[Altos Weekly Traders Edge] Forces Keeping Stocks Upward-Bound...Details Inside

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Investors seem convinced that inflation is heading back towards the Fed's 2% target, paving the way for rate cuts. This narrative could keep U.S. stocks buoyant in the short term, but we remain cautious in the face of shifting market sentiment. Tech stocks leading the charge: A handful of tech giants are driving market performance, reflected in their inflated valuations compared to the broader S&P 500. While valuations usually impact long-term returns more than short-term, runaway prices can be vulnerable to unexpected events. Earnings under the microscope: As earnings season kicks off, expectations are high, with a projected 11% growth in the next year. Strong results could fuel the rally, but pricey valuations leave little room for disappointment. Inflation: the wild card: The "soft landing" scenario hinges on inflation falling to 2% and staying there. We believe, however, that inflation will rebound towards 3% in 2025 due to factors like tight labor markets and geopolitical issues. This resurgence could shatter the current market optimism. Selective approach: We recommend a selective approach to developed market stocks, favoring regions like Japan and sectors like tech and quality assets that have already proven resilient. Beyond the immediate: Despite the current positivity, we expect 2024 to be a year of fluctuating market narratives and volatility. The December Consumer Price Index (CPI) confirmed our view that U.S. inflation is on track to fall towards 2% in 2024, but it also hinted at a potential uptick to 3% in 2025. This "inflation roller coaster" could be the catalyst for a shift in market sentiment. Central bank conundrum: While markets anticipate sharp rate cuts, we believe the Fed will be hesitant due to our projections of resurgent inflation. This mismatch between market expectations and reality could fuel bond yield volatility. Economic data in focus: This week's U.S. data releases will be scrutinized for signs of economic cooling due to higher interest rates. Similarly, UK CPI data is expected to mirror other developed markets, showing a decline in inflation. However, we maintain our view of an inflationary resurgence in early 2025, which could force central banks to keep rates high for longer. While the "soft landing" narrative could keep stocks buoyant in the short term, we urge caution. Selective investment choices and preparedness for shifting market dynamics are crucial in navigating the uncertainties of 2024. - The Team at Altos Trading In the next article: While December brought a surge in consumer confidence, fueled by optimism about inflation and jobs, lingering anxieties about recession and inequality paint a more complex picture of the American mood in 2023 and 2024. Sponsor There’s one thing every trader should be looking for Legendary trader Jack Carter has identified a hidden “calendar” of stock that, according to his research, have climbed like clockwork on the same day of the year, every year, for as many as ten years or more! Pause and think about what kind of an edge that could give you. Because once you see how powerful an advantage that is, you’ll want to everything and learn about the Income Calendar now.]( Disclaimer: The profits and performance shown are not typical, we make no future earnings claims, and you may lose money. The trades expressed are from historical data in order to demonstrate the potential of the system. By clicking the link above you agree to periodic updates from Jack Carter Trading and its partners ([privacy policy]( December's Optimism Surge: A Beacon in the Storm The December surge in the University of Michigan consumer sentiment index wasn't just a blip. It reflected a tangible improvement across demographics, with significant gains among middle-aged and high-income households. This newfound optimism can be attributed to a confluence of factors: - Taming the Inflation Beast: The gradual decline in inflation from a blistering 6.4% in January 2023 to a more manageable 3.2% in October offered a sigh of relief to cash-strapped consumers. The prospect of further easing fueled hope for financial stability. - Job Market Fortunes: Despite interest rate hikes, the U.S. economy remained remarkably resilient, boasting near-record low unemployment for nearly two years. This job security translated into improved household finances and a sense of optimism about the future. - Fed's Dovish Whispers: Hints from the Federal Reserve about potential rate cuts in 2024 further bolstered confidence. The specter of lower borrowing costs ignited hopes for a more balanced economic landscape. However, beneath the sunny skies of December, darker clouds lurked: - Persistent Price Pressures: While inflation subsided compared to its earlier peak, it still remained significantly higher than pre-pandemic levels. The fear of rising prices still weighed heavily on many consumers, dampening their purchasing power. - Recession Specter Lingers: Despite the December spike, consumer confidence remained historically low. Two-thirds of Americans still believed a recession loomed in 2024, highlighting underlying anxieties about the economy's long-term trajectory. - Political Divisions: As with everything in the current political climate, consumer confidence often mirrors political affiliations. Republican skepticism towards the Democratic administration could be skewing the overall sentiment, masking genuine economic concerns. So, is 2024 a year of unbridled optimism? The answer is likely a cautious "maybe." Factors Favoring a Brighter Future: - Robust Economy: The strong U.S. economy, with its low unemployment and rising wages, provides a solid foundation for growth. Rising disposable income could translate into increased consumer spending, fueling economic activity. - Post-Holiday Insights: The holiday season's spending patterns will offer crucial insights into consumer behavior and economic prospects. A sustained rise in spending post-holidays could signal sustained optimism. - Entrepreneurial Buzz: The significant increase in new businesses, particularly among minorities, paints a picture of entrepreneurial confidence and potential future job creation. Challenges: - Housing Market Woes: The turbulence in the housing market, with declining home values and rising interest rates, poses a significant challenge for many Americans. This could dampen overall consumer confidence and spending. - Global Risks: Ongoing geopolitical conflicts and trade disruptions add a layer of uncertainty to the economic outlook. Unexpected events could trigger market volatility and erode consumer confidence. - Wealth Gap Widens: The growing wealth and generational gap in the U.S. complicates the picture. While some segments might experience significant economic gains, others could face continued struggles, creating an uneven distribution of optimism. The Bottom Line: Predicting the future of American consumer confidence is no crystal ball gazing. While December's uptick offers a glimmer of hope, the path ahead remains riddled with uncertainties. The interplay between inflation, interest rates, political dynamics, and global events will ultimately determine whether 2024 paints a rosy picture or one shrouded in economic gloom. However, one thing is clear: a nuanced understanding of the diverse segments of American society is crucial. Painting all Americans with the same brush of optimism or pessimism would be a grave mistake. Recognizing the anxieties and aspirations of different demographic groups will be key to navigating the economic tides of 2024. Perhaps, with a prudent mix of fiscal and monetary policy, a continued focus on job creation, and a collective effort to address societal inequalities, we can steer the American economy towards a more inclusive and optimistic future. Sponsor [New Customers earn 5.25% APY* (variable)]( Store your money with Cash Reserve, a high-yield account built for peace of mind. New customers earn 5.25% variable APY*—that’s 13x higher than the national savings rate. ** Plus, your money’s FDIC-insured up to $2M†at our program banks and no limits on withdrawals and transfers. **The national average savings account interest rate is reported by the FDIC (as of 5/15/23) as the average annual percentage yield (APY) for savings accounts with deposits under $100,000. [Sign Up Now!]( Disclaimer: The Altos Trading Alert Newsletter is published as an information service for subscribers, and it includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so. Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. Altos Trading, LLC assumes no responsibility for any losses incurred by any individual or entity as a result of trade alerts or strategies taught through courses or coaching services. 7154 W State Street Suite 169 Boise Idaho 83714 USA Disclaimer: The Altos Trading Alert Newsletter is published as an information service for subscribers, and it includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so. Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. Altos Trading, LLC assumes no responsibility for any losses incurred by any individual or entity as a result of trade alerts or strategies taught through courses or coaching services. 7154 W State Street Suite 169 Boise Idaho 83714 USA [Unsubscribe]( | [Change Subscriber Options](