From the Desk: Will the Santa Claus Rally Continue?

  • 122023
  • 2 minutes

Since 1950, the Cleveland Browns are 109-152-2 in the month of December, with most of those wins coming in the early years of this storied franchise. Since Coach Stefanski took the helm, our beloved Browns are 5-7 in the month of December.

Since 1950, the S&P 500 (you had to see another Powell/Stefanski comparison coming…) has been up an average of 1.3% in the last seven trading days of the year and has been positive 79% of those years ( Yale Hirsch, the founder of the Stock Trader’s Almanac, coined the "Santa Claus Rally" in 1972 after noticing the long-standing trend of the equity market ending the year by bringing more Joy to the World. Since Fed Chairman Powell assumed his post in 2018, the S&P 500 has a December average of -1.03% and has been positive only 3 of the past 5 Decembers.

At the time of this post, the S&P 500 is up 3.85% this month alone, with just under two weeks to go in the year. The Cleveland Browns are 2-1 over the same period, with two games to go by the end of the month. Clearly, the Santa Claus rally is benefiting both investors and Browns fans alike.

Last week, Fed Chairman Powell suggested he and his fellow Board Governors would reduce interest rates three times in 2024. While I find that suggestion somewhat premature and even a bit unreasonable, the S&P 500 has rallied 2.6% on that news over the last four trading days. I can’t help but recall former Chairman Greenspan’s phrase “irrational exuberance” and think Chairman Powell may have set unrealistic expectations after just a few months of acceptable inflation data. While I welcome the market rally and certainly would not wish any of it away, I believe a little more discretion could have been used before putting a number to potential rate cuts next year. And I’m not alone on this one, as other Fed Board members have since come out and shared similar opinions. After all, investors are more likely to recall last week’s comment as a statement of fact rather than just a possible outcome, making Powell the Grinch if he doesn’t come through.

As for the Browns, some of you may recall reading my critical assessment of Coach Stefanski’s play calling a few games ago. While I stand by my prior comments, I also must give credit for the impressive victories that gave rise to the Santa Claus Rally in Cleveland this December. Browns fans relived many a Blue Christmas earlier this season as we watched leads surrendered, starters injured, and (arguably) questionable play calling. Enter the month of December, and Stefanski is making the absolute best out of a team with 13 players—more than 27% of its salary cap—on IR and, unlike Chairman Powell, he does so while only focusing on this week’s opponent. While the Browns’ only lead Sunday against the Bears came with 32 seconds remaining, this fan felt a sense of confidence throughout that was reminiscent of the Kardiac Kids days. Indeed, Coach Stefanski has Browns fans Rockin’ Around the Christmas Tree.

Whether the Santa Rally continues on Wall Street through the year is yet to be seen. But, given that present equity markets have already delivered to investors, I’m guessing most would still be ‘laughing all the way’ even if it fizzles. Regardless, this diehard will have a Blue Christmas without the present rally flying well through this holiday season.

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