Well-th Notes – Third Week of January 2024

By Hightower Great Lakes on January 19, 2024

Cashing In All the Chips

The tech-heavy Nasdaq jumped up 1.2% Thursday on the heels of news from Taiwan Semiconductor Manufacturing Co. (TSMC); meanwhile, the S&P 500 rose 0.5% and the Dow Jones fell 0.2%.

TSMC rallied 8% after posting an earnings and revenue beat for the fourth quarter, which provided positive guidance on semiconductors and AI. Investors are concerned that the hot jobs market and strong consumer spending may mean fewer rate cuts from the Fed.[i]

Yields in the Booster Seat

The 10-year Treasury yield rose 5 bps to 4.1% on Wednesday for a 5-week high. The 2-year yield also rose 12 bps to 4.3%. Retail sales data indicating strong consumer demand during the holidays boosted Treasury yields.

Comments from the Fed Governor Christopher Waller, who suggested that while the central bank will likely cut rates this year, it may take its time, also boosted yields.[ii]

Leader of the Pack

Many fourth quarter bank earnings reports fell short of expectations due to one-time charges at JPMorgan Chase, Citigroup, Wells Fargo and Bank of America.[iii]

However, Goldman Sachs beat expectations, with earnings $5.48 per share versus the $3.52 estimate and $11.32 billion in revenue versus the $10.8 billion estimate. Goldman’s earnings for the quarter jumped 51% from a year ago.[iv]

Shop ‘Til You Drop

U.S. retail sales rose more than expected in December, increasing 0.6%, boosted by increases in motor vehicle and online purchases. Motor vehicle sales rose 1.1% and online sales rose 1.5%. Excluding automobiles, gasoline, building materials and food services, retail sales jumped 0.8% in December.

The Atlanta Fed raised its GDP growth rate forecast from 2.2% to 2.4%. The government is due to publish its first estimate of GDP growth for the October-December period next Thursday.[v]

Hot Demand

Homes and businesses consumed a record amount of natural gas for heating and power generation due to freezing temperatures in several U.S. regions.

U.S. government-owned power utility Tennessee Valley Authority saw a peak demand record on Wednesday morning, at 34,526 megawatts, beating out the previous all-time high set in August 2007.

U.S. gas demand jumped to a preliminary 167.8 billion cubic feet per day on Tuesday, topping the previous all-time high of 162.5 set in December 2022.[vi]

Dimon’s Disinterest

Bitcoin is trading just above $42,700, up more than 100% in the past year. The SEC approved the creation of bitcoin ETFs, cementing it as an asset class. BlackRock, Franklin Templeton and WisdomTree launched their own spot bitcoin ETFs last week.

Analysts anticipate fund inflows between $50 billion to $100 billion in 2024. When asked what he made of the topic, long-time bitcoin critic and JPMorgan Chase CEO Jamie Dimon said, “I don’t care. So just please stop talking about this…”[vii]

Jet Blues

After a judge blocked Spirit Airlines’ proposed merger with JetBlue Airways, citing reduced competition, Spirit’s shares fell 22% and are continuing to drop. It is down roughly 60% since the judge’s ruling. Had the merger been approved, it would have created the country’s fifth-largest airline.

Spirit’s stock is down more than 90% from its record high of $84.47, reached in December 2014; shares of JetBlue fell roughly 9% Wednesday and are down about 4% since the judge blocked the merger.[viii]

Hoodwink Gone Wrong

A 26-year-old man from Hampshire in southern England has been sentenced for defrauding eBay buyers by attempting to sell what he claimed was a walking stick used by Queen Elizabeth II.

The man claimed he was a senior footman at Windsor Castle and that the proceeds from the sale of the “antler walking stick” would go to cancer research. The auction had reached 540 pounds ($686) before he cancelled the listing after learning police had launched an investigation.[ix]

Disclosures:

Hightower Great Lakes is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment advisor. Some investment professionals may also be registered with Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC.

Securities are offered through Hightower Securities, LLC. All information referenced herein is from sources believed to be reliable. Hightower Great Lakes and Hightower Advisors, LLC have not independently verified the accuracy or completeness of the information contained in this document.

Hightower Great Lakes and Hightower Advisors, LLC or any of its affiliates make no representations or warranties, express or implied, as to the accuracy or completeness of the information or for statements or errors or omissions, or results obtained from the use of this information.

Hightower Great Lakes and Hightower Advisors, LLC or any of its affiliates assume no liability for any action made or taken in reliance on or relating in any way to the information. This document and the materials contained herein were created for informational purposes only; the opinions expressed are solely those of the author(s), and do not represent those of Hightower Advisors, LLC or any of its affiliates.

Hightower Great Lakes and Hightower Advisors, LLC or any of its affiliates do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax or legal advice. Clients are urged to consult their tax and/or legal advisor for related questions.

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[i] Hakyung, Kim and Sarah Min, “Nasdaq jumps Thursday led by Apple, erasing 2024 losses: Live updates,” CNBC, January 18, 2024, https://www.cnbc.com/2024/01/17/stock-market-today-live-updates.html. Accessed January 18, 2024.

[ii] Hakyung, Kim and Matt Clinch, “10-year Treasury yield hits 5-week high after strong retail sales data,” CNBC, January 17,  2024, https://www.cnbc.com/2024/01/17/treasury-yields-edge-higher-as-investors-monitor-data-and-fed-comments.html. Accessed January 18, 2024.

[iii] “Bank Earnings: JPMorgan, BofA, and Citi Kicked the Season Off,” Barron’s, January 12, 2024, https://www.barrons.com/livecoverage/bank-earnings-jpmorgan-chase-bofa-citigroup-wells-fargo. Accessed January 17, 2024.

[iv] Son, Hugh, “Goldman Sachs tops revenue estimates on better-than-expected asset management results,” CNBC, January 16, 2024, https://www.cnbc.com/2024/01/16/goldman-sachs-gs-earnings-4q-2023.html. Accessed January 17, 2024.

[v] Mutikani, Lucia, “Strong US retail sales underscore economy’s momentum heading into 2024,” Reuters, January 17, 2024, https://www.reuters.com/markets/us/us-retail-sales-beat-expectations-december-2024-01-17/. Accessed January 17, 2024.

[vi] Kaushik Vakil, Deep and Scott Disavino, “Severe U.S. cold snap prompts peak power and natural gas demand,” Reuters, January 17, 2024, https://www.reuters.com/business/energy/us-natural-gas-demand-hits-record-high-amid-severe-cold-snap-2024-01-17/. Accessed January 17, 2024.

[vii] Sigalos, MacKenzie, “Jamie Dimon says he’s done talking about bitcoin: ‘I don’t care’,” CNBC, January 17, 2024. https://www.cnbc.com/2024/01/17/jamie-dimon-says-hes-done-talking-about-bitcoin-i-dont-care.html. Accessed January 17, 2024.

[viii] Anastasio, Ryan, “Spirit Airlines shares sink 20% in second day of losses after judge blocks JetBlue merger,” CNBC, January 17, 2024, https://www.cnbc.com/2024/01/17/spirit-airlines-jetblue-merger-shares-sink.html. Accessed January 18, 2024.

[ix] “A man who claimed to be selling Queen Elizabeth II’s walking stick is sentenced for fraud,” AP News, January 9, 2024, https://apnews.com/article/queen-elizabeth-ii-fraud-walking-stick-daa683a637a21a97adee13f82e1bc9d9. Accessed January 18, 2024.