Magnificent 7 Dominance, Fed Confusion, Layoffs and More!

Vonetta Logan's weekly recap of the big business, news, markets, political, cultural and viral trending stories featured this week on Daily Dose

What’s up tastynation? Welcome to this week’s edition of Weekly Dose! Each week, I recap the top stories that I covered on Daily Dose. If you missed any eps of Daily Dose you can catch up on them here. 

As I work to organize and reconfigure things in my home, I have discovered a delightful new slice of YouTube: the desk setup video. I am obsessed with watching people design beautifully laid out workspaces as the dappled light of the Swedish moors filters in through their window. Are there moors in Sweden? Anyway, I’m writing this week’s recap from my very aesthetic desk setup, which thereby makes all my purchases tax deductible. 

Let’s get to this week’s recap. 

Big Tech keeps on techin’ 

The fate of the S&P 500 seemingly rests in the hands of just seven stocks. These stocks, call them the “it girls,” the “cool kids," or in finance wonk parlance, the Magnificent 7. These stocks, Microsoft (MSFT), Nvidia (NVDA), Amazon (AMZN), Meta (META), Tesla (TSLA), Google (GOOGL), and Apple (AAPL) added around $5 trillion to the market’s value this year.

At nearly 30% of the S&P 500, the seven stocks have more sway over the benchmark than ever before. Not only that, but the companies just delivered record profits of $99 billion in the third quarter. As much as these companies seemingly have a chokehold on the market, but analysts might question their potential to dominate in 2024.

On Monday the Magnificent 7 stocks did something they’ve never done before … they underperformed the rest of the market. For the first time, all three major indexes were higher but all the Magnificent 7 were lower. A one-off instance or the start of a sea change?

As investors look to take profits in their high-flying holdings, other stocks are getting some love. On Tuesday, 51 stocks in the S&P 500 hit their all-time highs. It was the largest batch of stocks to see a record close since April 2022. One of those stocks was the aforementioned Apple. The company, with a market capitalization already well over $3 trillion, soared even higher to a record close this week. 

Also getting in on the record-setting market was the Russell 2000 (RUT) which has outperformed the S&P 500 by 4.6% in December thus far, putting it on pace for its best month versus the largest-cap U.S. equity gauge since January 2021. Looks like it's time to pop a small cap into your portfolio.

More gains for Alphabet and Amazon?

Not to be left out, JP Morgan (JPM) put out its 2024 forecast and they upgraded both Amazon and Google. JPMorgan sees 21% upside and 29% upside for Alphabet and Amazon in 2024, respectively.

What a sweet job, how do I get to sit in a cushy office and just upgrade things that are already at crazy highs? One bonkers addition from the week also in the tech space is that the venture capital firm Andreessen Horowitz announced that it would start doling out cash to politicians as long as the politician supports tech deregulation.

Never mind if that same politician supports more nefarious policies, if Andreesen’s investments don’t get hampered with red tape, it doesn't care if you build a smelting site that runs on banned books in our National Parks. Cool cool. How do I get off this timeline? 

Fed says what?

It’s a tale of two Fed officials this week as members of the United States central bank can’t seem to get their stories straight. Mommy and daddy are fighting, and the kids are confused.

On Wednesday, The Federal Reserve held its key interest rate steady for the third straight time and set the table for multiple cuts to come in 2024 and beyond. Along with the decision to stay on hold, committee members penciled in at least three rate cuts in 2024. That’s less than the market had been pricing, but more aggressive than what officials had previously indicated. Cool, cool.

Thanks for the announcement, said Wall Street. Let’s go ahead and crank everything up to new highs. Then on Friday, New York Federal Reserve President John Williams (not the cool Star Wars John Williams) said rate cuts are not a topic of discussion at the moment for the central bank.

“We aren’t really talking about rate cuts right now,” he said on CNBC. “We’re very focused on the question in front of us, which as chair Powell said … is, have we gotten monetary policy to a sufficiently restrictive stance in order to ensure the inflation comes back down to 2%? That’s the question in front of us.”

I’m sorry, what in the what now? He wants everyone to rein in their enthusiasm about rate cuts and says that talking about them right now is “premature”. We didn’t bring it up, dude. You literally brought up the rate cuts and told us how many and roughly when and then when we got excited about it you said, “hey why are y’all even talking about rate cuts right now.”

The Fed is trying to gaslight us all. It’s like telling your kids you’re headed for Disney (DIS) next year and as your kids dance around and start to pack and make plans for what they want to see, and do you walk in a go “why are you guys packing for Disney? This is a bit premature. We’re not even sure that Disney is going to be on the table next year.” The market looked very flat and done with the Fed’s bullshit on Friday. 

Layoffs, shutdowns and buyouts ... oh, my!

It’s never great news when a company must announce a massive reduction in headcount, especially when that announcement comes during the holiday season. But fiscal quarters don’t care about the calendar, so a lot of bad news got released this week.

SmileDirectClub (SDC), the international direct-to-consumer dentistry and orthodontics company that sold teeth aligners, shut down less than three months after filing for Chapter 11 bankruptcy. The terrible part about this is that a lot of people are still in the midst of the tooth correction process. Not only will they not get to finish their treatment, but SDC says they will still have to pay. How you just gonna leave people with jacked up teeth? That’s messed up.

In other news:

• Macy’s (M) is entertaining buyout offers. Arkhouse Management and Brigade Capital Management have offered to buy Macy’s Inc. for $5.8 billion, according to people familiar with the matter.
• Hasbro (HAS), maker of childhood favorites like Transformers and My Little Pony, also announced layoffs this week. Hasbro said it would cut 1,100 jobs as it struggles with slumping toy sales, a company memo said. Gah, that’s literally like firing Santa’s elves.
• Etsy (ETSY) also announced layoffs this week. Etsy is laying off 11% of its workforce, 225 employees, at the height of the holiday season as the e-commerce giant looks to restructure its business and streamline costs.
• General Motors (GM) announced a set of layoffs across different departments of the company. GM’s Cruise division announced that it will lay off 900 employees, or 24% of its workforce. GM also announced they were laying off 1300 employees based in Michigan who are working on vehicles that are ending their production runs. Finally, no one is safe, not even.
• The 95-year copyright lifespan of "Steamboat Willie" Mickey expires in 2024. Current copyright law dictates that copyright must expire after 95 years, as that time expires, Disney's (DIS) Mickey Mouse. will enter the public domain. That means your gritty John-Wick-style film about a Mickey who goes on a killing spree after Pluto is found murdered can now probably get the green light. Hooray? 
  
  

The next story about a firing is totally justified, IMHO. The publisher of Sports Illustrated fired its CEO, Ross Levinsohn, after an embarrassing debacle in which Sports Illustrated was caught publishing stories with fake author names and profile photos generated by artificial intelligence. Hahaha I mean yeah everyone who writes for Sports Illustrated looks like a generic white guy but they actually invented a bunch of generic white guys and that’s a big journalism no, no.

Honorable Mention for the week: Check out Google’s Year in Search for a full recap of everything people were searching for globally. 

 That’s it for this week. See ya next week! 

Vonetta Logan has more than a decade of markets experience and has been a trader for five years. She is an on-air personality, creative writer and news correspondent at tastylive. Vonetta  appears Monday-Friday on Daily Dose and contributes to Luckbox Magazine. @vonettalogan

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