What Happened Last Week
Price Action: Headline equities sold off as investors digested marginally hawkish Fed commentary and Trump’s cabinet picks.
Controversial Cabinet Picks: RFK Jr., picked by Trump as the next head of the Department of Health and Human Services, weighed on global healthcare stocks, with vaccine providers leading losses.
Senate Leadership: John Thune (R-SD) beat out Rick Scott (R-FL), to be the next Senate Majority Leader.
What We’re Watching This Week
Earnings: Nvidia (NVDA) reports this Wednesday following rumors of its Blackwell server racks overheating; additionally, we will have a window into the consumer with reports from Target, Lowes, and Walmart.
Trump Cabinet: Watching for Treasury pick; Bessent and Warsh would be much more market-friendly than Lutnick, the other high-likelihood pick for Treasury.
Eco Data: Housing starts, PMIs, and consumer sentiment.
Investment Management Team’s Views
The dollar rally picked up some pace last week, propelling U.S. equities above internationals despite broad indices all selling off. Investors continued to digest the U.S. general election’s outcome, focusing mainly on Trump’s cabinet appointees last week. Some more controversial picks, like RFK Jr. at Health and Human Services, weighed on biotech and healthcare companies. The last thing to note on the political front is that in a blow to the “MAGA”-wing of the Republican party, the more moderate Senator John Thune (R-SD) won last week’s Senate Leadership contest.
Last week’s CPI print surprised neither the headline nor the core prints. Markets well received the lack of surprise as there was no attributable bump up in volatility. Price action continued to be highly sensitive to Trump’s Cabinet picks on read-throughs for regulation (or deregulation, rather) and fiscal policy. Headline retail sales, which we think is currently more of a focus than CPI, came in stronger than expected, whereas “core” (ex-Auto & Gas) retail sales slumped relative to last month, with prior figures revised higher across the board, indicative of a strong consumer. Lastly, Powell & other Fed speakers cautioned last week that a pause could be in the cards for the December meeting.
In the week ahead, the most anticipated macro event is Trump’s pick for Treasury: hedge fund manager Scott Bessent, former Fed governor Kevin Warsh, and current co-chair of Trump’s transition team, Howard Lutnick, all seasoned financial services indusry vets, are three names to watch on the short-list. We will also be monitoring secondary/tertiary economic indicators like housing starts, PMIs, and consumer sentiment. Turning to the micro, NVDA earnings on Wednesday are of particular importance given the role that the company has played year-to-date in the equity market rally.
