(THE 2024 RATE CUT STORY HAS RISKS WE SHOULD ALL UNDERSTAND)
January 24, 2024
Hello everyone,
The subject of rate cuts in 2024 has been making headlines for the last several months. But has the Fed definitively said it will lower interest rates sharply this year? Rising geopolitical tensions and the potential for political turmoil could combine to throw a spanner in the works for investors who are hoping the Federal Reserve will enact sharp interest rate cuts this year.
I know no one wants to hear this – but I’m just throwing it out as a possibility.
The futures market is anticipating cuts – but is it ignoring risks that could force the Fed and its global central bank counterparts into a less accommodating posture? The equity rally of the past couple of months was driven by the emergence of a Goldilocks disinflation thesis that would allow central banks to cut rates early and aggressively (ahead of elections).
JPMorgan, among others, believes the disinflation process is likely to slow or stall in 1st H24, in part due to the impact of shipping/supply chain disruptions and upside risk for energy prices. Tensions in the Red Sea and the U.S. presidential election are risks to the ongoing disinflationary process.
Later this week, we get a better look at the economic picture. On Thursday the Commerce Dept. releases its initial estimate of fourth quarter GDP growth, and on Friday the personal consumption expenditures price index, a key inflation measure that’s watched by the Fed, is released.
Netflix closed at $480.33 on January 17 when I recommended you scale in…
Netflix added 13.1 million subscribers during the fourth quarter. It now has 260.8 million paid subscribers. The stock jumped 8.66% after earnings yesterday.
In the third quarter, there were 8.76 million paid memberships added and this fourth quarter easily tops that number. Earnings exceeded expectations.
Netflix is on a journey to transform from targeting subscriber growth to focusing on profit, using price hikes, password crackdowns, and ad-supported tiers to boost revenue. Furthermore, the company is going the extra mile by making its ad tier more attractive to advertisers, - by bolstering its sales teams and ad operations to “meet brands where they need us and how they need us.” Long-term revenue is their focus.
Boeing (BA) opened at $202.63 and closed at $206.30 on January 17, 2024. (This was another stock I recommended on January 17).
Boeing (BA) closed at $211.50 on January 23, 2024.
Berkshire Hathaway (BRK/B) closed at $368.06 on January 22, 2024. My newsletter focused on the stock that day and recommended buying in.
Closing price on January 23, 2024, = $372.14.
These are just some of the stocks I have recommended since last week. All of them are higher in price after recommendation.
Even though we may get a pullback or some choppy sessions, keep buying on the dips.
Enjoying Gold Coast beaches in the late afternoon.
Cheers,
Jacquie