It was an unusually slow financial and economic news week, with little making headlines. With market movements muted, we find ourselves in a similar position to where we started the year. Next Friday, all eyes will be on the release of the Fed’s preferred inflation measure, Core PCE, which will show December price movements. This release will be an essential gauge as they want to see Core PCE move closer to their long-term target of 2%. So, with the focus on next Friday’s inflation news, we’ll leave you with some interesting financial tidbits.
A SHIFT AT THE TOP: In trading on 1/11/24, Microsoft’s (MSFT) market cap of $2.886 trillion narrowly exceeded Apple’s (AAPL) market cap of $2.883 trillion to briefly take the crown as the world’s largest publicly traded company. It was the first time since 11/17/2021 that MSFT has topped AAPL’s tight grip at the top of the list.
MILLENNIALS SHALL INHERIT THE EARTH: Baby Boomers currently have an average net worth twelve times as large as their offspring Millennial generation. Millennials earn 20% less than Boomers did at their age. By 2030, however, Millennials are projected to increase their net worth by five times, primarily due to an inheritance of roughly $70 trillion that their Baby Boomer parents will pass on.
REVERSION TO THE MEAN: Within the S&P 500, the 50 worst-performing stocks in 2022 averaged a gain of 50.2% in 2023, outperforming the index by 26 percentage points. Conversely, the 50 best-performing stocks of 2022 averaged a gain of just 6.2% in 2023 and underperformed the index by 18 percentage points.
OFFICES OUT OF FAVOR: According to Moody’s Analytics, the U.S. office vacancy rate increased to a record of 19.6% in Q4 2023, surpassing the prior peaks of 19.3% seen in 1986 and 1991. Remote work has been a significant contributor to the high vacancy rates, but most of the vacant spaces are in older offices built before 1990 as companies seek more modern buildings with open floor plans.
RETAIL SALES RIPPING: Retail Sales for December exceeded expectations for the sixth straight month, representing the longest streak of better-than-expected reports since at least 2001. Breadth was also strong, with nine of thirteen sectors showing growth. On a YoY basis, inflation-adjusted sales increased by 2.2%, the largest gain since February 2022.
Economy
- Markets were mostly higher this week, with the S&P 500 up 1.2%, the Nasdaq up 2.3%, and the small-cap Russell 2000 down -0.3%.
- U.S. retail sales soared 0.6% month-over-month in December, following a 0.3% rise in November and beating forecasts of 0.4%.
- The number of Americans filing for unemployment benefits fell by 16K to 187K on the week ending January 18, the least since September 2022, and well below market expectations of 207K.
- Preliminary estimates showed the University of Michigan’s consumer sentiment for the U.S. soared to 78.8 in January, the highest since July 2021. This compared to 69.7 in December and forecasts of 70.
Stocks
- U.S. equities were in positive territory. Technology and Communication Services were the top performers, while Utilities and Energy lagged. Growth stocks led value stocks, and large caps beat small caps.
- International equities closed lower for the week. Developed markets fared better than emerging markets.
Bonds
- The 10-year Treasury bond yield increased 20 basis points to 4.15% during the week.
- Global bond markets were in negative territory this week.
- High-yield bonds led for the week, followed by government bonds and corporate bonds.
