‘Backpedaling’ off an extended S&P ‘ascending wedge’ late last year was a perfectly normal expectation for a stumble at this new year’s beginning. As you toss-in broad ‘tax-gain’ selling of portions of mega-cap winners as were clearly pushed forward into 2024 (gaining an extra year before paying taxes), and you have the formula which made sense (and still does) early this year.Most backpedaling was in mega-cap techs; especially Apple and in leading semiconductors, which led the upside. Now you can throw-in concern that AI might dethrone ‘Google Search’, which of course is Alphabet’s cash-cow in the sense that it’s also the biggest customer of Apple (Google pays Apple to be the default search engine on iPhone IOS and MACS).As always, the biggest problem with technology is … technology. Change over time is inevitable, and often nearly imperceptible. Here it’s fairly evident. One or two items that are perceptible might be signs of not just topping action, but scrambling to preserve relevance of older systems. Microsoft for the first time in decades is adding a keyboard key to Windows… for ‘Co-Pilot’ .. sort of an obvious short-cut to ‘generative AI’; so that’s fine, but not truly a big deal.And Apple is said to be eyeing an offer for Peloton, which might make sense if they want to get into fitness gear (less popular for homes post-pandemic), at the same time there’s pending litigation involving Peloton and might diverge a bit too much from ‘normal’ Apple pursuits, which is ‘informative fitness data’.Most absurd marketing effort: the X-Box Toaster (burns an X into your toast).
There is more evidence this is going to be an unusual year; war, elections, of course climate change, and ‘radioactive fish’. Yes, you heard that previously I assume about Japanese fish after Fukushima ‘hot’ reactor water was dumped in the Pacific (I would not encourage eating Sushi on the West Coast unless a Geiger counter is in your pocket). But it’s the story of Alaskan fishermen really in financial trouble, because the ‘Snow Crab’ population has eviscerated 90% or so, for two years in a row.It’s not mating habits of crabs (?), but most likely climate change making the Arctic waters inhospitable ‘for’ mating, that’s at the real root of this challenge (it is not trivial). Besides impoverishing fishermen, there will be less protein for all in the world. No wonder the U.S. Coast Guard is assisting Latin American navies in trying to enforce fishing restrictions against China over-fishing the remaining fertile waters off of South America. They are mass-farming fish.
Market X-Ray: Perceptions are that a year ‘plays out in January’. That’s an oversimplification this year, because the Fed is pivoting before Elections; and the poor start to the year was pre-ordained by the ascending wedge excess upside performed by S&P in December. Military/geopolitical issues as well.
Next week we’ll hear more about interest rates; the Middle East, and our long running epic consumer technology introduction season; which is CES. I trace attendance all the way to Comdex, which was before ‘adult videos’ triggered Intel and Microsoft to refuse exhibiting; so Shelly Adleson sold off portions so that the ‘Win-tel’ combination would participate (before Sony and Samsung of course became the primary exhibitors, followed by LG, Panasonic, etc.).And yes, ‘Adultdex’ shifted to what is now the ‘Sands Exhibit’ halls adjoining the Venetian, which Sheldon built with funds from sale of Comdex. Of course the ‘Adult Video Awards’ continued for years (maybe Epstein went; maybe I saw a few exhibits haha); with everything changing to ‘streaming’ from days of ‘multiple DVD or VHS duplication machines’ populating the gear for sale.I contemplated visiting this year (umm… I mean CES not the AVA); but really I don’t feel adequate ‘mobility’ for that yet; plus everything is introduced online these days simultaneously, ‘or’ has already been premiered at IFA. As Covid is behind (at least for public exhibits) they have returned; but not huge crowds as in the old days. Fewer exhibitors; less need to incur the costs of Vegas or of Berlin (IFA); although newcomers tend to try out these shows. Stalwarts of course attend, and I’ve already been invited to next week’s events and Berlin next Summer, but I don’t contemplate attending either. 
Really it’s war expansion fear that dominates; nothing has changed with Fed or with regard to S&P corrective behavior. The secretive illness of the Sec’y. of Defense (Austin) is hard to evaluate; since even when then-Secretary of Defense Powell has prostate surgery it was pre-announced and detailed later.Politics are strange this year of course; and I won’t go so far as to say there is a risk of ‘peril’ later this year, or that political chaos would affect the market. I’ll say that markets dislike uncertainty; the S&P got too high for its own good last month (and we looked for a stumble); but later in the year can be tricky too, if a few things don’t fall in-line better. I’ll have more in the week ahead, CES too.
Bottom line: We don’t think one has to have a ‘hard-hat’ on regarding all of 2024; but we do have to expect more short-term correction evolution; or even a slightly more dramatic shakeout to conclude what to so many is a horrid start to the New Year. It’s not horrid in our view; it was very predictable after the superlative rally (stronger without a ‘B’ wave setback) that preceded this.Inflation is moving down toward target, but that’s normal and given firmer Oil (that’s geopolitical not supply/demand at the moment) that’s also expected as an impediment to the Friendlier Fed psychology (but again, Elections); so the story this year should be the progress of the small-caps with diminution of the mega-caps; which is a theme we projected last month as likely for 2024.More By This Author:Market Briefing For Thursday, January 4
Market Briefing For Wednesday, January 3
Market Briefing For Tuesday, January 2
