The S&P500 fell 2.62% from December 24 to December 31, 2024. That's the worst year-end in the 2009-2023 period! Some have commented that there was no Santa Claus rally this year and that we are facing a correction in January...
The worst January in the last 15 years was 2022. The main reason is too high inflation...
The best January in the last 15 years was 2019... The main reason... mean-reversion and the Powell’s (dovish) pivot in December 2018.
While everything is possible, it is currently rather difficult to identify a serious reason for a large sell-off... A serious reason could be a clearly returning inflation (but it is still too early to "panic" about it, i.e. it is not yet in the data), or fears of growth slowdown/recession - similarly... it is still too early to "panic" as it is not in the data (yet). Nevertheless, a correction can come at any time, and the last major one on the S&P500 was in August 2024 (-8.49%).
Figure 1 shows the Santa Claus rally from 2009-2024. Table 1 shows the details.
From the interesting facts of the last few days.. yesterday Trump said on FOX that the US needs more immigrants?
Trump: "We need a lot of people coming in... (to our country)".
After the election Trump significantly softened his rhetoric on immigration (e.g. allow Dreamers to remain in the country). Such a change is/would be very positive for the markets ...
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