🎙️ Gold Goes Higher

As mentioned Monday, this week’s newsletters are a bit of a change of pace, and next week, we’ll return to our regular market-news coverage.

Today, though, we have a quick-read newsletter for you, looking at some of the most interesting charts describing markets and the economy right now.

See for yourself below.

— Matthew & Shawn

Here’s today’s rundown:

Today, we'll review some of the biggest charts in markets, including:

• The rise of gold after rate cuts

• Comparing Nvidia and Cisco, again

This, and more, in just 3 minutes to read.

Gold Tends to Trend Higher After Rate Cuts

Gold keeps rallying in 2024, outpacing the S&P 500 with a nearly 30% gain. It’s up over 34% in the past 12 months dating back to fall 2023.

History suggests more gains could be in store for the precious metal.

“After an interest rate cut, there has only been one time, 1998, when gold trended significantly lower after a rate cut throughout the next year,”Bespoke Investment Group found. “Even then, close to the one-year mark, it surged as the Dot Com crash started.”

Health Insurance On the Rise

Most everyone has noticed the rise of healthcare costs, including health insurance itself. The biggest beneficiaries of this massive increase? Health insurance companies, as Creative Planning’s Charlie Bilello illustrates above.

For example, UnitedHealth Group (the largest U.S. health insurer) is up 11,160% since 1999 vs. a 479% gain for the S&P 500.

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YouTube Is A Titan in the Streaming Wars

Move aside, Amazon and Disney: When it comes to streaming wars, it has ended up being a battle of two titans: Netflix and YouTube.

According to monthly Nielsen data reported by Variety, Americans spend more time streaming YouTube content on their TVs than from any other service.

Over the last six months, 25% of all time spent streaming on U.S. televisions has been on YouTube.

The Nvidia-Cisco Comparison

I/O fund tech analyst Beth Kindig — a long-time Nvidia bull — recently shared these charts on X, courtesy of JP Morgan Asset Management. As you can see, while Nvidia’s surge has prompted questions about its fundamentals, the chipmaker’s earnings have kept pace.

Cisco, a tech darling of the 1990s, saw its stock price soar for years, even though its 1-year forward earnings per share didn’t rise at nearly the same clip.

Nvidia stock is up about 150% this year and 2,630% over the past five years. Its market capitalization briefly touched $3 trillion when it reached its all-time high in June.

Obesity in America Continues to Climb

Obesity in the U.S. keeps climbing steadily: Global adult obesity rates have more than tripled from 5% to 16% from 1990 to 2022. In the U.S., the problem is more severe, with a much higher average obesity rate of 34%.

The trend also has market implications: Some companies, from fast food restaurants and suppliers to healthcare organizations and diabetes drug makers, are making plenty of money.

Who benefits the most, though? Big pharma, primarily.

Ozempic maker Novo Nordisk and Mounjaro maker Eli Lilly dominate the lucrative weight loss drug market with Wegovy and Zepbound. A quick glance at Eli Lilly’s stock —up nearly 700% in the past five years and ~50% this year — doesn’t tell the whole story, but it says a lot about how large pharmaceutical companies are profiting off weight-loss drugs and American obesity.

Home Prices Forecast to Keep Rising in 2025

U.S. home prices are expected to climb as the Federal Reserve begins cutting interest rates, according to Goldman Sachs Research.

As one Goldman analyst put it, “The growth in home prices has been really resilient. At the start of the pandemic, there was a lot of concern that home prices might actually decline, because of the loss of income.

“The opposite happened. There ended up being a massive surge in household formation, which created an organic need for housing. On top of that, it was also a time when there wasn’t a ton of supply, both in terms of existing inventory and new builds. Those factors in the supply and demand sides led to the strongest home price growth we’ve seen in the country’s history: around 20% on an annualized basis.”

The rise in home prices has contributed to a housing affordability crisis. The solution? Goldman analysts say lower interest rates in the coming year—coupled with higher income growth—could alleviate the problem.

The Rapid Pace of Change

Our final chart says plenty. It speaks to the rapid pace of change that has only accelerated since the introduction of the internet. It took ChatGPT only two months to read 100 million users, begging the question: What new technology will reach 100 million users even faster?

Quick Poll

On Monday, we asked: Which aspect of S&P Global's business are you most interested in as an investor?

— “I am most interested in their ability to monetize the many indices they create.”

— “I think their Market Intelligence unit is really interesting; I’ve used it myself! Great product.”

— “Has the advantage of steady and definite growth, whats more to ask from any business?”

See you next time!

That's it for today on We Study Markets!

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