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Good afternoon,

The stock market had a stellar performance last week, marking its best run since the election. With Donald J. Trump taking office as the 47th President of the United States on Monday, there’s a palpable sense of anticipation in the air. But it wasn’t just politics driving the markets; inflation trends and impressive earnings from major financial institutions played crucial roles.

**Equities**

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The S&P 500 reclaimed its position above the 50-day moving average, a technical indicator that often signals bullish momentum. Here’s how the major indices fared:

* S&P Midcap 400: +4.5% for the week / +3.8% YTD

* Russell 2000: +4.0% for the week / +2.1% YTD

* S&P 500: +2.9% for the week / +2.0% YTD

* Dow Jones Industrial Average: +3.7% for the week / +2.2% YTD

* Nasdaq Composite: +2.4% for the week / +1.7% YTD

What caught my eye was the **outperformance of value over growth, and small caps over large caps.** It’s a reminder that sometimes the underdogs can surprise us. As the famous investor Peter Lynch once said, “The key to making money in stocks is not to get scared out of them.” This week’s performance certainly rewarded those who held their nerve.

## **Bonds and Treasuries**

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The bond market responded positively to inflation data, with yields dropping sharply. The 2-year note yield fell 13 basis points to 4.27%, while the 10-year note yield dropped 17 basis points to 4.61%. This decline in yields ignited a stock market rally, highlighting the intricate dance between bonds and equities.

Have a great week!

Irving Wilkinson, Editor

[AlphaBetaStock.com]([link removed])

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## Week In Review


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## **US Highlights**

* **Consumer inflation** rose to 2.9% in December, primarily due to increasing gas prices. However, core inflation eased to 3.2%, coming in below estimates and fueling market optimism.

* **Retail sales** showed broad advances in December, capping off a solid holiday shopping season with a 0.4% rise. Sectors like autos, furniture, and sporting goods performed particularly well.

* **Wholesale inflation** cooled in December, with the producer price index rising just 0.2%, below the expected 0.4%. This data point, along with the CPI figures, suggests easing inflationary pressures.

* In corporate news, **Johnson & Johnson** made waves with its $14.6 billion acquisition of **Intra-Cellular Therapies**, bolstering its neurological drug portfolio.

* **President-elect Trump** reached out to **China’s Xi** ahead of the inauguration, discussing trade, TikTok, and Taiwan. This diplomatic move signals potential shifts in U.S.-China relations under the new administration.

## **Global Highlights**

The U.S. economy is showing its muscles, and it’s giving some investors jitters. Here’s what caught my eye:

1. The biggest news on the global stage is undoubtedly the **ceasefire agreement between Israel and Hamas** after 15 months of conflict. This development has significant implications for geopolitical stability and potentially for energy markets.

2. **China’s economy** grew by 5.4% in Q4, exceeding expectations. However, soft consumer demand remains a concern for sustained recovery.

3. In a shocking turn of events, **South Korea’s President Yoon Suk Yeol** was arrested – a first for a sitting leader in the country’s history.

4. **Germany’s economy** contracted for the second consecutive year, shrinking 0.2% in 2024. This economic stumble in Europe’s largest economy is worth keeping an eye on.

5. The **United Kingdom** saw inflation ease to 2.5% in December, its lowest since March 2022, potentially paving the way for more rate cuts from the Bank of England.


----------## Commodities & Crypto

### **Energy**

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Oil prices climbed despite the easing of geopolitical risks, with **Brent crude** exceeding $82 a barrel and **WTI** briefly breaking the $80 barrier. The International Energy Agency’s upward revision of demand forecasts played a role in this surge.

### **Metals**

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In the metals market, **copper** continued its upward trajectory, rising over 5% since the beginning of the year. **Gold** also shone, climbing back above the $2,700 mark.



### **Crypto**

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The cryptocurrency market saw significant action this week. **Bitcoin** flirted with the $103,000 mark, while **XRP** surged by 40%, becoming the third most valuable cryptocurrency. **Dogecoin** also had a notable performance, jumping 23% to $0.41.

## Calendar

Looking ahead, we have a holiday-shortened week due to Martin Luther King Jr. Day, which coincides with Trump’s inauguration. The earnings season will kick into high gear with reports from heavyweights like **Netflix**, **Procter & Gamble**, **Johnson & Johnson**, **American Express**, and **Verizon**.

Here’s a quick rundown of what to watch:

* Tuesday: Netflix, Prologis, Interactive Brokers Group, 3M, Capital One Financial

* Wednesday: Procter & Gamble, Johnson & Johnson, Abbott Laboratories, GE Vernova, Travelers, United Airlines Holdings

* Thursday: Intuitive Surgical Group, Union Pacific, Elevance Health, CSX, American Airlines Group

* Friday: American Express, Verizon Communications, NextEra Energy, HCA Healthcare

As we navigate these market dynamics, it’s crucial to remember that investing is a marathon, not a sprint. A fascinating fact about investing is that historically, the stock market has shown a positive return in about 70% of years. This long-term perspective can help steady our nerves during short-term fluctuations.

In conclusion, this week has been a testament to the resilience and dynamism of financial markets. From geopolitical shifts to economic indicators and corporate maneuvers, we’ve seen it all. As we look to the week ahead, stay informed, stay diversified, and most importantly, stay patient. The markets always have stories to tell – our job is to listen carefully and act wisely.

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