(Justin Vaughn, Editor, Options Trading Report)
Stocks begged for a rate cut … and Mr. Powell obliged, and the week closed on a high note. The benchmark Dow Jones Industrial Average jumped 498 points Friday ending a 10 day stretch of falling. Blue chips and value stocks were the focus Friday, as investors and traders looked for stalwart investments. The S&P 500 and the Nasdaq Composite managed to rise above flatline, up 1.1% and 1% respectively. Donald Trump, president elect continued to threaten European countries with tariffs, affecting the financial markets negatively. “The market was already trading on the edge of a knife, so the smallest thing can have such an outsized reaction,” said David Volpe, president and deputy chief-investment officer at Emerald Advisors. Bond yields slid Friday as the stock markets were strong, with 10-year Treasury closing at 4.522%, after gaining early in the past week. Bitcoin also started the week climbing to $108,000, dropping off and hovering near $94,794 on Saturday.
Is the Santa Claus rally coming? The SantaClaus rally refers to the market rally the last 5 days of December and the first 2 days of January with about an 80% positive rate over the years. According to Londen Stockton, an NDR analyst in a report on MarketWatch, he says, “Although we are currently down 2.0% with only two days to go (in December), historically that has been positive for the 5 days after. In 17 cases where the first 5 days before Christmas have been negative, the average return was 2.0% in the 5 days after.”
As the short week opened, investors were still positive from Friday as high tech and chip charged back, leading the heavy buying. The indexes were mixed, with the Nasdaq rising 1% and the S&P 500 up 0.7% after last week’s early ‘crumble.’ The Dow Jones was lethargic, trading just over flatline. Bond yields edged up with the 10-year Treasury at 4.594% rising from 4.522% Friday. Tom Hainlin, national investment strategist at U.S. Bank said; “I think that drop on Wednesday and Thursday (last week) just created an opportunity for bargain hunters to come in and own those high quality names. The ‘before Christmas rally’ was welcome as Santa Claus arrived just in time. Santa rested the day after Christmas, taking a break as the Dow Jones Industrial Average inched up 28 points, while the Nasdaq and S&P 500 finished just below flatline. The Russell 2000 of smaller value cap stocks edged up 0.9%
The major component for Electric Vehicles is lithium…could there be a battery made of ‘Sodium-ion? With electric vehicle demand rising and the use of lithium skyrocketing, alternate power plant sources are being explored. Sodium-ion looks to be a viable option, however production costs at this early stage of development are excessively high. Researchers, and scientists together have recently focused on Sodium-ion, a less expensive and “environmentally acceptable” fuel. “It’s unlikely sodium-ion could displace lithium-ion anytime soon,” said Keith Beers, polymer science and materials chemistry principal engineer at technical consultancy firm Exponet. Sodium-ion batteries consist of sodium, manganese and iron materials that are much less costly than lithium-ion which uses expensive materials of nickel, cobalt and lithium- all premium commodities. One of the biggest negatives of sodium-ion is weight, as it weighs 3 times as much as lithium. However battery life is much longer with a much smaller size.Wendell Brooks, co-CEO of Nation Energy commented: “Sodium-ion batteries last longer than lithium-ion ones because they can withstand more charge cycles.
“Our product can have millions of cycles, where lithium-ion would have three to five thousand cycles and wear out a lot faster,” said Mr. Brooks. Bringing sodium-ion batteries to market will take much research and development, but the results could be monumental.
RUMBLINGS ON THE STREET
Guy Berger, Labor economist of the Burning Glass Institute, Barron’s – “A lot of advanced tech these days, including AI, is capital-intensive and also highly dependent on high-paid skilled workers. I’m not sure how much head count $100 billion spread out over four years gets you.”
President elect Donald Trump, WSJ – “I told the European Union that they must make up their tremendous deficit with the United States by the large scale purchase of our oil and gas, otherwise it is TARIFFS all the way,” Trump wrote.
George Smith, of LPL, YAHOO, – “Stocks were flat or even fell in value on average during the first half of December, before on average, rallying in the second half of the month (upward momentum built around the 11th trading day of the month).”
Matthew Luzzetti, Deutsche Bank chief economist, YAHOO – “We expect a gradual deceleration from where we are, but to levels that are still uncomfortably high for the Fed,” he said.