The United States has experienced a resilient growth in retail sales during December, a sign of robust economic demand that reinforces the Federal Reserve's cautious stance regarding potential interest rate cuts this yearAccording to the data, retail sales increased by 0.4% in December, falling short of economists' expectations of 0.6% growth and down from the revised figure of 0.8% growth in NovemberFurthermore, last week’s non-farm payroll figures saw a significant rise, with the unemployment rate dropping from 4.2% in November to 4.1%. Although underlying inflation indicators showed signs of cooling, the overall consumer price index recorded its largest increase in nine monthsPresently, the resilience of the labor market, highlighted by stable wage growth, is driving consumer expenditure.

The December retail sales figures largely met expectations, propelled primarily by holiday-related spending

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However, the underwhelming performance in core retail data points to limited consumer spending on non-essential goods, indicating possible weakness in consumer purchasing power and confidenceAdditionally, recent CPI data suggests that inflation pressures are relatively controllableConsequently, we have revised our forecast for the Federal Reserve's interest rate cuts, dialing back our initial expectation of three cuts to a more conservative stance of one cut each in March and June, each by 25 basis points, with a likely pause in cuts for the latter half of the year.

Moreover, the Federal Reserve's Beige Book revealed that strong holiday sales exceeded expectations, leading to a slight to moderate expansion in economic activity during late November to DecemberConsumer spending experienced modest growth, particularly seen in robust holiday sales and slightly increases in auto salesHowever, there was a notable decline in overall construction activities, and the manufacturing sector saw a minor downturn, while residential real estate remained unchanged, balanced out by a slight upturn in commercial property sales

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The non-financial services sector enjoyed modest growth, especially in leisure, hospitality, and air transportThe labor market indicated an overall increase in employment, particularly in the healthcare sector, with job growth continuing in multiple service industriesPrices showed a slight increase, and it's anticipated that inflation will continue to rise into 2025.

Experts forecast that the resilience of the US economy will persist into 2025, with a low probability of experiencing a hard landingThis year, the GDP growth rate is likely to remain above 2%. Insights from the Beige Book suggest that the factors propelling growth may shift in the coming year; while consumer spending may slow down, a resurgence in manufacturing is anticipated, with service industries expected to maintain robust growth, further bolstering overall economic performanceHowever, challenging conditions in the auto sales, housing market, and agriculture could exert some pressure on economic stability.

Additionally, the demand for artificial intelligence has once again proven to be a significant driver of growth as Taiwan's TSMC (Taiwan Semiconductor Manufacturing Company) reported exceptional financial outcomes for the fourth quarter of last year, showcasing a net profit that exceeded expectations by a staggering 57% year-on-year

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Their consolidated revenue reached approximately 868.46 billion New Taiwan dollars, with a net profit of 374.68 billion New Taiwan dollars and earnings per share that hit record highsThe revenue and net profit growth rates stood at 38.8% and 57%, respectively, while the gross margin climbed to 59%. Profits generated from the 3nm process accounted for 26% of their total profits, with 60% of total revenue derived from 5nm and 3nm manufacturing processesProjections for 2024 suggest total revenues may reach 2.89 trillion New Taiwan dollars, marking a milestone in the company's history.

TSMC's leadership has indicated that the demand for AI-related products is anticipated to continue its strong trajectory, expecting revenues from AI accelerators to double in 2024. Over the period from 2024 to 2029, they forecast a compound annual growth rate of approximately 45% for AI accelerator revenues

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The company remains ahead in advanced manufacturing technology and plans significant investments, especially in hot sectors like AI and 5G technologies, aimed at expanding their share in the AI application market, which ranges from cloud computing to edge computing and autonomous drivingTheir investment in Arizona is set to enhance competitiveness in the US market, though challenges from industry competition and global economic uncertainties remain significant.r

Bank of America has also reported substantial growth in its fourth quarter, with net profits soaring by 125% compared to the previous yearThe bank recorded revenues of $25.35 billion for the fourth quarter, an 11% increase year-on-yearIt’s notable that net interest income rose to $14.36 billion, also reflecting a 3% increase, surpassing market expectationsWith a diluted earnings per share of $0.82, this too exceeded predictions

The investment banking division saw a revenue spike of 44%, hitting a three-year high of $1.7 billionSimilar to other major Wall Street banks, Bank of America benefitted from a resurgence in trading activities and a bullish stock market.

Last year's robust performance of capital markets had a positive ripple effect on the bank’s investment banking sector, driving fee income and trading revenues beyond expectations, with double-digit growth in intermediation incomeFurthermore, the pressure on deposit rates eased after interest rate cuts, thereby enhancing the bank's net interest incomeHowever, they face challenges such as the potential rise in default rates in a high-interest environment, particularly in consumer credit and mortgage sectors, along with uncertainties surrounding future economic policies.

In the luxury sector, Richemont's sales have soared, contributing to a spike in European luxury stocks

The demand for Cartier jewelry reflects a shift in consumer spending habits during the holiday shopping season, resulting in unexpected double-digit sales growth for the groupAccording to their latest report, sales surged by 10% in the fourth quarter when calculated at constant exchange rates, defying analyst projections that anticipated growth of less than 1%. The performance was driven mainly by strong results in the Americas and Europe while weaker watch sales were offset by the surge in high-end jewelry purchasesConsequently, Richemont's stock experienced a momentous surge, rallying by 18% at one point during morning trading before closing with a 16.36% increase, fuelling optimism within the luxury goods sectorStocks of their competitors like LVMH and Hermes also saw significant gains of 8.6% and 4.4%, respectively, with Goldman Sachs’ European luxury goods index registering its largest rise in nearly three years.

The latest earnings report from Richemont underscores the strong market position of its high-end jewelry offerings, reflecting the effectiveness of its geographic diversification strategy, especially in the Americas and Europe