Good morning!

I hope you're enjoying the holiday season and getting all your shopping done! December has always been special to me and my family, with the joy and comfort of the holidays and the excitement the prospect of a new year brings.

It may be the week before Christmas, but that isn't slowing the flow of important economic news. The Fed meets for the final time in 2024 this week, with a likely .25% rate cut incoming. Here's what's happening...

• The U.S. economy wrapped up 2024 on a high note, hitting its best performance in almost three years, according to S&P Global. Their latest flash U.S. composite PMI (Purchasing Managers Index), which looks at both services and manufacturing, jumped to 56.6 in December from 54.9 in August. Economists were expecting a smaller increase to 55.1. The boost mainly came from the services sector, with its PMI business activity index reaching 58.5, the highest in 38 months. On the flip side, the manufacturing PMI slipped to 48.3 in December, marking a three-month low. *

• The Federal Reserve is at a crucial point with interest rates, and the stock market is in for a big week as it deals with ongoing widespread weakness. The central bank is expected to cut rates on Wednesday, with a 97% chance according to Wall Street analysts. That might be a bit optimistic, especially considering last week’s stubborn inflation data. Several Fed officials are considering arguing against a cut when they meet later this week, according to The Wall Street Journal. A hold decision would definitely be a surprise. A cut is still the most likely outcome, but the economic data doesn't show an urgent need to lower borrowing costs right now. Consumer prices rose to 2.7% in November, which is above the Fed’s 2% inflation target. The economy is still growing at a decent rate of 3.3% in the fourth quarter, and the job market is holding up well. On the flip side, some argue that the fed-funds rate of 4.5% to 4.75% could come down a bit more to better match the current economic conditions. **

• Bitcoin reached a new all-time high of $106,648 at the start of this week after rallying 3.2% the previous week. A further rise in price could be fueled by the upcoming decision of the Fed on interest rates on Wednesday. The US central bank is expected to slash rates but also signal fewer-than-previously-anticipated cuts for 2025. An interest-rate cut tends to favor risky assets like Bitcoin because lower rates tend to stimulate the economy. However, markets’ reaction to Wednesday’s Fed decision isn’t likely to be driven by the rate decision itself (unless there was a huge surprise) but rather the Fed projections about how interest rates will head in 2025. If these projections reflect slower or fewer rate cuts next year, Treasury yields and the US Dollar will likely be stronger, making it harder for risk assets, including BTC, to be more attractive to investors. *** 

Primary Advisors diligently keeps up with anything that can impact your finances with more than 175 years of combined investment experience. We're doing our all to keep your money protected and growing. If you have a friend or family member you think might benefit from our financial oversight, do them a favor and send them our way. Until next week...

Martin Lombrano

Primary Advisors

Investment Advisory Services offered through Miramontes Capital, LLC. dba Primary Advisors. This newsletter is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Miramontes Capital, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Miramontes Capital, LLC unless a client service agreement is in place.