The Intrigue Remains

January 8, 2024by Anton Tryhubchenko

It seems that investors, who spent so much energy to get to the end of last year with record results, needed a break.

The first week of the year began and ended with a drop in indices. This is understandable – we need to take a breath, calmly record and recalculate the profits earned in 2023, and only then start a new round of the race for even more money. So, let’s continue the race, hoping that for us, the pursuit of money will end when we become insanely rich. Hi, this is a quick review from Ivan Kompan, Edinburgh Business School analyst.

The beginning of the year has brought more disappointments than joys to the markets, even though January is traditionally a good month for the stock market. The end of January is still a long way off, of course, but the first four days have seen all the indices turn red, even as the US economy continues to demonstrate resilience and strength.

American companies continue to actively hire new employees, and wage growth is declining, which is consistent with the forecast of steady economic growth and lower inflation. In the private sector, the number of jobs in December increased by 164 thousand, and initial jobless claims fell to 202 thousand. The number of new jobs reached 216 thousand, which is significantly higher than the forecast of 170 thousand and the results of November at 173 thousand. The unemployment rate remained unchanged at 3.7%, which is lower than the expected 3.8%. Everything seems to be looking good for the economy, but there are issues.

As always, in any business, there are nuances. One of them is the Fed’s plans for next year. The central bank’s leaders agree that rate hikes are over, but there is no serious discussion about when and at what pace to start moving downward. In addition, the December labor market report does not exactly add to the Fed’s arguments for a possible rate cut in the near future, quite the opposite. So, the intrigue remains, and investors are definitely not happy about it.

The real disappointment of the week was Apple, or rather the way analysts see its future. Barclays expressed concern about iPhone sales and the lack of alternative sources of revenue. Piper Sandler also supported Barclays’ forecast, citing the unfavorable macroeconomic situation in China as a reason for the decline in demand for iPhones. According to Bloomberg, the share of analysts who recommend buying Apple shares is at a three-year low. And it is expected. This is to be expected. In the story of artificial intelligence that moved the markets last year, the company is far from being a leader and is far behind Google and Microsoft.
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