SFM Observer - December 2023

Issued: January 3, 2024

The Dow closed the month of December at 37,689 for a large monthly gain of 1,739 points or 4.8% and a 2023 total return of 16%.  The S&P 500 did even better up 26% for the year. We can all thank big tech for the large return this year.  The news on interest rates and inflation continues to come in positive providing fuel for the current rally.  The job market while still growing, is cooling and wage increases are also on the decline.  In the background looms the deficit now at $34 trillion waiting to take the stage at some point in the future.

Some interesting events from the month just past:

•               Several large investment firms are raising billions of dollars to build above and below ground transmission lines to transport clean energy to the cities where the power is needed.  One of the prime cities being targeted is New York.  One group is attempting a power line running over three hundred miles from Canada to New York city.

•               Google has developed the most powerful artificial intelligence system but they are conducting more tests before they release it on the market.  The system is called Gemini.  Google states it is the most ambitious combined engineering and science project they have ever done.

•               A group of investors has placed a bid for Macy’s for $5.8 billion.  Macy’s owns Bloomingdales and has some very valuable real estate including Herald Square in Manhattan.  An interesting piece of trivia is the original Macy’s was opened in Haverhill, Massachusetts in 1851 to serve the people that worked in the mills.

•               Southwest Airlines is facing a $140 million penalty for their meltdown in 2022 just before Christmas when they cancelled 17,000 flights.  Fortunately, much of that penalty is going out in the form of free travel to the customers that were impacted.  $35 million is going to the Department of Transportation.

•               According to Mastercard, retail spending increased 3.1% over the holiday season.  Much of the increase is being attributed to higher prices not more unit sales.

•               A five alarm fire in the world of beer.  U.S. beer shipments fell -5% during the first 9 months of 2023 and are expected to hit the lowest point in 25 years.  Some of it can be attributed to the Bud Light boycott but there are many factors that combine to create the decline.

Hoping for peace, health and prosperity for all this new year.

Thank you for reading this issue of the SFM OBSERVER. 

Happy new year to all,

Glenn Sweeney CFA