Broker Check

Mosaic Asset Partners - The Rally In Our Market Is Broadening Out

December 08, 2023

Several economic data points flowed through the headlines this week, pointing to what amounts to more confusion! Private payrolls were released on Wednesday and came in below expectations. Private payrolls grew by 103,000 workers in November, below the downwardly revised 106,000 in October and the 128,000 Dow Jones estimate. The leisure and hospitality industries, which had seen significant hiring headwinds in the post-Covid period, recorded a loss of 7,000 jobs. This would be another indication that consumer spending has slowed, and companies are “rightsizing” their operations to account for this. Today, however, nonfarm payroll numbers were released and rose by a seasonally adjusted 199,000 in November. This was slightly better than the 190,000 Dow Jones estimate and ahead of the October gain of 150,000. On top of that, the unemployment rate declined to 3.7% compared with the 3.9% rate that had been forecasted. The icing on all of this is that average hourly earnings, a key inflation indicator, increased by 0.4% for the month and +4% from a year ago. Phew – a lot to consider!

Now what??!!! The Federal Reserve is set to meet for their final meeting of 2023 on December 12-13. Prior to the data points I wrote about in the preceding paragraph, the expectation had been set for a “no action” decision from the Fed at its meeting next week. In other words, enough has been put into place to keep interest rates steady and let the dust settle further. Will the jobs data from today’s releases make an impact into how we finish the year?

A few more anecdotal points to consider:

  1. Oil prices dipped below $70/barrel at one point this week for their lowest levels in nearly a year. Energy inflation has dropped considerably from their highs.
  2. The University of Michigan consumer sentiment survey and outlook for the inflation rate slid to 3.1% from 5.5% in November. The 5-year outlook also moved lower to 2.5% from 3.2%. Consumer sentiment and expectations also factor into how the Fed makes decisions.
  3. A broadening of the market rally over the last few weeks has started to take some shape. The “Magnificent Seven,” a handful of mega-cap tech stocks (GOOG, GOOGL, AMZN, AAPL, META, MSFT, NVDA, TSLA), were responsible for nearly all of the market’s gains earlier this year. While those stocks have remained at the top of Wall Street’s scoreboard, the recent rally has encompassed a wider range of stocks. Neglected pockets of the market like financials, cyclicals, and small caps have started to climb in recent weeks.

All of this points to a market that is trying to keep the Santa Claus rally in place for a merry New Year. With that being said, we will certainly be writing about the Fed and its course of action in next week’s letter. Let me finish by saying Happy Hannukah to our clients and friends celebrating the holiday that started last evening. Our best to all enjoying the many holiday festivities taking place including the team at Mosaic that will be enjoying an evening together with our respective loved ones.

Have a nice weekend!

https://www.cnbc.com/2023/12/06/us-crude-drops-below-70-per-barrel-gas-prices-fall-to-11-month-low.html

https://www.cnbc.com/2023/12/06/private-payrolls-increased-by-103000-in-november-below-expectations-adp-says.html

https://www.cnbc.com/2023/12/08/jobs-report-november-2023-us-payrolls-rose-199000-in-november-unemployment-rate-falls-to-3point7percent.html

https://www.cnn.com/2023/12/01/investing/premarket-stocks-trading-2023-santa-rally/index.html

https://www.nasdaq.com/articles/what-to-expect-from-the-magnificent-seven-stocks-in-2024

Christopher E. Wasson, CFP®

President

Mosaic Asset Partners, LLC

1122 Kenilworth Drive, Suite 310

Towson, MD  21204

410.821.0089         fax 410.821.5993

MosaicAssetPartners.com  

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Mosaic Asset Partners, LLC is not affiliated with Kestra IS or Kestra AS.  Investor Disclosures: https://www.kestrafinancial.com/disclosures

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.