporate earnings improve, the labor market is positioned for potential reacceleration in late 2025. Pro-growth policies could further drive hiring, contributing to economic momentum.

Sectoral Dynamics: Services Lead, Manufacturing Stabilizes

The services sector, constituting 70% of U.S. GDP, has been the economy's mainstay in 2024. Financial services, transportation, and leisure industries have exhibited steady growth, supported by resilient consumer demand. The ISM services index consistently signaled expansion, reflecting the sector's vitality.

Manufacturing, on the other hand, faced headwinds for much of the year, grappling with supply chain disruptions and global uncertainties. However, recent ISM data indicates a potential turnaround, with new orders for both services and manufacturing showing expansion. If sustained, this trend could herald broader industrial stabilization, complementing the strength of the services sector.

Navigating the Challenges: New “Walls of Worry”

Despite the rosy backdrop, 2025 presents its own set of challenges. Policy uncertainties, particularly under a new White House administration, could impact trade, tariffs, and immigration. Escalations in trade tensions could weigh on consumer confidence and inflation, introducing volatility into otherwise stable markets. However, the likelihood of extreme policy measures appears low, with potential disruptions expected to be contained.

Federal Reserve policy represents another critical variable. While rate cuts are anticipated, robust economic growth or re-emergent inflation could lead to a more cautious approach from the Fed, potentially tempering market enthusiasm. Nonetheless, the prevailing trajectory suggests lower rates, supportive of consumer spending and corporate investments.

Market Strategies: Turning Volatility into Opportunity

Increased uncertainty should not dissuade investors but instead serve as an opportunity to reassess portfolios. Pullbacks in markets can provide strategic entry points, particularly given the underlying strength of the economy. Diversification remains a key theme, with a balanced allocation across large- and mid-cap stocks and a mix of growth and value sectors.

The bond market also offers opportunities. While short-duration bonds and cash-like instruments have provided stability, a gradual shift toward intermediate maturity bonds could lock-in attractive yields amidst a declining rate environment. Strategic allocation between equities and bonds can help investors navigate the complexities of 2025.

Conclusion: Poised for a Soft Landing

The U.S. economy's performance in 2024 has been nothing short of remarkable. With resilient consumer spending, a robust labor market, and sectoral strength, it stands poised to achieve the elusive "soft landing"—a modest slowdown without tipping into recession. While challenges loom, from policy shifts to market volatility, the fundamental backdrop remains favorable.

As we transition into 2025, the focus should be on maintaining diversification, capitalizing on market opportunities, and navigating uncertainties with strategic foresight. With the U.S. economy on firm footing and no downturn in sight, the coming year offers a landscape ripe for growth and investment. Investors, armed with insights and a long-term perspective, can look forward to navigating this promising yet complex terrain.

Futures Markets Snapshots