The Executive Review Vol. 2

This article was written on December 1st, 2024. Things may have changed by the time you read this. For more information on stocks and the stock market, go to Trading View. 

Independent Companies

Since the last Executive Review, the United States presidential election has taken place. President-elect Donald Trump's proposed tariffs on America’s major trading partners—Mexico, Canada, and China—are expected to raise consumer prices, potentially prompting the Federal Reserve to halt interest rate cuts or even increase rates. While Fed. Chair Jerome Powell noted it is too early to assess the economic effects of these policies, Trump has pledged swift action, threatening steep tariffs on his first day of a second term. These tariffs would affect $1.5 trillion in goods, leading to higher prices for items like cars and fresh produce. Wall Street is concerned about a potential inflation surge, with bond yields rising ahead of the election. Meanwhile, the Federal Reserve is preparing to model the economic impacts, considering potential retaliatory tariffs and shifts in consumer inflation expectations, as seen during similar trade disputes in 2018. Though inflation has cooled recently, consumer concerns about rising prices remain high. Despite these uncertainties, the Fed continues to cut rates, citing low unemployment, steady consumer spending, and a deceleration in inflation.

Elon Musk’s social media platform, X, has taken an unusual step by intervening in the bankruptcy sale of Alex Jones’ Infowars, which is being sold to help pay nearly $1.5 billion in damages owed to families of Sandy Hook victims. The satirical news site The Onion won the auction with a seven-figure bid, but Jones is fighting the sale in court. X objected to the inclusion of Jones’ social media accounts, arguing that its terms of service clearly state accounts cannot be sold and are ultimately owned by the platform. This move is significant because social media companies typically avoid getting involved in legal disputes over account ownership, leaving such matters to the courts. Experts believe Musk’s intervention could be politically motivated and may set a legal precedent. However, critics warn that such actions risk eroding user trust, as it sends a message that X operates more as Musk’s personal domain than as a neutral space for public discourse.

Stocks

Please know that I am not an expert, so if I make any mistakes, please do not risk your life savings on my advice.

In October 2024, markets faced heightened uncertainty ahead of the U.S. presidential election. Equities declined, with the S&P 500 down 0.9%, and only three sectors—Financials, Communication Services, and Energy—posted gains. Economic indicators were mixed: job growth slowed significantly, with just 12,000 jobs added, and unemployment held steady at 4.1%. Inflation showed contrasting trends as overall rates declined, but core inflation edged higher. Housing saw a dip in existing home sales and rising mortgage rates, while gold surged 4% to $2,734.20 per ounce, and Bitcoin exceeded $70,000, gaining 10.2% for the month. Despite the market volatility, the Federal Reserve prepared for a potential rate cut in November, reflecting cautious optimism in broader economic conditions.

In November, Wall Street saw one of its best months of the year, with the S&P 500 up 5.7%, the Dow Jones Industrial Average rising 7.5%, and the Nasdaq gaining 0.8%. The Dow's strong performance was boosted by significant gains in Disney (+22.1%), Goldman Sachs (+17.5%), and Salesforce (+13%). Tesla led the S&P 500 with a 38% increase, spurred by investor confidence in CEO Elon Musk’s alignment with Trump administration policies. Retail stocks like Macy’s and Best Buy benefited from holiday shopping expectations, while Apple rose 1.1% on hopes that new AI-powered iPhones would drive sales. Bond yields fell, with the 10-year Treasury dropping to 4.19%, and Bitcoin briefly hit $98,000, up 10.2% for the month. Gold also rose 4% to $2,734 per ounce. Globally, Japan’s Nikkei fell 0.4% amid rising inflation, while China’s markets advanced due to government support for consumer spending.

For December, several stocks are worth considering for investment. Tesla (TSLA) is a top pick, leading in electric cars and clean energy with a strong brand and innovative technology. Apple (AAPL) remains the most valuable company in the world, with its mix of products and services helping it stay strong, along with a lot of cash on hand. Boeing (BA) is a good choice as the aviation industry recovers, supported by a big order book and government defense contracts. Toyota (TM), the largest car maker by production, is known for its reliable cars and a growing electric vehicle line, plus it pays steady dividends. Johnson & Johnson (JNJ) stands out in healthcare, focusing on new medicines and medical devices after its spinoff of Kenvue. It has a strong financial position and reliable dividends. These stocks have strong financials and good plans for the future, making them solid options for investors in December 2024.