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Market Breakdown for the week.

Hope all is well. The major U.S. stock indexes recorded their fifth positive week in a row. The Dow added more than 2% and the S&P posted a fractional gain, with both indexes climbing to year-to-date highs. November was the strongest month so far this year for the major U.S. stock indexes. The big gains offset much of the overall decline from the previous three months’ negative results. For the month, the NASDAQ added 10.7%, the S&P 500 rose 8.9%, and the Dow gained 8.8%. Pogues front man Shane MacGowan passed away this week. I have broken down this week’s update using lyrics from the Pogues song Sally MacLennane.

Took the jeers and drank the beers and crawled back home at dawn

The economy continues to keep moving forward despite all the negative predictions. This week we got the government’s initial estimate of third-quarter GDP growth. Once again it beat expectations. The adjustment puts the annual growth rate at 5.2% versus the 4.9% initial estimate made in October. Even after a strong third quarter. Most economists are continuing to predict a cooldown this quarter, because of the elevated interest rates.

Sad to say I must be on my way, So buy me beer and whiskey ’cause I’m going far away

Inflation is going away.  The U.S. Federal Reserve’s preferred gauge for tracking inflation showed that consumer prices continued to rise at a slower pace in October. The Personal Consumption Expenditures Price Index rose at a 3.0% annual rate, down from 3.4% in September. Excluding volatile food and energy prices, core inflation was 3.5% in October down from 3.7% in September. Inflation is headed in the right direction. The November rally was driven by the fact that inflation remains in a downtrend. Inflation ticking lower even as the economy has shown resilience. Most importantly, the pressure from shelter prices is beginning to subside. I believe that inflation will continue to move lower, which will support extended move higher in the stock market.

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