Bill Gunderson delves into current economic indicators and their implications for the stock market in this insightful episode. From the nuances of the January effect to sector rotations, Bill shares his strategies for managing portfolios during this time. He also addresses the significance of the ongoing strength in the labor market, holiday retail performance, and examines the latest updates from international markets, including China and its economic forecasts.
He’s been seen on CNBC, the Fox News Channel, and the Fox Business Channel. His articles can be found on MarketWatch, Seeking Alpha, thestreet.com, and many other places. He’s the author of the weekly Best Stocks Now newsletter and the inventor of the Best Stocks Now app. He’s president of Gundersen Capital Management. Here is professional money manager Bill Gundersen.
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and welcome to the uh thursday the day after christmas the day uh when will the trash man get here and haul all of this trash away it looks like we got a little bit of returns on some of the gifts that were given on christmas eve markets giving a little bit back this is bill gunderson President of Gundersen Capital Management. The best stocks now show. The Dow is down 78 points right now. It’s at 43,218 with just five days left in 2024. The Nasdaq is down 63 right now. It’s mostly Tesla. A few others that have been quite elevated here lately. The NASDAQ is at 19,962. The S&P 500 is down 15, so that’s about a quarter of a percent. We had a really good day on Tuesday, however, on Christmas Eve, which we’ll go over a little bit here. The Russell 2000 down 45 basis points, and I’m going to point to the yield on the 10-year. We are up again there on that 10-year and closing in on a 52-week high on interest rates. We’re at 4.63% today. We’re up three basis points. That is hurting equities. And 4.70 is the high for the year, which we’re closing in on. And last but not least, Bitcoin right now is down 3,300 to 95,214. So welcome to today’s Best Stocks Now show with professional money manager Bill Gunderson, president of Gunderson Capital Management. Barry has the day off with family this time of year, and I will be flying solo here today, but we certainly have plenty to talk about on this day after Christmas. We’ve got a full day in the market today. And we have a full day in the market tomorrow. And then, of course, we’ll deal with New Year’s Eve when we get there. I don’t even know what day New Year’s Eve is right now. I’m thinking maybe Tuesday, something like that, next Tuesday. And that will be a half day. And, of course, New Year’s Day, the market will be closed. close we have a little bit of a sell-off going on in the market today i’m sure it’s very light volume how many people are actually putting in a full day uh in in my business today we are we’re i’m putting in a full day here uh looking at a bunch of charts i don’t have as many to look at as i did For a while after that big move after the election results, I had about $1,300 to look at today. That’s been cut on a daily basis. That’s been cut in half. I’m down around to about $600, which is much more normal when you add up the A-plus momentum stocks, the B-plus stocks, which meet the momentum and the valuation criteria. the stocks that we own here at Gundersen Capital Management, and then some of the bellwether stocks that I check on a daily basis. So we’re at about 600 right now, which is a much more manageable number, easier on the eyes than the 1300. But I’ll tell you what, I mean, during that time, a lot of good stocks were exposed. uh sometimes uh when the tide comes in it brings some goodies with it and it did we found a lot of new stocks a lot of new players lining up some of the leadership stocks for 2025 as we get ready to turn the page i have found my history in the market is that no two years are really alike And sometimes you can get dramatic changes in the first few weeks of January and kind of set the tone for the rest of the year. A lot of times, too, you’ll get a false rally in those first few weeks of January. A lot of times you’ll see the small caps. The small caps, they always have one false start right after another. You know how the guys line up for the 100-meter dash, and before the gun sounds, one guy jumps the gun. Well, you have a lot of false starts. With small caps, they never follow through. Maybe this year will be different with a looser regulatory environment and a little more grease skids for small cap companies. We’ll see if it has any impact. But this continues to be pretty much a large cap market, Amazon, Microsoft, Tesla, Nvidia, etc., etc., etc. But it’s not, even in the large caps, you still have to be selective because there’s a lot of bad large caps. What was the worst performer in the NASDAQ this year? Intel, large cap stock. Okay, we had a good day the day before we took Christmas off. The Dow was up 390 actually on Tuesday. The NASDAQ had a really good day on Tuesday. I’m really surprised by that. Usually people are gone or off on vacation, but that does set the stage for what they do call a Santa Claus rally. Christmas Eve is included in that calculation. And with that 266-point rise on the NASDAQ, you could officially say… that were in a Santa Claus rally, but obviously it has to follow through. Bitcoin had a big day on Tuesday. It was up 5,087 points. And Tesla on Tuesday was up 6.9%. Huge winner. Tesla has probably been one of the biggest winners since the election of Donald Trump. So the NASDAQ was up 1% on Christmas Eve, marking the first step in a Santa Claus rally. I don’t know. I don’t give too much credence. Like I say, every year seems to be unique and different. And we shall see. A lot of times, I will say this, though, more often than not, we see some pretty radical changes in the first few weeks of January. They call that the January effect. Yale Hirsch had his theory that proves to be true more often than not, where those first few weeks of January kind of set the tone for the year. And a lot of times, I see some pretty vicious sector rotation out of some of the big winners, well, okay, put it this way. If you’ve got a big gain in one of these big tech stocks or several of them, and you want to make a move and diversify a little bit, maybe a position has gotten too big in your portfolio, you want to trim it a little bit. Well, you’re going to wait until after the first of the year because you don’t want to incur that taxable event. You want to put it off. You can’t get around the taxable event, but you can delay the taxable event. as far as you can. It would be silly to sell a big gain stock this week or next week and incur that big capital gain. So that’s another thing that’s in play this time of year. How did the holiday sales go? Well, somebody adds this all up. This comes from MasterCard. The late burst helps holiday retail sales rise 3.8% versus last year. Notably, the last five days of the holiday season accounted for 10% of all holiday spending. It’s called the mad rush. I’ve been a part of it. You’ve been a part of it. That mad rush, that line just to get something wrapped up under the Christmas tree or whatever the holiday you celebrate is. The last five days, 10%. Look how important those last five days are. Consumer demand for experiences like dining out strengthened in the holiday season with restaurant spending growth. Up 6.3% compared to last year. I find it getting harder and harder to get into some of the popular restaurants. I was in the middle of reserving some place for tonight as we’ve got some company in town. And by the time I verified it with the other parties, if they could go or not, the reservations were gone. So, so much for that. Apparel was up 3.6%. Jewelry up 4%. Electronics 3.7%. the holiday shopping season revealed the customer who was willing and able to spend but driven by a search for value as can be seen by concentrated e-commerce spending during the biggest promotional periods But solid spending during this holiday season underscores the strength we observe from the consumer all year. And obviously, as we enter into a new year, there’s always going to be a recession watch. Always. There’s always a recession watch. We have not had a recession since 2008, 2009, when we had one of the worst recessions of all time caused by the housing market, caused by the loan market, caused by the mortgage market. We’ve had rising earnings every year since 2009. It’s obviously the longest run I’ve seen as far as earnings growth, bull market. expansion in the U.S. economy, but it will come to an end at some point in time. And one of the things we watch is the consumer very closely, because that’s your economy right there, or most of it. And the other thing we watch very closely, we’ll talk about when we come back. The numbers are in, and we’ll go over those. This is Bill Gunnarsson. It’s the Best Stocks Now show. And welcome back here to the second quarter of today’s Best Docs Now show. Well, that weekly report every Thursday is also going to be critical because the consumer can’t really make reservations at restaurants and spend at the local mall and online without a job. Well, some people can, I guess. But for the most part, the jobs market is also very, very important to watch. Every Thursday we get clues, at least initial clues, called initial jobless claims. How many people went in and filed for unemployment? The jobless claims came in at 223,000 today, slightly up, but that is still a very low number. If I were to draw a baseline, anything under $300,000 is pretty darn good on those initial jobless claims. So we continue to see a strong labor market. If the person wants a job, there pretty much is a job out there. It may not be the job you want, but there pretty much is a job out there. And that remains a bullish indicator for the market. What’s the third big indicator? Well, I’ll add just two more right now. GDP, obviously, gross domestic product. Obviously, the market has priced in increasing gross domestic product with the new administration coming in. We’ll see. Because there’s a lot of things that could also hurt that gross domestic product, like the tariffs, obviously, and DOGE. Cutting government spending is also, you know, the government spends a lot of money, obviously, more than it has, year after year after year after year, month after month after month after month. That’s also an important indicator. gdp the fourth one obviously the one that i really key off of because what does it all lead to what does the funnel all come down to you can take this funnel and at the top you can put in all these things gdp uh you know interest rates uh the job picture uh and all the other things and out comes earnings that’s what comes out of that is how much do corporate america companies make bottom line earnings and I use the S&P 500 as my proxy. That’s what pretty much everybody else uses. And we look at those earnings, which are looking to be about $275 or so for next year. That’s $275 per share. That would be a record. We’ve only had, I think, since 2009, obviously, the COVID year, which was an anomaly. There might have been one other year where earnings were flat or just a few cents lower. But if you look at the trajectory of earnings, If you draw a line from 2009, March of 2009, that’s when earnings bottomed to where we are today. We’ve gone from $60 to about $250 this year, and we’re looking for $270 next year. That’s also very critical. You start to see those earnings estimates decline. Now, you want to get even more granular. That’s why I watch the individual companies that report earnings and the trends. And we have consistently had for several months, several years, 70% of the companies beating their earnings estimates, very few guiding lower, usually 10% or so. That’s also a very important indicator. How many companies are guiding lower, starting to guide lower? All of a sudden you’ll see a trend start to take place and it could start to happen at any point in time. Interest rates also key. Because once we have those earnings, then it’s a matter of applying a multiple to those earnings. The market is trying, or the big analysts, the big Wall Street firms are trying to justify, were trying to justify a couple weeks ago, the 22.5 times forward earnings for the S&P 500. It’s hard to justify that number. What’s keeping it high? Momentum, demand for stocks, exuberance, I guess, optimism, et cetera, hopes for higher growth going forward with the new administration. But 22.5 is really not sustainable. And in fact, over the last week or so, we’ve dropped down a full point somewhere in there. to 21.5 times forward earnings. And, of course, we went back up a little on Wednesday. But that’s another thing we have to watch. And interest rates have a big effect on that number, and we’re at 4.63 right now on the 10-year. That’s not good. I mean, that shrinks that multiple. That’s more than likely why we saw, seeing this sell-off in the Dow, you had nine straight days where the Dow was down. As the interest rates went up, the multiple did some shrinking along the way. Okay, other factors. Obviously, other countries that we trade with are trade partners. How’s China doing? Not very good. That’s a problem that we have to keep continuing to monitor and watch. The World Bank recently updated its economic forecast for China, raising GDP growth for 2024 and 2025. They now expect 4.9% in 2024. China used to consistently put out 7.5% growth. Not anymore. They’ve come down to earth. 4.9% 2024, 4.8% in 2025. Beijing’s target is 5%. So we’ll see how that goes. But China is a huge trading partner of the U.S., mostly selling things to us. not buying a lot of things from us. But that definitely is something that we’re going to be watching going forward in 2025. You can never take your eye off the ball in the market. I call it vigilance, being vigilant. One of the issues that China has, probably their biggest issue, is their real estate market. Their average housing rent, which we’re having, that’s one of the biggest parts of our inflation is lodging. And rent these days is a big part of that inflation. We have a tight rental market. They have a four-year low. They have a rent slump going on. Why? They have too many units. They have a supply glut. And that has hurt the Chinese economy, and it continues to hurt. It’s all about supply and demand, right? Speaking of which, Bitcoin. Sanctions. Russia is now using Bitcoin for international trade, okay? And that’s not traceable. It’s kind of that dark, murky kind of underneath the surface market. And that probably has something to do with the big uptick in Bitcoin, where it recently hit $107,000. Now, it’s down about, what, $12,000, $13,000 from that all-time high, which is pretty volatile. You know, recently you had Microsoft say no. to carrying Bitcoin on their balance sheet instead of cash. Why? Well, cash is a lot more stable. You look at the movement of the U.S. dollar versus Bitcoin, which has lost $13,000 over the last couple of weeks. That’s why Microsoft said no to carrying Bitcoin. We’ll be right back with some more world news and some individual stocks in the news today. This is Bill Gunderson. Thank you for tuning in to today’s Best Stocks Now, Best Inverse Funds Now show. I put several hours of research in during the wee hours of the morning each day to bring you the very best cutting-edge stories that I can. To get two free weeks of my newsletter, go to GundersonCapital.com. To talk to us about our fee-based only money management services, call us at 855-611-BEST. Now, back to the second half of the show.
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Thank you.
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And welcome back here to the second half of today’s Best Stocks Now show with professional money manager Bill Gunderson, president of Gunderson Capital Management. Boy, I’ve got a lot of people to have some fun with today. As soon as the show’s over, I get going on my charts. i’ve sent out two messages so far on the market not a lot happening obviously kind of a slow day so far but you know you never know when you look at five i’ve got 600 charts to look at today a lot of times you find stuff underneath the surface if you’re willing to look it’s out there and if i If I see something, I say something. I try to keep everybody posted throughout the day of what’s going on in the market, things I’m finding, things I’m buying, things I’m selling. I’ve made a few quick trades here over the last couple of weeks in the incubator portfolio, the incubator trading portfolio, which is for people that want a little more action and you know a little faster the vast majority obviously of the stocks that I own I’m an investor in for my clients in the fee based portion of my business but I also have the do it yourself portion of my business we have a lot of fun I try to educate I’m in the market anyways I may as well be texting what I’m seeing as I go through the market on a daily basis I continue to offer four free weeks as of now. This is December the 26th. We’ve got five days left in the year, and then I’ll decide whether I’m going to renew that offer, continue it into January. We’ll see. But I’m having a lot of fun. I really am, and I hope I haven’t read. We sent out a survey. I’m always afraid to read a survey. I think Gunnarsson is nuts. I hate this. I don’t know what it’s going to say. You have to be willing to accept. I have not seen it. I have not had time to look at it, but I have had lots of good conversations or people emailing me from all over the world, frankly. All over the world. And if you’d like to do four weeks, learn something about technical patterns, get in the full newsletter every Saturday, Seeing my activity during the day, every day for four weeks, the five different portfolios, etc. Go to GundersenCapital.com. And if you like it, you can subscribe after four weeks. Now, big change is about to happen in the world on January the 20th. That is just 24 days away now when you get the Trump inauguration and out with the old and in with the new or in with the old, however you look at it. You’ve had a dozen companies donate a million dollars each to President-elect Donald Trump’s inauguration. In other words, they want to be on Trump’s good side. So far, we’ve got Ford kicking in a million dollars. General Motors, Bank of America, Goldman Sachs, AT&T, Toyota, Stanley Black & Decker, Intuit, Coinbase. And I want to say Elon Musk himself and I know Jeff Bezos, Amazon, all contributing a million dollars towards the inauguration, hoping that they’ll be found on Trump’s good side after January the 20th. How about your home? Remember the meteoric 10% a year rise? I can’t even believe how much home prices have gone up. I look at my home that I left in Carlsbad and how much it’s gone up. I would never pay that for that home today. But luckily over here in Charleston, it’s been about equal on the home that we traded for once we got to Charleston. Well, this past year, what do you think you earned on your home? Of course, it depends on where you live. U.S. home prices advanced 5.7%. Okay, that’s way more in the average. It’s still above average, but it’s come down. That’s the smallest annual increase since October 2023. So things have definitely moderated. But they’re still going up faster than inflation, all right? 5%, 6% is still faster than inflation. But it’s not that 8%, 10% area. Well, it’s a lot harder. There’s not as many people. There’s not as much demand for homes because a lot of people have been taken out of that area. demand equation because they can’t afford a 7% interest rate for a 30-year loan. 13 of the 50 most populous U.S. metro areas recorded a seasonally adjusted month drop in home prices in November. The biggest decliner was Fort Lauderdale, Florida, down 1.1%. Tampa, down 1.1%. San Diego, California, down 1%. The highest, Charlotte, North Carolina, plus 1.4. Minneapolis, 1.3. The highest month-over-month gains. That’s just month-over-month now. So anyways, the home appreciation has definitely slowed down. uh considerably as and that’s what higher interest rates are kind of meant to do right to cool off some of these overheated markets tesla rallies into the christmas break q4 deliveries report looms uh when will they report their deliveries let’s see analysts blah blah blah it’s coming up i know real quickly uh report late next week okay Let’s just look at Tesla stock today. Tesla is basically flat, but at or near a new all-time high, $460 per share. Market cap of $1.48 trillion. $1.48 trillion is where Tesla is at these days. And, of course, if you want to double your fund, Granite Shares has a, well, they have a Tesla at one and a quarter. So you get 25% more than what it does on the upside. And on the downside, you get 25% more drop. And they have a 2 to 1 Tesla upside. And they have an inverse Tesla, which that has not been a good investment here. But at some point in time, I suppose there will be a big correction in Tesla. Uber gets the snub in Taiwan. Okay, Uber has been a disappointing stock. That would be one of the disappointers here in 2024. It’s cheap, in my opinion, with 237 estimated earnings next year. And that’s about a 25 forward PE multiple. And it’s still growing. I look at the last four quarters, 20%, 16%, 15%. I think it’s still a 15% to 20% grower. But they did get the snub in Taiwan. Uber tried buying a company over there, Delivery Hero, a food panda business for delivering meals and whatnot. Taiwan stepped in and blocked it. The Fair Trade Commission, Uber is down 19 cents today, so no big deal. Lyft, the main competitor to Uber, sues San Francisco for allegedly overcharging 100 million in taxes. Well, the city of San Francisco was charging on the price of the entire ride without subtracting out the cost that the driver paid. The cost of the driver. You should be paying on the gross, not on the net. And, of course, San Francisco sees it differently. Lyft is going after California for overcharging them by $100 million in taxes. OpenAI ponders a humanoid robot. Was there one under your Christmas tree yesterday? I don’t know. Will everybody have to have a humanoid robot at some point in time to vacuum, do the laundry, make the beds? Be nice. In a quest to take AI to a new level. Well, OpenAI, which is Microsoft, backed by Microsoft, has considered the possibility of building humanoid robots capable of a wide range of tasks. And, of course, Tesla’s working on the same thing. Humanoid robots, two legs, two arms, can do a whole lot. We’ll see where that goes and a lot of people said that’s one of the most lucrative irons in the fire that Tesla has along with their robotaxi and of course microsoft has some exposure there too so does nvidia uh… which would uh… be part of the uh… artificial intelligence that uh… runs these humanoid robots can you claim them as dependents on your tax return i don’t know about that uh… toyota rips a nine percent gain after a report of a lush ROE Yeah, I just don’t know about the car, the auto builders, other than Tesla, obviously. And when we come back, guess who is endorsing Eli Lilly’s weight loss drug? And we’ll take a look underneath the market when we come back. This is the Best Docs Now show.
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The way you wanna go, do what you wanna do with whoever you wanna be. The way you wanna go, do what you wanna do with whoever you wanna be.
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And welcome back here to the final segment of today’s Best Docs Now show. Well, Elon says he likes Terzepatide better than… than semaglutide. In other words, he likes Lilly’s drug. Now, whether he’s on it or not, I don’t know. But he must, to form that opinion, he must be doing something with those drugs. And he is endorsing Lily’s drug now that has also been a disappointment in 2024 I’m just gonna look real fast and see what Lily stock it did a lot better than most drug stocks that’s for sure especially the large pharmaceuticals Eli is coming Eli was up 37.4% this year that’s not bad okay that’s a lot better than the S&P 500 we continue to own Lily Over the last year, it’s up 40%. Over the last three years, it has averaged 44% per year. Not bad for big pharma. And over the last five years, it’s delivered 45% per year. This is one of the best performing large pharma by far. Nothing even comes close. It just lacks momentum right now. That’s what it lacks. It lacks a catalyst to really get it going. It’s had a couple things go its way recently. It’s no longer a shortage. It got its designation for sleep apnea. The competitor’s drug, the studies show that it’s much, much more effective. It got an endorsement from the UK today, which is good. And now Elon Musk says he prefers Lily’s Mongero over Novo’s Ozempic for weight loss therapy, which would really be Zep-bound over Wagovi. So anyways, we’ll take that into account. And we’ll also worry a little bit about RFK. who has long advocated for dietary control over drugs to fight America’s obesity epidemic. You know, I’m not with RFK on that. I think a lot of people have tried and tried dietary control, and it’s not easy. Just look around at the results and this seems to make that whole quest a lot easier. And anyways, that’s where Lily is. Now let’s take a look underneath the surface of the market on this day after Christmas, which has got to be some pretty light trading. Out there most people eating holiday leftovers, cleaning up the garbage, taking things to the trash, picking up, blah blah blah, doing things with the family. Let’s take a look at the S&P 500 right now. It doesn’t look like there’s much on the upside, much on the downside. Macy’s is up 5.1%. That’s a pretty good chart on Macy’s. I wouldn’t be a buyer of Macy’s, but that’s a pretty good chart. The retail stocks are doing best today by far. Kohl’s up 3.9%. Gap Store is up 3.7%. Advanced Auto Parts, maybe you got an oil change kit. under the tree over the week. Just don’t do it. Don’t make a mess. 3.4% on advanced auto parts. Walgreens is up 2.8%. Target’s up 2.5%. FedEx up 2.4%. Guess what? It was a good holiday season. They’re the leaders in the market today. Not a lot on the downside. I don’t see anything other than Netflix down 1.4%. I don’t know how their football, I heard it was a roaring success, but it is down 1.4% today. Now, let’s look at the NASDAQ, the home of the disruptors. I visited the NASDAQ last week, had a good time, saw a lot of those disruptors, pictures on the wall the day they went public. A lot of history there at the NASDAQ. And again, it looks to be the only tech stock I see on the upside to any extent, and it’s one of the better performers over the last quarter of the year is Broadcom. Broadcom has been on a tear. Broadcom is at an all-time high. It’s now over a trillion. It’s $1.1 trillion and definitely a part of that AI race. And then I see a lot of retail stocks. Raw stores up 1%. Dollar Tree up 1.3%. That’s where I do all my Christmas shopping, over at the Dollar Tree. Henry Schein up 1.4%. Ulta up 1.7. Starbucks up 1.9. Good day for retail. What do we have on the downside over at the NASDAQ? You know, not much. Like I say, Netflix and Tesla. Tesla down 1%. Meta down three quarters of a percent. NVIDIA, which had a really good Christmas Eve. NVIDIA is down 7 tenths of 1%. And one last thing we’ll take a look at is the Dow. Not much on the downside on the Dow. On the upside, Boeing, which has been on a nice little run here recently. Not a bad chart on Boeing as they’re back doing, I think the assembly line is going at 100% again finally. So that’s good news for Boeing. Okay, well, this is, don’t forget, I mean, take a look at your tax planning. You’ve only got a few trading days left. Tomorrow’s the 27th, 28th, 29th, market close. You’ve got Monday. You’ve got basically today, Friday, and Monday, and a half day on Tuesday. To take advantage, get rid of those big losers. At least get a little bit of a tax write-off loss to offset gains. If you’ve got some big losers to write off, now’s the time. Otherwise, you’ve got to wait until next year. So tax planning is very important here. I’ve got a few hanging around that are a little bit underwater. I’m open for a little rally between now and the end of the year on Tuesday when the bell rings. And if I don’t get it, I will sell and take advantage of some losses to offset a lot of gains from this year. Set up an appointment with us. Get on the right track. Get on the right track in 2025. I think there’s going to be a little bit different leadership in the market next year than what we saw this year. Give us a call to set up an appointment at 855-611-BEST. 855-611-BEST. And to take advantage of the best offer, just like the guy on my pillow, you know, comes out of your medicine cabinet. No, instead it’s my live trading. Go to Gunderson.com. GunnarssonCapital.com, GunnarssonCapital.com. Sign up for four free weeks, and we’ll have some fun together, all right? And happy holidays, and I’ll be talking to you throughout the day if you’re one of my subscribers here. Have a great day, everybody.
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This show is not a solicitation to buy or sell any securities. Bill Gunderson or clients of Gunderson Capital Management may have long or short positions in stocks mentioned during the show. Past performance is not indicative of future performance. Gunderson Capital Management is a fee-based registered investment advisory firm. All accounts are held at Charles Schwab. Schwab is a member of SIPC and FINRA.
