TRG Fast Facts

By TRG Advisors on February 2, 2024

Weekly data-driven insights on the markets and economy

1. Dips & Declines

The S&P 500 fell after the Fed announced it will keep interest rates unchanged. The S&P 500 was down 0.9%, the Nasdaq dropped 1.4% and the Dow Jones dipped 0.1%. Shares of some of the Magnificent Seven, as often referenced in the media, dipped this week as well. Alphabet dropped more than 6% and was on pace for its worst day since Oct. 25 as disappointing ad revenue overshadowed better than expected earnings and sales; and stock in Microsoft slipped 1.5%, on lower-than-expected forward guidance after posting quarterly results.[i]

2. Ups & Downs

The 10-year Treasury yield fell more than 7 bps to 3.98% on Wednesday, the first time it’s fallen below 4% in about two weeks. The 2-year yield was down about 8 bps at 4.27%. Yields moved slightly higher after the Fed released its updated policy statement on Wednesday afternoon, but the 10-year did not jump back above 4%.[ii]

3. Gearing Up

The Federal Reserve indicated on Wednesday that it is done raising rates, but not yet ready to begin cuts. The key fed funds rate is targeted in a range between 5.25%-5.5%, the highest in nearly 23 years. The Fed has been riding a wave of decelerating inflation (2.9% in December), a strong labor market and solid economic growth, giving it leeway to start easing up on monetary policy and caution about growth that could reaccelerate the economy.[iii]

4. Jobs Indicator

The ADP reported Wednesday that private payroll growth for January declined. Companies added 107,000 workers in the first month of 2024, off from the downwardly revised 158,000 in December and below the Dow Jones estimate for 150,000. Leisure and hospitality reported the strongest growth, adding 28,000 workers, while trade, transportation and utilities added 23,000, and construction rose by 22,000. This release comes two days ahead of the Labor Department’s nonfarm payrolls report, which is expected to show growth of 185,000.[iv]

5. Liquid Freeze

President Biden said Friday the administration froze the approval process for new liquified natural gas plants, pausing export application reviews while it takes stock of the country’s newfound status as the world’s largest liquified natural gas exporter. When the DOE conducted its last analysis into the impact of gas exports in 2018, U.S. LNG export capacity was less than 4 billion cubic feet a day. Since then, it has more than tripled and is set to nearly double by 2030.[v]

6. Kick-Start Campaign

In more White House news, President Biden’s administration is expected to award billions of dollars in subsidies in coming weeks to top semiconductor companies (including Intel, Taiwan Semiconductor Manufacturing Co., and Samsung Electronics) to help build new factories in the U.S. These subsidies will aim to kick-start manufacturing of advanced semiconductors that power smartphones, artificial intelligence and weapons systems. Intel has projects underway in Arizona, Ohio, New Mexico and Oregon that will cost more than $43.5 billion; Taiwan Semiconductor Manufacturing Co. has two plants under construction near Phoenix for a total investment of $40 billion; and Samsung Electronics has a $17.3 billion project in Texas.[vi]

7. Fall From the Top

Disappointing earnings led Tesla’s stock to fall 12% last Thursday – bumping Elon Musk out of the seat as the world’s richest man. His net worth dropped more than $18 billion with the stock, putting his personal fortune at $204.5 billion. According to Forbes, Musk lost his top spot to Bernard Arnault, founder, chair and CEO of LVMH Moët Hennessy-Louis Vuitton, whose fortune is $207.8 billion.[vii]

8. Breaking the Pigskin Bank

For the second time in four years, the Chiefs and 49ers will face off in the Super Bowl. The tickets, which used to cost at an inflation-adjusted rate over only $100 by today’s market, will now set fans back several thousand dollars just to sit in the nosebleeds. The average seat is currently $10,026, with prices ranging from $6,300 to more than $44,000. Factoring that it is held in Las Vegas with one of the smallest stadiums in the league’s history (only 65,000 seats), and tickets could keep climbing for the Super Bowl.[viii]

[i] Evans, Brian, and Hakyung Kim, “S&P 500 retreats as Fed says it’s not quite ready to cut rates: Live updates,” CNBC, January 31, 2024, https://www.cnbc.com/2024/01/30/stock-market-today-live-updates.html. Accessed January 31, 2024.

[ii] Pound, Jesse, Brian Evans and Sophie Kinderlin, “10-year yield trades below 4% even as Fed says it’s not time for rate cuts yet,” CNBC, January 31, 2024, https://www.cnbc.com/2024/01/31/us-treasury-yields-ahead-of-fed-interest-rate-decision.html. Accessed January 31, 2024.

[iii] Cox, Jeff, “Fed holds rates steady, indicates it is not ready to start cutting,” CNBC, January 31, 2024, https://www.cnbc.com/2024/01/31/fed-rate-decision-january-2023.html. Accessed January 31, 2024.

[iv] Cox, Jeff, “Private payroll growth slowed to just 107,000 in January, below expectations, ADP reports,” CNBC, January 31, 2024, https://www.cnbc.com/2024/01/31/adp-jobs-report-january-2024-.html. Accessed January 31, 2024.

[v] Morenne, Benoit, “Biden Pauses Approvals for LNG Exports,” Wall Street Journal, January 26, 2024, https://www.wsj.com/politics/policy/biden-pauses-approvals-for-lng-exports-3d065745. Accessed January 31, 2024.

[vi] “US to announce billions in subsidies for advanced chips -WSJ,” Reuters, January 27, 2024, https://www.reuters.com/markets/us/us-announce-billions-subsidies-advanced-chips-wsj-2024-01-27/. Accessed January 31, 2024.

[vii] Clark, Adam, “Elon Musk Is No Longer the World’s Richest Man After Tesla’s Stock Slump. Who Took the Title.,” January 29, 2024, https://www.barrons.com/articles/tesla-elon-musk-lvmh-bernard-arnault-net-worth-richest-man-5a6ddce3. Accessed January 31, 2024.

[viii] Sutelan, Edward, “How much are Super Bowl tickets 2024? Here are the cheapest & most expensive seats for Las Vegas,” The Sporting News, January 31, 2024, https://www.sportingnews.com/us/nfl/news/super-bowl-tickets-2024-cheapest-expensive/ab7842bc251e9943372c726b. Accessed January 31, 2024.

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TRG Fast Facts

By TRG Advisors on February 2, 2024

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