Mid-Week Wrap-Up - December 11th, 2024

Rising inflation apparently doesn't concern the market anymore

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Good morning investors!

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Every Wednesday we publish “The Mid-Week Wrap-Up” — your ticket to being well informed and staying ahead in the investment game!

This report is designed to help investors of all skill levels break down important stories/topics within the stock market. And best of all, we cut through all of the BS and give you exactly what you need to know in easy to digest, bite sized pieces of content.

This article is designed to truly give you that EDGE in the day ahead!

Grab your afternoon pick me up and let’s dive in.

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Market Talk

Markets are mixed to start the week as tech and Mag7 continue to move higher while the rest of the market struggles.

3 Stories Moving the Market

These are some of the biggest stories so far this week that are having an influence on market action.

Annual inflation rate accelerates to 2.7% in November

Consumer prices rose at a 12-month rate of 2.7% in November, with a 0.3% monthly increase, slightly up from October's annual rate of 2.6%, according to the latest CPI report. Core CPI, excluding food and energy, remained steady at 3.3% YoY and 0.3% MoM, aligning with Dow Jones estimates.

Shelter costs, a significant contributor to inflation, rose 0.3% month-over-month and 4.7% year-over-year, accounting for 40% of the November CPI increase. Vehicle prices also reversed recent declines, with used cars rising 2% and new vehicles increasing 0.6% monthly. Food prices grew 0.4% month-over-month and 2.4% year-over-year, while the energy index edged up 0.2% monthly but remained 3.2% lower than a year ago.

Inflation-adjusted hourly earnings were flat for the month but rose 1.3% YoY, reflecting continued wage pressures despite moderating inflation in some areas.

The data bolstered expectations for a 0.25% Federal Reserve rate cut at their Dec. 18 meeting, with traders assigning a 95% probability, though a January pause is anticipated to assess the impact of prior cuts.

👉 EDGE ALERT: The Federal Reserve’s rate cuts—50 basis points in September and 25 in November—have acted as a catalyst to reignite inflationary pressures, which are now becoming evident in the data. November’s…upgrade to Edge+ to read the full Edge Alert.

Alphabet shares jump after Google touts ‘breakthrough’ quantum chip

Alphabet shares rose 6% on Tuesday following the announcement of its new quantum computing chip, "Willow," which Google described as a breakthrough.

Willow outperforms its 2019 predecessor on quantum benchmarks and addresses error reduction, a major hurdle in quantum computing. With 100 qubits, it marks the second step in Google’s six-phase plan to develop a system with 1 million qubits for practical applications like drug discovery and energy solutions.

CEO Sundar Pichai highlighted Willow as a significant milestone toward building commercially relevant quantum computers.

While quantum technology remains years away from full maturity, Google’s efforts compete with those of Nvidia, Microsoft, IBM, and other researchers. The announcement received praise from tech leaders, including Elon Musk and Sam Altman, underscoring its impact on the field's future.

📚 EDGE-UCATION: What is quantum computing and what does this mean?

Quantum computing is a revolutionary field of computing that leverages the principles of quantum mechanics—such as superposition and entanglement—to process information.

Unlike classical computers, which use bits (0s and 1s) to perform calculations, quantum computers use qubits that can represent both 0 and 1 simultaneously, thanks to superposition. This allows quantum computers to perform complex calculations exponentially faster than traditional computers for certain types of problems.

Google's announcement of the "Willow" chip marks significant progress in the race to harness quantum computing for real-world applications. Willow's ability to manage and reduce errors as it scales—a critical challenge in quantum computing—moves the field closer to creating machines capable of solving problems beyond the reach of classical computers. For example, quantum computers could revolutionize areas like:

  • Drug Discovery: Simulating molecular structures to find new treatments or materials.

  • Energy Solutions: Optimizing processes for fusion energy or battery design.

  • Cryptography: Breaking traditional encryption methods or developing quantum-secure systems.

  • Logistics: Optimizing complex networks like supply chains and transportation.

While practical, large-scale quantum applications are likely still years or decades away, breakthroughs like Willow signal that we're steadily overcoming technical challenges. This development places Google at the forefront of a highly competitive field that could reshape industries and create entirely new markets.

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Albertsons says it is terminating merger agreement with Kroger

Albertsons announced it is terminating its $20 billion merger agreement with Kroger and has filed a lawsuit accusing Kroger of breaching its contractual obligation to secure federal approval for the deal.

The lawsuit, filed in Delaware chancery court, seeks billions in damages, alleging Kroger failed to address regulators’ concerns with adequate divestiture proposals and prioritized its own financial interests.

The decision follows a federal court ruling siding with the FTC, which argued the merger would make Kroger the dominant player in the traditional grocery market.

Albertsons has exercised its right to terminate the deal and is entitled to a $600 million breakup fee from Kroger.

Kroger has not yet commented on the lawsuit.

📊 EDGE SCORE: Here’s a look at Kroger’s Edge Score - valuations are intriguing despite the merger termination:

Want access to your own Edge Scores? Upgrade to Edge+ today and be one of the first to use the dashboard:

In Other News

In this section we'll be curating a selection of news headlines we think you'll find interesting. If a topic catches your eye, click the provided links to read more about it.

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The Second Half

There’s still a few key earnings to watch this week as well as important inflation and jobless claims data.

Earnings Reports

We will be watching earnings reports from Adobe, Broadcom and Costco.

Here is the calendar of earnings releases scheduled for the rest of the week:

Source: Earnings Whisper

Economic Reports

Though it’s been a relatively quiet week on the economic front, we still have the PPI report and jobless claims data due out tomorrow.

Here is the full calendar of events scheduled for the remainder of the week:

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Thank you for reading this edition of the Mid-Week Wrap-Up.

Until next time investors!

Mark & Chris

The Investor’s Edge

Disclosure

This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.

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