Appreciate Newsletter

Hello readers,

We've got an action-packed update and round-up of US markets for you in today's edition of the newsletter:

?? Is a Santa Claus rally on the cards?

?? Food inflation is raising its ugly head

?? HDFC Bank surges to all-time Highs

So, let’s go ??

Will the stock market rally continue in December?

We’re into the last leg of 2024, with the S&P 500 index rallying over 28% year-to-date. However, let’s see why investors should brace for another strong month in this record-breaking year.?

Have you heard about the Santa Claus Rally? It includes the last five trading days of December and the first two trading days of the new year. So, while you’ll hear a lot about the Santa Claus rally in the coming days, note that it isn't about the entire month.?

Further, December is the second best-performing month for the S&P 500 during election years, next only to November. Given that all three major indices surged ahead in November, historical trends suggest market sentiment will remain bullish in the near term.?

Since 1950, December has been the third-best month on average, trailing April and November. However, in the last 10 years, it has underperformed due to significant pullbacks in 2018 and 2022.?

Data suggests that when the S&P 500 index was up at least 20% in the first 11 months of the year, it moved higher in December 90% of the time.

Food Inflation Looms Large

In early 2022, several global central banks were forced to increase interest rates multiple times to offset inflation that had soared to multi-decade highs.?

While elevated interest rates helped lower inflation to a large extent, global food prices continue to weigh heavily on consumer spending.

Global food prices rose to an 18-month high, according to data from the UN’s Food and Agriculture Organization.?

The food price index, which monitors the prices of food baskets, rose by 2% in October, driven by a surge in vegetable oil prices.?

The index measures raw commodity prices rather than retail costs. However, the increase indicates that higher food prices will continue to impact consumer spending.?

Several economies are wrestling with sluggish consumer spending as inflation is eating into household budgets, resulting in lower demand for other discretionary items.

HDFC Bank Surges to All-Time Highs

India’s largest private bank, HDFC, recently touched a new all-time high, surpassing a market cap of ?14 lakh crore ($118 billion). The stock is up 5.5% in the past month and has gained over 9% in 2024.?

Recent gains can be tied to the rebalancing of the MSCI Emerging Markets Index, which caused HDFC to attract $1.9 billion in passive inflows.?

In fiscal Q2 of 2025 (ended in September), HDFC Bank reported a 5.3% increase in net income, which grew to ?16,821 crore from ?15,976 crore in the year-ago period. Its net interest income rose to ?30,110 crore from ?27,390 crore over the past 12 months.?

HDFC Bank has underperformed the broader markets in recent years, rising less than 50% since December 2019. Notably, it has returned a monstrous 33,496% since its IPO in 1999.?

A broader market rally supported HDFC’s recent uptick as the Nifty 50 index has gained 5% since the third week of November.

Headlines You Can't Miss

U.S. national debt has crossed $36T for the first time ever.

Macy’s found an employee intentionally hid up to $154M in expenses.

Warren Buffett spoke out against family wealth dynasties and donated $1.1B.

Jamie Dimon said the next generation of employees will only work 3.5 days a week.

U.S. business activity rose to a 31-month high in November.

Stocks exceeding 50x forward earnings start lagging the market after 10 months.

Intel will receive up to $7.9B from the government to build new chip plants.

Chart of the Week