Monthly Market Debrief

2023 is officially over! It’s been a heck of a year for the economy, marked by bank collapses, union victories, Barbenheimer, and a joint Taylor Swift/Beyonce-incited economy boost. What a time to be alive.

Market Snapshot

Let’s look at some 2023 market highlights:

The US stock market is creeping close to an all-time high

The S&P 500 closed December at $4,769.83, just shy of its record high of $4,796.56 on 03 January 2022. By the time you read this, the market may have reached a new high. Or it could’ve collapsed, who knows.

US stocks crushed international stocks

US stocks vastly outperformed international stocks this year, with the S&P 500 up over 24%, compared to 14.2% for the S&P International 700 (which tracks the 700ish biggest international publicly-traded companies outside of the US).

USA! USA! USA!

Major cryptocurrencies are way up (some would say “to the moon”)

Despite increased efforts by regulators to oversee cryptocurrencies, they saw huge gains in 2023.

Bitcoin rose almost 157% in 2023 to around $42,000, recording its best year since 2020. Although 2023 was a solid year for (non memecoin) cryptocurrency, Bitcoin is still down about 39% from its all-time high in 2021.

Company Highlight - Apple

For the past three years, Apple has been in a messy legal battle with medical device maker Masimo over a single feature on the Apple Watch, the blood oxygen sensor.

Masimo argues that Apple hired former Masimo employees, which contributed to the Apple Watch’s addition of a blood oxygen sensor in violation of Masimo’s patents. Most recently, the US International Trade Commission ruled that Apple had infringed Masimo’s patents and imposed an import ban of the Watch Series 9 and Watch Ultra 2 that went into effect last week.

Although Apple quickly appealed this decision and has since resumed selling both watches, this cost Apple millions in revenue. Another decision by US Customs and Border Patrol to determine if the changes Apple made to the watches are significant enough to avoid a patent dispute is set for next week.

While mildly inconvenient for Apple’s bottom line, this lawsuit has been more damaging to Apple from a PR perspective, painting them as a bully that would rather steal technology from its competitors than develop its own.

Apple is no stranger to being on the wrong end of a patent-infringement lawsuit. Apple just agreed to pay out $25 million to settle a 2019 class action lawsuit over its Family Sharing feature.

Masimo's legal battle with Apple has so far cost Masimo about $100 million, but its CEO says it won't stop until Apple changes how it deals with smaller companies. His goal is to stick it to the man, if you will.

Will this derail Apple’s market value? Nah. ‘Tis but a flesh wound. Market “guru” Jim Cramer and many others on Wall Street project that Apple will be the first company to reach a $4 trillion valuation, as early as this year. But maybe it’ll give other smaller companies the courage to stand up to corporate giants in protection of their intellectual property down the road.

Current Event - Federal Reserve Announces Planned Interest Rate Pause (And Maybe Reduction?)

Interest rate pause, or even decrease?? Music to my ears.

After rapidly increasing rates to combat inflation, Federal Reserve Chair Jerome Powell (affectionately known as JPOW by my fellow degenerates over at Wall Street Bets) announced that Fed officials are likely done raising rates.

“Inflation keeps coming down, the labor market keeps getting back into balance and it's so far, so good,” Powell stated during a recent Fed policy committee meeting. He even acknowledged that the officials had discussed the prospect of rate reductions in their meeting. Although those comments were quickly contradicted by the New York Fed Bank President who said they did not discuss rate cuts.

Wall Street has responded joyfully, largely contributing to the 4% rise in the S&P 500 in December alone.

Although the current inflation of 3.1% remains above the Fed’s target of 2%, inflation has declined faster than Fed officials had expected, allowing them to keep rates unchanged for now and wait to see if price increases continue to ease.

What does this mean for you and I? If the Fed’s key interest rates decrease, loan interest rates will generally decrease with it. This means lower borrowing costs, stimulated economic growth, and for the home-seekers out there, more manageable mortgage interest rates. However, it also means lower yields from high interest savings accounts and money market funds. 

To learn more about the Fed, read here.

Debrief on Deck

Next week, Wilson is going to give you an overview of all things finance in 2024, from retirement account contribution limits to popular Yankee Candle projections.

As always, please reach out to us with any questions or comments you have. You can reply directly to this email or find us on social media (X (formerly Twitter) and Instagram).

Until then, stay the course.