Hi! Don’t throw the baby out with the bath water, and don’t blow up your apartment trying to kill a single cockroach.
In today’s big story, we’re looking at why a slew of good news for the stock market doesn’t guarantee a huge 2024.
What’s on deck:
But first, go big or go home?
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Investors love it when a plan comes together, and the Fed is finally playing its part in Wall Street’s bid for a big 2024.
Jerome Powell & co. announced they’d continue to hold off on raising interest rates. But the fun didn’t stop there. The fight with inflation seems to be ending, as the Fed is projecting three rate cuts planned for 2024.
The market rejoiced, with the Dow Jones Industrial Average hitting an all-time high. A pause in rate hikes is one thing, but an acknowledgment of incoming cuts? Let the good times roll in 2024!
But at least one Wall Street bank has been wondering if the market is getting overconfident. UBS cited the ultra-low levels of the VIX index, a measure of expected stock volatility over the next 30 days, as an example of investors getting ahead of themselves.
“At present, markets are priced for this optimal outcome,” strategists wrote in a note last week.
“The VIX index of implied US equity market volatility, a popular measure of fear in markets, is close to historical lows – pointing to a degree of over-confidence, in our view,” they added.
“The Dow at an all-time high, rate cuts are coming, and you’re pessimistic? You must be a blast at parties, Dan.”
I don’t mean to come off like a spoilsport, but there are reasons to hold off on penciling in those 2024 returns.
For one, Fed Chair Powell made it clear the projected 2024 cuts are just that, a projection.
“Inflation is still too high, ongoing progress in bringing it down is not assured, and the path forward is uncertain,” Powell said in his opening statement Wednesday.
Translation: Don’t count your chickens before they hatch.
And inflation is a thing we all might have to deal with for the foreseeable future. That’s the take from some market experts, including Wall Street guru Jim Grant, who pointed out that the purchasing power we lost from inflation isn’t coming back.
And, as we’ve covered before, rate cuts don’t necessarily equate to instant gratification for the market.
So you might want to hold off on those big spending plans for 2024, at least for a little longer.
Shelley Alvarado, who worked for five years at a Louis Vuitton store, details what she did when customers tried returning fake bags. Employees were trained to look out for tell-tale signs of a fake.
The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York City. Diamond Naga Siu, senior reporter, in San Diego. Hallam Bullock, editor, in London. Lisa Ryan, executive editor, in New York.
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The latest news, headlines, and business stories for December 14 – Business Insider
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