US holiday, new highs for financials, a meme stock is born
The US markets are closed for Thanksgiving, but we shall press on.
Taking stock: The S&P 500 snapped a 7-session hot streak while the TSX finished at another all-time high. Yesterday’s moves were characterized by weakness in tech offset by strength elsewhere in the market. A read of the Fed’s preferred inflation gauge showed both headline and core inflation advancing at the highest pace in months. However, the numbers came in line with expectations. Nvidia continues to be under pressure, slumping to nearly a 1-month low and is now down nearly 10% from its recent peak. On the flip side, the financial sector (which is now the best performing sector in 2024) hit a fresh all-time high. TSX financials also finished at a fresh record high.
Folding: Canada’ response to Trump’s tariff threat has been swift. There was an emergency meeting with the Premiers yesterday. Canada said it will spend more money to tighten up the border. Mexico’s initial response to Trump’s threats were hostile. Mexican President Sheinbaum said her government would impose retaliatory tariffs. However, Trump posted on Truth Social that the two had very productive conversations in which she said she would stop migration through Mexico “effectively closing our Southern border.” Shortly after Sheinbaum refuted the claim that the southern border was closing. However, she did say they discussed collaboration on security issues. Both the Canadian dollar and the Mexican peso are rallying on the back of these smoother relations.
Calendar invite: OPEC+ is delaying its December 1st meeting on oil production. They will now meet on December 5th. Oil prices are higher for the first time in four sessions, however still trading below $70/bl. OPEC says there is nothing to see here, this is just about conflicting calendars among members. However, with oil prices slumping and OPEC set to increase production starting in 2025 there are big questions about whether they will actually go ahead with the plan. Some see the delayed meeting as a sign that perhaps there is some negotiations taking place behind the scenes that require more time. But with oil prices only up by 0.5% right now it shows either investors aren’t placing much hope in reduced supply or that they don’t think it will matter.
Rubble: The Russian ruble is recovering slightly after hitting the lowest level since March 2022. The ruble has been under renewed pressure since the US ramped up sanctions on November 21st. Russia’s interest rates are already at record 21% level. But inflation has reaccelerated to 8.8% since the sanctions as the currency declines. Bloomberg is reporting that the central bank may be forced to increase interest rates to as high as 25%. A reminder that Russia’s invasion of Ukraine has not been without economic ramifications.
Unusual moves: Yesterday a drone company called Unusual Machines soared 84% after Donald Trump Jr. announced he was joining the company’s advisory board. Don Jr. said the need for drones is obvious and that “we must stop buying Chinese drones and Chinese drone parts.” This tiny $85 million company has been on the receiving end of two major endorsements with political connections. In addition to the boost from Don Jr, Elon Musk sent the shares soaring on Monday when he called the builders of F-35 jets “idiots” and said “Crewed fighter jets are an inefficient way to extend the range of missiles or drop bombs. A reusable drone can do so without all the overhead of a human pilot.” Shares of F-35 maker Lockheed Martin fell, but Unusual Machines rallied 34%. The average trading volume on this tiny company before the recent run up was around 121,000 shares per day. Yesterday, a whopping 57 million shares traded! A meme stock is born.
