Turkey, Tariffs, and Tech Troubles: A Thanksgiving Market Roundup

Hey folks,

The market is closed today, but have no fear, Tom Nash is here, serving up a platter of market insights with a side of grandpa jokes.  

Let’s start with inflation, the unwelcome guest at the Fed’s Thanksgiving table.

The core PCE price index, the Federal Reserve’s favorite inflation measure, rose 0.3% month over month in October. That’s steady from September and exactly what economists expected.

Headline inflation crept up slightly year-over-year to 2.8% from 2.7%.

Now, here’s where it gets freaking strange: magazines and stationery were one of the top contributors to inflation. Yes, you read that right. I double checked that and my head almost exploded. FREAKING Magazines.

While housing and financial services also played a role, the monthly rise in magazine prices was the highest ever. Imagine explaining that to your holiday guests: “Sorry, no gifts this year, magazines ate my budget.”

But here’s the silver lining: excluding magazines, core inflation is tracking toward the Fed’s 2% target. This could give the Fed room to ease up on rate hikes, a move the markets are already anticipating.

The Housing Market Is Finally Waking Up

Here’s a rare piece of good news: the housing market might be turning a corner. Mortgage demand jumped 6.3% last week, with applications to purchase homes up 52% year over year. This surge is largely thanks to falling interest rates, which are making homeownership slightly less of a financial death wish.

But it’s not all roses.

While lower rates are helping demand, housing supply remains tight, and affordability is still a challenge. That said, this rebound is a positive signal for an economy that’s been leaning heavily on consumer resilience.

Tech Stocks Losing Their Shine?

It was a tough week for tech.

Dell plummeted 12.3% after reporting weak PC sales, while HP dropped 11.4% after issuing a bleak outlook. Even Workday, a star in HR software, stumbled, lowering its full-year revenue forecast.

The tech sector’s struggles highlight the challenges of maintaining momentum in a market where valuations are sky-high. But let’s be real... Big Tech always finds a way to bounce back. If you think this is the end for tech, you need to talk a walk outside and meditate and just relax.

Thanksgiving Rally?

Historically, Thanksgiving marks the start of a year end rally.

Since 1950, the S&P 500 has climbed an average of 1.8% between Thanksgiving and New Year’s, closing higher 70% of the time.

Inflation is moderating, the labor market remains strong, and consumer spending is holding up. Add in the prospect of a dovish Fed, and you’ve got the recipe for a holiday rally.

But remember, past performance isn’t always indicative of future results...

Bitcoin

While stocks cooled off, Bitcoin continued its hot streak. Thanks to regulatory clarity and renewed optimism, MicroStrategy has soared 459% year to date.

With Bitcoin up 60% annually over the last four years, it’s clear investors are buying into the hype.

Still, the crypto market isn’t without risks. The last crypto winter was triggered by poorly managed, unregulated exchanges. This time, with most trading happening on regulated platforms, the landscape looks more stable. Whether Bitcoin can maintain its momentum remains to be seen.

American Exceptionalism: TINA

TINA (There Is No Alternative).

With U.S. stocks delivering over 25% returns this year, there’s simply no better place to invest. The AI revolution, resilient consumer spending, and strong corporate earnings continue to make U.S. markets a global standout.

But it’s not all smooth sailing. High valuations and uncertainty around the incoming Trump administration’s policies, particularly tariffs, could introduce volatility.

Even so, the U.S. remains the go to market for investors worldwide.

Risks on the Horizon

While the market’s recent gains are impressive, risks loom large.

Rising Treasury yields could dampen corporate profitability, and Trump’s tariff threats could stoke inflation. Add in high valuations for Big Tech, and the road to year end gains could get bumpy.

But here’s the thing: markets love to climb a wall of worry. As long as the U.S. economy stays resilient and the AI revolution continues to drive productivity, the long-term outlook remains bullish.

Final Take: The Market and Your Turkey Have One Thing in Common

Both the stock market and your Thanksgiving dinner go through phases of chaos before settling into something glorious.

So, as you dig into your leftovers, remember this: the market, like your turkey, always comes back for seconds.

Cheers and GO BLUE!
Tom

P.S. If you think Thanksgiving is stressful, try explaining to your relatives why magazines are inflating their grocery bill. Good luck out there!