EB Daily Market Report - Friday, December 10, 2021

Abbreviated Daily Market Report

I will be in meetings throughout the day, so I wanted to just get you a quick overview of what I'm seeing this morning. First, one of the biggest economic reports due out in December was released at 8:30am ET. It was the November CPI, which came in slightly ABOVE expectations at +0.8% (estimate was +0.7%). The Core CPI, however, matched estimates at +0.5%. Nonetheless, the headline annual inflation rate has now jumped to 6.8%, our highest level in nearly 40 years. I would expect many media outlets to pound this through our skulls in the near-term. And there's more. On Tuesday, we'll get the latest report on producer prices (PPI). As you'll see from the December Seasonality Report below, the December 10th through December 15th period tends to be the most challenging for U.S. equities. I'll be remaining somewhat cautious through that date and then re-evaluate. It's worth noting that one of the best periods of the year to be invested is December 16th through December 31st. We do have a very strong historical tendency to move higher during this upcoming period.

As for the next few days, I'll be watching the IWF:IWD (large cap growth vs. value) and $DJUSGS:$DJUSVS (small cap growth vs. value) ratios VERY closely to see if growth stocks continue to weaken on a relative basis. My expectation would be that they will. If they don't, I believe it's a very bullish signal for growth stocks ahead. If I do see that expected relative weakness in growth stocks, I'll be using that weakness to build positions in several of my favorite growth stocks like Tesla (TSLA).

Let's just see how this plays out.