Here's the Deal - November 10, 2024

Economy: In Slowdown

Market Cycle: Bullish

_{Week 45 of 52 for 2024: 86.5% of the way through 2024}

Weekly Note:

Well, thank God that’s over and that it was was a definitive outcome. As the Federal Reserve cut the Federal Funds Rate by 25bp, bringing it down to a range of 4.50% to 4.75%.

But surprisingly, the real headline this week wasn’t about the Fed's rate decision. Instead, it was the announcement that "The Great Freight Recession" has officially ended! This bold claim came from Craig Fuller, CEO and founder of FreightWaves, who is one of the top voices in the freight and transportation industry today.

This is a big deal because the transportation sector often acts as a bellwether for the entire economy, giving us an early glimpse into broader economic trends. It is something which can help foretell an extension of the credit cycle like in 1996 and 1965 (i.e. soft landing), or a softer and easier than usual Recession.

Below are images showing how freight has played out over the last three credit cycles. We will continue to track this to see if it is indeed the case.

Alright, alright, the real headline of the week was the re-election of Donald J. Trump as the 47th President of the United States of America, and the huge gains made by Republicans across the board. In the end, it was a massive Red Wave as Republicans won/now control:

• Presidency

• Popular vote

• Senate majority

• House majority

• State governor majority

• State legislature majority

As far as history is concerned, this is one of the better outcomes for markets with an average performance of 12.9%, but not the best. As the highest growth rate for the S&P 500 has historically taken place under a Democrat President and Republican controlled Congress.

As for the economy, it has historically performed best under a Democrat President and Democrat controlled Congress resulting in 4.2% GDP growth. With the a Republican President and Republican controlled congress result coming in at the middle of the road with an average of 2.7% GDP growth.

Don’t shoot the messenger. It’s literally just math.

We will see if Trump and the Republicans can learn from the past and defy the odds.

As far as any changes in what to expect from the economy in the coming months… Zero.

We are on a path, and that did not change Tuesday night. A year from now, the path may look different. If so, we'll see it coming before most people. The clues will show up in the data and in the moves made by those with the power and means to influence markets.

However, there are a couple of changes to pay attention to moving forward which are and will continue to impact the economy and predictions in the future:

1. Social Media now dominates Legacy Media. In truth, it has for a few years, but many still were not aware. They are now if they are smart and paying attention. It’s the real reason the press hates Musk, as social media is their competition and is kicking their asses. Although let’s be honest, the Legacy Media really just kicked their own asses by doing the bidding of one political party. While also continuing to double down when called out for their one-sided reporting over the past decade.

2. Betting markets have earned their spot to be considered a better source than polling as election predictors.

The incoming administration has a lot of work to do in a very short amount of time as a four year term is guaranteed for Trump.

They and the Republican Congress take control of a pretty decent economy, which is showing signs of weakening. There is time to turn that around, but it’s imperative to act quick once they take office in January.

However, they may face immediate economic challenges, including a potential port strike and a budget standoff. Key deadlines are quickly approaching: the budget deadline on December 20th, the debt limit extension on January 1st, and the longshoremen’s contract deadline on January 15th. All just days before the inauguration on January 20th.

These economic factors are compounded by a short holiday shopping season, which could affect economic momentum. Typically, a longer shopping period between Thanksgiving and Christmas results in more seasonal employment, which then bolsters December and January economic data. A shorter holiday period this year may limit these gains.

On the bright side, consumer spending doesn’t appear to be declining.

And now, a new twist: FedEx and UPS are engaged in a competitive “shipping war” this season, spurred in part by the shorter holiday shopping season, as well as lower parcel volumes of late. This competition is a win for small businesses, which should benefit from the lower shipping rates. Which in turn could offset the expected lower economic performance of a short holiday shopping season.

It’s important to stay realistic about economic expectations during a presidential transition. Some people are already saying, “The economy wasn’t great, but with all this excitement, it should take off!” But the reality is more complex, as economic dynamics don't pivot on election outcomes alone. Instead, a mix of policies, global factors, and consumer behavior will continue to shape economic trends. And trends in the economy take months and years to play out.

If your side lost the election and you are deeply concerned, take a moment to write down your biggest concerns about what the next four years might mean for you and your life. Review this list every few months. If, in time, these fears don’t materialize, you’ll have a reminder that emotions can sometimes cloud our judgment. By reflecting on this list in four years, you may find that things were not as dire as they once seemed.

If your side won, take this opportunity to connect with close friends and family who felt strongly about the other side’s vision for the future. Listen to their concerns and understand what matters to them. If you truly believe your side has the best path forward, then show it by leading with respect and understanding. This isn’t a sporting event. It’s your life. Your actions impact your family’s well-being, your neighborhood’s unity, your community’s strength and prosperity, your city’s vibrance, your state’s economic health, and ultimately, your country’s prosperity.

So, show that your side deserved this win by acting in a way that builds trust, connection, and progress for everyone. If you believe that you are the adults in the room, then act the part. Earn the win and leadership position. Otherwise, you get to go through this all again in four years.

The choice is yours.

More Top Economic Stories of the Week:

How the Trump Whale Correctly Called the Election

Why it matters: Of all the articles, read this one. It explains the thought, preparation, and experience that went into the bet. If you thought bets like this are made on a whim or based on politics, it will show you exactly why people like this consistently win with their wagers. More importantly, it gives insight into why US polling is so dreadful and a great idea on how to fix the system.

Trump’s Win Cemented It: New Media Is Leaving the Old Guard Behind

Why it matters: Good explanation of how the shift has and continues to take place.

Architect of Trump’s Win Becomes First Woman Tapped as Chief of Staff

Why it matters: Clearly it’s not about what a person is packing below the belt with this guy. Either that or he’s as shitty at being “anti-woman” as he is at being a racist. Another reminder of why it’s more important to watch a person’s actions than to believe their words. Or in this case, the words of people who don’t like him because he is on the other team.

Negotiations on a new labor contract for East Coast ports begin next week.

Why it matters: Keep an eye on this as the Jan. 15th deadline approaches.

Kroger Stock Jumps as Investors Eye Possibility of Acquisition Approval

Why it matters: Expect to see a jump in M&A activity with the departure of Lina Khan from the top spot at the FTC (Federal Trade Commission), as it has endured a huge headwind under her control.

Cool graphic showing the absolute juggernaut the US has been in productivity versus the rest of the world since “The Panny.”

How ChatGPT Brought Down an Online Education Giant

Why it matters: Interesting explanation of how new technology can even upend new-ish technology. Just wrong place at the wrong time for Chegg. It happens.

Most Important Data Drops from the Past Week:

This Week in Markets

Markets were right… again. As Trump was elected President in a huge victory, just as Stanley Drunkenmiller, Paul Tudor Jones, and Ken Griffin said markets were anticipating. Seriously, betting against these guys right now is like betting against Mariano Rivera or Tom Brady in their prime. Sure, it might pay off a few times, but you’ll lose much more often.

Throw in a very decisive victory to boot, and markets raged even higher as the threat of a prolonged showdown for power were put to rest quickly.

When markets speak, listen to them. It wasn’t me saying “be bullish AF” the last few weeks, it was the markets.

As evidenced in the S&P 500 hitting 6000 for the first time ever on Friday.

I was simply translating the message.

The win for Trump also propelled Bitcoin to break out from it’s base, sending most of the crypto world flying higher as well. As Trump was the heavy Bitcoin candidate.

After an initial surge by 10-year yields into and as a result of the election outcome, they finally rolled over. Very helpful for the economy and markets, as it is imperative that the 10-year yield stay below 4.5% here.

Don’t forget, Presidents don’t control markets.

Markets are not the least bit stressed right now.

Bullish November has weak spots. - Hirsch

Continue to expect higher markets into the end of the year. Especially in the land of small caps.

The Week Ahead

Economic Data to watch:

Earnings to watch:

WTF of the Week

Quote of the Week

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