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My top 10 things to watch Friday, Dec. 20
1. Wall Street was back in the soup Friday morning but trimming some losses on a cooler reading from the Federal Reserve’s favorite inflation measure. The S&P 500 and Nasdaq closed modestly lower Thursday for their third straight session. The Dow closed slightly higher, breaking its 10-day losing streak, its worst run in 50 years.
2. All of this follows Wednesday’s Fed-driven market nosedive. Central bankers cut interest rates for the third meeting in a row but signaled fewer future rate cuts than the market had anticipated. Fed Chairman Jerome Powell said he wants to see inflation come down. New York Fed President John Williams stressed on CNBC that central bankers are data dependent.
3. BTIG downgraded Lennar to hold from buy. The Street is turning on these homebuilders. The companies’ biggest fear is that their strategy will produce too many unsold homes at higher rates. Oddly, that will reduce the price of homes in the long run, which is the Fed’s goal as shelter inflation has been very sticky.
4. When stocks are this oversold you almost have to buy the market. But the speculation in space, nuclear, mobility, and quantum names must be quelled to get a real ending to this. History says you must buy. We have been buying for the Club, and on Thursday at our December Monthly Meeting, I ran through all of our 35 stocks to give members of a menu to choose from.
5. Warren Buffett went on a December shopping spree in the down market. According to a securities filing, Berkshire Hathaway bought more shares of Occidental Petroleum, pushing the Buffett firm’s stake over 28% in the energy giant. Berkshire also made small buys of satellite radio company Sirius XM and internet name VeriSign.
6. FedEx is crushing it with a new spin-off, producing instant value because its truckload business is the best but valued at about half of its currently publicly traded rivals XPO and Old Dominion. Shares of FedEx jumped roughly 8.5% on the move to focus on its core delivery business.
7. Nike shares sank 6% after new CEO Elliott Hill outlined a strategy to turn around the sneaker giant and it looks like that’s going to take longer than expected. The quarter reported Thursday evening beat very low expectations. How much value did former Nike CEO John Donahoe destroy in four years? It was a staggering amount.
8. Novo Nordisk shares tanked after the drugmaker’s trial results for what could be its next-generation obesity treatment showed 22.7% weight loss after 68 weeks. That’s less than the 25% expected. Novo Nordisk’s current obesity drug Wegovy competes against Eli Lilly‘s Zepbound. Club stock Lilly jumped more than 6%.
9. My reading of the unsealed Justice Department brief against CVS makes me wonder if the government wants to put the pharmacy giant out of business. The complaint alleges “unlawful” prescriptions. CVS has a pharmacy benefit manager, Caremark, a target of President-elect Donald Trump. CVS’s other businesses are also challenged.
10. The House is expected to vote Friday on a temporary federal funding bill to avoid a Saturday government shutdown. President-elect Donald Trump wrote on his Truth Social account: “If there is going to be a shutdown of government, let it begin now, under the Biden Administration, not after January 20th, under ‘TRUMP.'”
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