Frontier Investment Management
December 12, 2024
Second Week of December 2024
THE WELL-TH NOTES
Weekly data-driven insights on the markets and economy
1. November inflation surge
Consumer prices rose at a faster annual pace in November, with the consumer price index showing a 12-month inflation rate of 2.7% after a 0.3% monthly increase. Excluding food and energy, the core CPI remained steady at 3.3% annually and 0.3% monthly. These figures align with Dow Jones estimates and have solidified market expectations for a Fed rate cut next week.[i]
2. Year-end slump
Stocks fell on Tuesday as traders digested a year-end rally and awaited new U.S. inflation data. The S&P 500 lost 0.3%, the Nasdaq dropped 0.25%, and the Dow Jones declined 0.35%. Oracle shares slumped 6.7% while Alphabet surged 5.6%. Investors are now focused on the upcoming consumer price index report, which could influence the Fed’s interest rate decisions next week.[ii]
3. Walgreens eyes buyout
Walgreens shares jumped about 20% on Tuesday on a report that the company is in discussion to sell to PE firm Sycamore Partners. The Wall Street Journal reported that the deal could be completed early next year. This news comes during a rough period for Walgreens, which has underperformed Wall Street’s earnings expectations for two straight quarters and plans to close roughly 1,200 drugstores over the next three years.[iii]
4. All that glitters is gold
Gold prices hit a two-week high on Tuesday, driven by rising geopolitical tensions and expectations of a third U.S. rate cut by the Federal Reserve next week. Spot gold rose 1.3% to $2,692.32 per ounce, while U.S. gold futures settled 1.2% higher at $2,718.40. [iv]
5. Gallagher pays a premium
Arthur J. Gallagher & Co. announced on Monday it will acquire AssuredPartners in a $13.45 billion all-cash deal, enhancing its focus on property and casualty and employee benefits across the U.S. The acquisition will expand Gallagher’s offerings in niche segments and strengthen its UK and Ireland business. The deal’s net consideration is about $12.45 billion, reflecting a $1 billion deferred tax asset, and is expected to close in Q1 2025.[v]
6. The end of an Era(s Tour)
Taylor Swift’s The Eras Tour, which concluded on Sunday in Vancouver, made a significant impact on the global economy. With 152 concerts in 51 cities, the tour became the highest-grossing of all time, earning an estimated $2.2 billion. The tour’s economic influence, dubbed “Swiftnomics,” revitalized post-pandemic economies, boosting local tourism and hospitality industries.[vi]
[i] Cox, Jeff. “Annual inflation rate accelerates to 2.7% in November, as expected.” CNBC, 11 Dec. 2024, https://www.cnbc.com/2024/12/11/cpi-inflation-november-2024-annual-inflation-rate-accelerates-to-2point7percent-in-november-as-expected.html. Accessed December 11, 2024.
[ii] Conlon, Sean, Kailai Han, Lisa, and Kim, Hakyung. “Dow falls more than 150 points to notch four losing days as year-end rally takes a breather: Live updates.” CNBC, 11 Dec. 2024, https://www.cnbc.com/2024/12/09/stock-market-today-live-updates.html. Accessed December 11, 2024.
[iii] Constantino, Annika Kim. “Walgreens shares pop on report pharmacy chain could sell itself to PE firm Sycamore.” CNBC, 10 Dec. 2024, https://www.cnbc.com/2024/12/10/walgreens-shares-pop-on-report-pharmacy-chain-could-sell-itself-to-pe-firm-sycamore.html. Accessed December 10, 2024.
[iv] Mukherjee, Anushree and Anil, Anjana. “Gold hits two-week high in the run-up to US inflation data.” Reuters, 10 Dec. 2024, https://finance.yahoo.com/news/gold-extends-gain-chinas-vow-032716386.html. Accessed December 10, 2024.
[v] Biswas, Pritam and Basil, Arasu Kannagi. “Gallagher strikes $13.5 bln deal for AssuredPartners to strengthen insurance broker business.” Reuters, 10 Dec. 2024, https://www.reuters.com/markets/deals/arthur-j-gallagher-buy-assuredpartners-1345-bln-deal-2024-12-09/.Accessed December 10, 2024.
[vi] Bacon, Auzinea, “The end of an era: How Taylor Swift boosted the US economy.” CNN, 8 Dec. 2024, https://www.cnn.com/2024/12/08/business/taylor-swift-eras-tour-economy. Accessed December 10, 2024.
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