Finimize - 🤩 US stocks showed off

What’s going on here?

OPEC – the group of oil exporting nations – announced supply cuts designed to get the market talking, but the declaration fell on deaf ears.

What does this mean?

OPEC’s voluntary supply cuts usually send a chill through the markets – and not just because slimmer supplies make it more expensive for analysts to heat their luxury condos. See, when there’s less oil to go around, the stuff out there becomes more expensive, and that means everyday folk, businesses, and whole economies end up spending more. But analysts barely batted an eyelid after OPEC’s latest agreement to produce 2.2 million fewer barrels of oil a day, around 5% of the group’s current harvest.

Why should I care?

For markets: Trust the process.

Thing is, OPEC’s members don’t actually want to sell less oil. The slippery stuff is their lifeblood, after all. So when the rest of the group starts slicing and, in theory, pushing up the price of each barrel, there’s always the temptation to sneak a little more into the market and pocket the extra cash. Savvy oil traders have seen it all before, though, so they know that if a couple of rogue members don’t stick to their promise, supposed supply cut threats won’t be worth the paper they’re written on.

The bigger picture: Feel the change.

All signs point to high oil prices: war around the world, stable economies that need fuel to run, and OPEC supply cuts. Yet, oil’s only getting cheaper. That might be because the world’s greener intentions are finally making a dent in the fossil fuel industry: transport guzzles up 60% of the world’s oil, and with electric vehicles taking over the roads, those barrels may be better used in an obstacle course.

What’s going on here?

US stocks just pulled off their second-best November in over 40 years.

What does this mean?

High interest rates can drag stocks down, so investors weren’t counting on an especially jolly end to the year. But when inflation started retreating and rate cuts became the focus of water-cooler conversation, US stocks were really feeling the festive cheer. So not only did investors pick up stocks in anticipation of cuts, but the ones who hadn’t expected the pick-up started piling in out of fear of missing out. That meant US stocks notched some of their best November results in four decades, and December could follow suit. ‘Tis the season for “window dressing”, when pros sell their losing stocks and buy better looking ones instead to polish up their portfolios.

Why should I care?

For markets: Decisions, decisions.

You can’t blame investors for being caught off-guard, though. The economy is swaying between two completely opposite but equally likely scenarios. One: hardy economic growth, low unemployment, and tamed inflation. Two: a hard recession, out-of-hand unemployment, and stubborn inflation. Both outcomes would heavily influence the stock market, so it’s no surprise that investors can’t seem to make their minds up one way or the other.

The bigger picture: It’s a party in the USA.

The US has dominated the world’s stock markets for over a decade. And just as the most famous nightclubs charge exorbitant entry fees, those stateside show-off stocks charge a healthy admission price. But more intimate, small parties have their own charm, so investors may want to consider cashing in on some American stocks and spending the cash exploring foreign markets.