We don’t usually cover international events in these pages, but I’ll make an exception.
What in the world happened with global governments last week?
South Korea. France. Romania. Syria.
Suffice it to say that the world order got shaken up during the first week of December.
I’ll get to those first two national upsets in a moment, but the latest two “episodes” began on Friday after Romania’s Constitutional Court ruled its (then) ongoing presidential elections invalid.
One of the two candidates, you see, is apparently pro-Russian. And when he ended up leading in the first round of voting, the powers that be determined there was foul play from Russia involved. Therefore, the whole process needed to be restarted.
When it will be rescheduled, nobody knows. At least that was true when I last checked this morning. In fact, nobody knows much of anything at all about what’s going on over there. It’s a chaotic mess that’s probably going to result in more chaos still before everything is said and done.
Then there’s Syria, where Russia also plays a part.
Syrian rebels just successfully ousted President Bashar al-Assad yesterday, toppling an administration that’s been in power since the turn of the century – and a family name that’s been operating for over 50 years, since Assad’s father ruled before him. That longevity was, in part, thanks to an alliance with Russian President Vladimir Putin.
So it should be no big surprise then that President Joe Biden heralded the overthrow. He even took credit for it, claiming that U.S. policies against Russia in Ukraine and against Iran through Israel left the Syrian government ripe for takeover. But the truth is that Turkey – another Russian ally, though also an ally of Ukraine – may have played an enormous part in what just happened.
So what happens from here is very much up in the air. As in Romania, there are far more questions than answers available at the moment. What we can be almost certain about is that these developments could have significant impacts on the larger world, especially in the ongoing wars in Ukraine and Israel.
Those changes will then trickle into our investment opportunities one way or the other. So let’s all hope it’s in the best possible ways.
With that said, let’s get on to our official five stories I’m following…
France’s Chaos Briefly Hits the Euro, but Bitcoin Keeps Soaring Straight Up
Speaking of the larger world, global currencies took a particularly bright spotlight last week.
Not all of it was welcome.
On the one hand, as I wrote on Thursday, Bitcoin topped $100,000 for the first time ever. And there are plenty of people who think it’s going higher still next year.
A lot higher, in fact. We’re talking about the cryptocurrency leader hitting $200,000 or even $250,000 by this time in 2025 – if predictions turn out right.
My 22-year-old son is exceptionally excited about the latest moves, and I understand why. But if you want to know the reasons I’m still holding out on this alternative payment category, you can read my thoughts right here.
Now, I’ll be the first to admit that I’m not the biggest currency expert. That’s not my field of expertise or even interest. However, even I had to notice when France’s government fell into political chaos after its so-called far-right and far-left factions delivered a no-confidence vote.
It’s therefore no surprise that the euro fell on the news. And while it’s since rebounded, I’d say there’s continuing cause for concern.
The same applies to the South Korean won after President Yoon Suk Yeol declared martial law Tuesday night. His stated reason was to protect the country against destabilizing efforts by “North Korean communist forces.”
Accurate or not, well-meaning or not, the immediate results were overwhelmingly negative. First off, he had to retract that declaration within hours. Secondly, his administration is probably dead in the water now as even like-minded politicians try to distance themselves from him. And thirdly, the won tanked, and with good reason.
Once again, the currency went on to recover. But I’m not so sure it should have since nobody seems to know what’s going on in with that administration – perhaps not even the president himself.
The Meme Stock Is Dead. Stop Trying to Make the Meme Stock “a Thing”
Volatility really did abound the last few trading days, with GameStop (GME) coming into play in typical meme stock fashion. This was thanks to Keith Gill, more commonly known to the investment community as Roaring Kitty.
It appears he’s back.
Perhaps Gill is genuinely delusional in his determination to make GameStop shares appear valuable. Perhaps he’s just an opportunist determined to take advantage of other people’s delusions. But one way or the other, Roaring Kitty hasn’t lost his cryptic touch.
All he had to do was take to X (formerly Twitter) on Thursday, posting a picture of a Time magazine cover with a computer screen. Just like that, his favorite meme stock shot up 6%.
Admittedly, it still didn’t manage to close above $30. So it’s still far behind its yearly high of $48.75 (hit back in May). But that’s still an impressive jump for such little effort – either on Gill’s part or GameStop’s.
As of Friday’s close, the stock had settled at just over $29 after a pretty humdrum Friday. This next week, however, could see further volatility considering how the company will report its latest quarterly results tomorrow.
I’m sure I don’t need to tell you it’s not worth your time or money. But let me say it anyway just in case you’re tempted to get in on the Roaring Kitty action…
Don’t invest in GameStop. There are much better places to put your money.
Jobs, Jobs, Jobs, but Unemployment Goes Up
Go figure, the U.S. economy added more jobs than expected last month. Not by an absolutely enormous amount, mind you, but still more.
Who knows how much it will be revised up or down in the coming months. But, for now, the Bureau of Labor Statistics say that 227,000 new openings were filled instead of the 200,000 economists projected.
Despite that bump, unemployment went up to 4.2% compared to October’s 4.1%. The hurricanes and Boeing (BA) strike definitely contributed to that increase.
Naturally, everyone is wondering what this means for the Federal Reserve meeting on December 17 and 18. Will the central bank cut rates one last time for 2024? Most investors seem confident it’s still going to happen considering Chair Jerome Powell’s most recent remarks on the subject. At a New York Times even on Wednesday, he said that:
The U.S. economy is in very good shape, and there’s no reason not to continue… the downside risks appear to be less in the labor market, growth is definitely stronger than we thought, and inflation has come in a little higher. So the good news is that we can afford to be a little more cautious as we try to find neutral.
The market is translating that to mean we’ll see another 0.25 point cut to close out the year.
Then again, this week might have a surprise or two in store, for all we know. We’re getting the latest CPI numbers on Wednesday, after all. And then we’ll learn about the Producer Price Index ("PPI") on Thursday.
My thought is that Powell and Co. are still committed to lowering rates regardless of what the data says – for better or for worse.
A Very Merry Christmas Season So Far for Retailers
Last Monday, I brought up Black Friday sales, including how they’re no longer limited to a single day. There were “plenty of three-day and even five-day” deals to be found this year.
Still, we knew that U.S. consumers “purchased about $10.8 billion worth of stuff on Friday alone… a 10.2% jump year over year.” We also now know that Cyber Monday discounts caused an even greater feeding frenzy, with $13.3 billion spent, a 7.3% increase over 2023. So there was plenty of clicking, clacking, and tapping going on over the five-day retail free for all.
But what about in-person shopping? Well, we now have that information as well. CRE Daily, one of my favorite commercial real estate sources, noted that:
Roughly 126 million people visited physical stores during the holiday weekend, narrowly outpacing the 124 million who shopped online. Black Friday saw the highest traffic both online and in stores, with many shoppers seizing early discounts.
Moreover:
[The National Retail Federation] forecasts holiday spending to grow between 2.5% and 3.5%, reaching record levels of $979.5 billion to $989 billion. Despite the weekend’s shopping success, consumers reported having 52% of their holiday shopping left to complete.
Many economists are saying these massive numbers aren’t just due to the holidays… They’re also due to Trump’s tariff threats. People are (theoretically) stocking up now before prices (theoretically) skyrocket.
That might be true. But considering how consumer spending just seems to keep rising and rising regardless, I’m guessing that the vast bulk of sales were holiday related.
The Manhunt for UnitedHealthcare Killer Continues
Last but sadly not least, there’s still far too much mystery surrounding the search for UnitedHealthcare CEO Brian Thompson’s killer.
It’s been six days now since a still unknown man walked up to Thompson in Midtown Manhattan and shot him dead. The NYPD was naturally all over the murder right away, even offering $10,000 for information leading to the arrest of whoever did it. And now the FBI has stepped in with a $50,000 reward.
Part of the problem in closing the case is that there are so many possibilities with so many motivated parties. The murderer could be an angry policy holder, of course, especially considering how ammunition was found at the scene with the words Delay, Deny, and Depose written on them – an allegation against insurance companies in general for rejecting claims.
Everyone knows how much hatred these corporations get. So it stands to reason that the U.S.’ largest single health carrier would have its fair share of angry customers.
There’s also the fact that the company has been under federal scrutiny for alleged monopolistic practices. I’d like to say I’m confident authorities will get to the bottom of this. But as of now, it’s just one more shocking development we’re waiting to see some resolution to.
Hopefully the world will get at least a few stories straightened out in this new week ahead of us. But since some aspects are utterly unchangeable, I’ll have more to say on the UnitedHealthcare situation tomorrow.
Regards,
Brad Thomas
Editor, Wide Moat Daily