By Matthew Gutierrez and Shawn O’Malley
For decades, Americans have loved their cars — symbols of freedom, a mark of one’s wealth, and materialism, depending on whom you ask.
Americans especially love their trucks, which consistently rank among the country’s most popular vehicles.
💭 Our Chart of the Day shows each state’s most popular car. What’s most well-liked in your state?
— Matthew & Shawn
Here’s today’s rundown:
POP QUIZ
Today, we'll discuss the three biggest stories in markets:
Inflation continued to normalize in November
JPMorgan’s fight with a client who lost a $50 million fortune
Attacks on vessels in Red Sea disrupt global oil trade
All this, and more, in just 5 minutes to read.
CHART OF THE DAY
IN THE NEWS
😅 Inflation Continues to Normalize
Happy CPI day. That’s right, new inflation data is out, and we wouldn’t be worth the keyboards we type this on if we didn’t report on it.
The Consumer Price Index crawled 0.1% higher in November, up 3.1% from a year ago.
Consumers owe a tip of the cap to energy prices, which dropped 2.3%, underpinning the flat changes in CPI — gas prices fell 6%.
Core focus: In assessing “core” inflation, the Fed prefers to strip out prices for food and energy since they fluctuate more frequently than other important price benchmarks. So-called core CPI rose 0.3% last month, in line with estimates.
Other interesting CPI notes:
Housing prices (as measured by surveys of what homeowners think they could rent their houses for), actual rental costs, and hotel and lodging rates are captured under the “shelter” prices umbrella, comprising about a third of the CPI weighting.
While shelter pieces moved 0.4% higher and were up 6.5% year-over-year, the inflation rate in this segment has been steadily declining.
Apparel prices fell the most since 2020 — a troubling sign for retailers amid holiday shopping.
Why it matters:
Nothing burger: As the head of rates strategy at BMO Capital Markets put it, “There’s nothing within the details that will immediately impact the Fed’s thinking.”
And the Fed will be doing lots of thinking. In fact, central bank officials started a two-day meeting on Tuesday that will culminate with their next decision on interest rates — nearly everyone expects them to leave things unchanged again.
Quick aside: No one is cheering for the Fed to keep inflation in line more than baseball star Shohei Ohtani, who opted to defer most of his blockbuster $700 million contract to be paid out between 2034 and 2044. Someone needs to talk to him about the time value of money…
SPONSORED BY…US!
Invest Like The Legends
Learn to invest like legend investors do — from the company that has interviewed them ✔️
🎙️ We've interviewed investing legends like Ray Dalio, Howard Marks, Joel Greenblatt, Jeremy Grantham, and many more, and now, we’re passing along the most important things we’ve learned to you.
In our new course, we'll take you through ten different sections, covering what a stock actually is and how stock markets work, strategies to optimize your retirement savings, picking great companies, what to look for in ETFs, and how to monitor your investments + so much more!
We Study Markets readers can use the coupon code WSM15 to take 15% off at checkout 💰
📉 JPMorgan In Fight Over Client’s Lost $50 Million Fortune
Imagine having a $50 million fortune, only to let professionals manage it, then see it all evaporate.
That’s basically what happened to Peter Doelger, who built a company, sold it, and then invested the proceeds in stocks and oil to beat the market. By age 78, he was worth over $50 million.
But he was also showing signs of dementia. Then came the losses.
Bye bye fortune: Doelger and his wife relied on JPMorgan’s advice for managing their portfolio, but they kept losing money. In less than a decade, they went from $50 million to about $1.5 million, prompting them to sell their Boston home and move in with relatives.
Now, the high-stakes battle is playing out in Boston Federal court. Will a big financial firm be held responsible if a wealthy client develops dementia and their investments fall over 90%?
The Doelgers are seeking tens of millions of dollars from the country’s biggest bank. The legal battle alone could wipe out their remaining savings.
“We had 100% trust in them that they will manage our assets,” the Doelgers told Bloomberg. “We didn’t expect them to make us a fortune but at least make us comfortable.”
Who’s to blame? Peter, now 86, can’t remember much of what happened.
In its defense, JPMorgan pointed out that the family wasn’t exactly frugal, splurging on the Boston condo, a $7 million Palm Beach mansion, a Paris apartment, and memberships at four private clubs.
The bank also said the family signed an agreement in 2015 stating that he wanted to engage in sophisticated, risky bets on oil and gas.
“JPMorgan repeatedly suggested to Mr. Doelger that he diversify and reduce his overall exposure,” the bank said in a statement.
“Mr. Doelger signed an agreement, delivered to Mr. Doelger and his personal attorney, acknowledging that advice and affirming that he was ‘financially knowledgeable and sophisticated’ and ‘fully aware of the concentration risk.’”
Why it matters:
No signs? JPMorgan also said it has policies and procedures for protecting elderly and vulnerable clients, adding that “no one” at the bank saw any signs of his cognitive decline.
The case highlights an issue that could become more common as the Baby Boom generation retires with a record pile of wealth. Many will face cognitive decline in the coming decades, and the financial system doesn’t have a clear model for when that happens. This case could set a precedent.
“This case screams out for more attention to how waning cognitive abilities affect older people’s capacity for financial decision-making and independent financial management,” said a financial analyst and consultant.
“We need to put more responsibility on financial firms since they are well-positioned to detect warning signs.”
MORE HEADLINES
🛢️ Why oil prices keep falling
📱U.S. teens ‘almost constantly’ use YouTube and TikTok, per report
🧸 Hasbro to layoff 1,100 workers on weaker holiday toy sales
👩🏻⚖️ Jury rules against Google’s app store in antitrust hearing
🤝 Occidental Petroleum to buy Crownrock for $12 billion and raise dividend
☕️ + 🚗 Starbucks joins the EV business
⛴️ Oil Investors Watch Attacks on Shipping Vessels in Red Sea
Fallout from the ongoing conflict between Israel and Hamas initially stoked fears of a wider regional conflict that could, among other disruptions, throw the global oil market into turmoil.
While the conflict has mostly been contained, attacks on commercial ships transiting the Bab al-Mandab strait by Yemen’s Houthis, an Iran-aligned group, have raised tensions further. The Houthis have proclaimed their support for Palestinians, pledging to continue attacking ships destined for Israeli ports regardless of nationality.
Recent developments: On Tuesday, the group attacked a Norwegian commercial tanker, just over a week after the U.S. military reported that three other commercial vessels had been attacked in the southern Red Sea.
In November, the Houthis also allegedly seized a British-owned cargo ship.
Why it matters:
Reuters reports that the Bab al-Mandab strait “is one of the world’s most important routes for global seaborne commodity shipments, particularly crude oil and fuel from the Gulf bound for the Mediterranean via the Suez Canal…as well as commodities bound for Asia.”
About 7.8 million barrels of crude oil are shipped through the strait daily, representing 12% of all seaborne-traded oil in the first of 2023.
The FT added that, “The incident is the latest example of shipowners from around the world being dragged into an intensifying conflict in the Middle East.”
Shipping disruption: Shipowners are increasingly hesitant about having their ships transit the area, with one saying, “You can’t defend yourselves against missiles.”
In response, the U.S. has moved two carrier strike groups to the region since October, as Washington works with allies to formulate a maritime task force to ensure “safe passage of ships in the Red Sea,” according to national security adviser Jake Sullivan.
The world’s second-largest container ship company, AP Møller-Maersk, announced surcharges of up to $100 on all containers headed to Israel due to rising insurance costs after the recent attacks.
RECOMMENDED READING
WallStreetZen is the first stock research platform that doesn’t just show you data — it helps you understand a stock’s fundamentals within minutes by distilling due diligence checks used by professional investors into simple one-line explanations.
Now, they’ve developed WallStreetZen daily, a newsletter that helps you connect the between real-world events and the markets and provides data-driven investment ideas from top-rated analysts.
Join 100,000+ investors getting market-moving news and stock ideas.
QUICK POLL
As an investor, how worried are you about Middle Eastern conflicts disrupting the global oil market?
Yesterday, we asked: Do you think the Dodgers overpaid for Shohei Ohtani?
— One “Yes” responder commented, “I love Baseball, and I like the Dodgers; St. Louis Cardinals, however, are my team. I’m not being ‘bearish’ on the deal, I just hope Ohtani keeps up his production and stays healthy. ”
— Another added, “Seems like a lot of money, so much more than anyone before.”
TRIVIA ANSWER
See you next time!
That's it for today on We Study Markets!
Enjoy reading this newsletter? Forward it to a friend.
Was this newsletter forwarded to you? Sign up here.
Use the promo code STOCKS15 at checkout for 15% off our popular course “How To Get Started With Stocks.”
Advertise with us.
Follow us on Twitter.
Keep an eye on your inbox for our newsletters on weekdays around 6pm EST and on weekends. If you have any feedback for us, simply respond to this email.
You can also leave your comments/suggestions/feedback anonymously here.
What did you think of today's newsletter?
All the best,
P.S. The Investor's Podcast Network is excited to launch a subreddit devoted to our fans in discussing financial markets, stock picks, questions for our hosts, and much more!
Join our subreddit r/TheInvestorsPodcast today!
© The Investor's Podcast Network content is for educational purposes only. The calculators, videos, recommendations, and general investment ideas are not to be actioned with real money. Contact a professional and certified financial advisor before making any financial decisions. No one at The Investor's Podcast Network are professional money managers or financial advisors. The Investor’s Podcast Network and parent companies that own The Investor’s Podcast Network are not responsible for financial decisions made from using the materials provided in this email or on the website.
