DECEMBER 2024: YEAR IN REVIEW

December saw a post-election shift away from cyclical winners, with the technology sector—especially Mega Caps—remaining resilient. For 2024, these standout U.S. compounders once again led the charge, driving the S&P 500 to a 25% annual gain, while the equal-weighted index delivered half that return. The NASDAQ outperformed the small-cap Russell 2000 by nearly 2,000 basis points. Communication Services and Information Technology were the strongest sectors, each gaining about 40% in 2024. Growth dominated factor performance, outperforming Value by 2,350 bps, with Momentum close behind. In contrast, Europe and Emerging Markets posted more modest annual gains of 9% and 8%, respectively, while Latin America lagged significantly. US Banks surged (+37%), while Transportation (+1.5%) barely moved. Within the Innovation space, Gaming (+50%) and eCommerce (+45%) stood out as top performers, whereas Cleantech (-35%) and Genomics (-30%) experienced the steepest declines.

Commodities showed mixed performance in 2024. Softs like Cocoa (+180%), Coffee (+70%) and Orange Juice (+55%) led the gains, while Grains like Soybeans (-23%) lagged. Natural Gas (+45%) surged, briefly topping $4 in December. Precious Metals, with Gold (+27%), outpaced Industrial Metals, as Iron Ore (-27%) marked the biggest decline.

2024 was dominated by King Dollar. Global currencies, led by LatAm FX, weakened against the USD. The CAD dropped 8%, its steepest decline since 2015, staying below 70 cents for over 10 consecutive days for the first time since 2003.

In crypto, Dogecoin surged 300% and Bitcoin rose 120%.

Despite the Fed cutting its benchmark rate three times (-75bps to 4.5%), the 2Y UST yield remained flat at 4.25%, while the 10Y yield rose 70bps, steepening the curve.

CHART OF THE MONTH

Transportation: Awaiting Departure

Our cycle dashboard highlights a consistent market preference for Early and Mid Cycle sectors, with one notable exception: Transportation. Manufacturing PMI, which naturally tends to revert, has been in contraction for over two years and is due for a rebound. New Orders, a key leading indicator, recently surged into expansion, reaching a nearly 30-month high. This shift could set the stage for Transportation to outperform and close the current performance gap.

AND THE 2024 WINNERS ARE…

Total return (dividend reinvested), local currency

Best S&P 500 Stock Performance

Vistra (VST): +260%

Best S&P 500 Sector Performance

Comm. Services: +39%

Best TSX 60 Stock Performance

First Quantum (FM): +71%

Best TSX Stock Performance

Celestica (CLS): +240%

Best TSX Sector Performance

Info Tech: +38%

Best Commodity Performance

Cocoa: +180%

Best Currency Performance vs USD

Malaysian Ringgit (MYR): +2.7%

Most significant curveballs as per B-CAP

Growth (factor): +36%

30Y UST: +75 bps

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