Weekly Market Update December 13, 2023

The U.S. job market added 199,000 jobs in November, an improvement from October's 150,000 new jobs but below the 2023 monthly average. Overall, investors responded favorably to the news as all three major U.S. equity indices closed at their highest level of the year on Friday to notch a sixth straight week of gains. The slowing but still healthy labor market is supportive of the economic "soft landing" narrative, defined as an economic slowdown that avoids a recession. The unemployment rate ticked down from 3.9% to 3.7% and average hourly earnings grew 4% year-over-year. (Source: The Wall Street Journal)

The artificial intelligence narrative regained strength last week as Alphabet debuted their new multimodal AI system Gemini and AMD released a new generation of AI chips which are expected to compete with Nvidia's flagship AI processors. The AI secular growth story has been the main driver of the "Magnificent 7" tech stocks 2023 returns and may help sustain elevated multiples in these tech stocks moving forward. AMD revised their forecast for the total artificial intelligence chip market upward from $200 billion to $400 billion. (Source: CNBC)

While this week offers an update on inflation via the Consumer Price Index report and a check-in on retail sales, all eyes will be on the Federal Reserve. The final Federal Reserve meeting of the year takes place this week and it is widely expected the Fed will continue their pause on interest rate hikes. The focus will be on any clues when the first interest rate cut will be, with investors expecting a cut in mid- to late-2024 as the Fed's longstanding fight against inflation appears to be working. (Source: The Wall Street Journal)

Blueprint Numbers

GOLD SETS ALL-TIME HIGH - Gold futures eclipsed $2,100 an ounce for the first time ever last week (unadjusted for inflation) before correcting to end the week just above $2,000. Gold is often viewed as a safe-haven asset in times of uncertainty despite exhibiting equity-like price volatility. (Source: John Hancock)

BUY VS. RENT IMBALANCE - With the rise in interest rates, homebuying has become out of reach for many Americans. The average monthly new mortgage payment is 52% higher than renting, and the gap is even larger in many major cities; Seattle, Austin, San Francisco, and a few other cities are 175% more expensive to buy than rent. (Source: The Wall Street Journal)

HOUSE MAJORITY GETS SLIMMER - The Republican House majority stood at 222-213 and may be getting slimmer. Former House Speaker Kevin McCarthy announced he would not seek reelection last week after being the first House Speaker to be ousted from the role. This follows the news that fellow House Republican George Santos was expelled from Congress on December 1st. (Source: ABC News)

$700 MILLION DOLLAR MAN - Baseball superstar Shohei Ohtani signed a 10-year, $700 million deal with the Los Angeles Dodgers, the largest deal in North American sports history. Prior to this, the largest sports contract was signed by Ohtani's now former Los Angeles Angels teammate Mike Trout who signed a $426.5 million deal in 2019. (Source: Sports Illustrated)

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