The combined effects of lower crude prices, moderating natural gas prices, and a reversal of the recent jump in oil refining margins (crack spreads) have removed some of the sources of the recent rebound in Energy stock earnings estimates and performance.

The Fed will likely need to see the December data before potentially moving off their current stance of most likely not cutting again in January.

But the Fed and inflation are much less of a market issue now, earnings and investor sentiment are the key, particularly around Tech.

Bitcoin/crypto falling again is not helping the Tech space either, still persistent weakness in both the crypto assets and the stocks tied to them.

The UBS Crypto and Crypto-linked Index is down -3.7% today and -42% from its Oct. 15th peak, giving back all of the late Nov/early Dec bounce.

Demand for crude continues to gradually decline, while OPEC has kept supply relatively high and non-OPEC countries continue to produce at high levels.

So actual or potential supply shocks are the main reason oil is even as high as it is, and news of possible deals in Ukraine reduce that threat.

Relatedly, the youth (16-24) unemployment rate is up from 9.0% in December to 10.6% now. Ex-COVID, this is the highest since 2016.

The unemployment rates are thus not extremely high but are moving in the wrong direction, particularly for the "fringes" of the labor market.

The U-6 rate includes part-time workers who want full-time work, and those who want a job but haven't sought one recently, i.e., "discouraged workers" or "marginally attached".

U-6 is thus always higher than the U-3 rate but has risen from 7.5% to 8.7% this year, while U-3 is up from 4.1% to 4.6%.

Markets bouncing around on the news. Not clear that the data will change the Fed's view much.
Bond yields are little changed today, and stock futures are off somewhat, reversing an initial bounce.
US dollar is mildly lower, gold up a touch, oil down on supply worries.

Report on retail sales for October was mixed. Headline growth was flat but ex autos and gas was a solid +0.5% and the "control group" used in GDP was +0.8% after unchanged the prior month.

Data are noisy month to month but spending still growing at a moderate pace.

The "prime age" 25-54 y.o. employment/population ratio was little changed at 80.6%, still a fairly high level.

Average hourly wage growth dipped to 3.5%, lowest since 2021. Wage pressure and real earnings growth easing.

Labor market not great but holding up ok outside of federal government.

Unemployment rate:
Nov was 4.6%, a bit above consensus, up from 4.4% in Sept. Due to shutdown, there is no October data and Nov. data is noisier than usual, be careful with interpretation.

Data shows more employed since Sept., but labor force grew more.

More about our MAER stock selection tool here:
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Apple still has support from positive earnings estimate revisions and has been outperforming as the "less-AI Big Tech" name.

But the outperformance has pushed its relative forward P/E back up to the upper end of its range around 1.5x market multiple (~31x 2026 estimates).

The market continues to show evidence of rotation as skepticism about high-priced AI-related companies has grown while money has moved into non-Tech areas lately, including Financials, Industrials, Health Care, and parts of Materials, and Consumer Discretionary.

Broadcom's sharp decline today despite an apparent "beat" is less surprising after a 75% gain this year to push it to 43x its 2026 estimated EPS.

But the company stands out for its extraordinary run of 5+ years of consistent analyst estimate upgrades, so little wonder the multiple expanded.

Notably, the buy ideas have had moderate volatility -- not just chasing risk. The Avoid ideas have been riskier.

Fair warning, this has been a particularly good 3-year period and won't always be like this, but good to see real-time performance.

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Assuming 1-month holding periods, the buy ideas have returned nearly 23% annualized. Avoid ideas have returned only about 2.5% annualized, vs the benchmark (Russell 1000 equal weighted) of 12.3%

NOTE: Mill Street does not manage money; these are hypothetical returns excluding transactions costs.